December 15, 2011

Derived from the Arabic amir al bahr via the Medieval Latin admiralis, the word Admiral means not, as is commonly supposed by those with basic sangria Spanish, “someone who looks around a bit” (possibly with a telescope), but something more like commander or ruler (emir) of the sea. For how much longer the South-Wales-based insurance provider of that name will continue to rule the metaphorical motor insurance waves from Cardiff Bay to far Dundee, however, seems suddenly open to question.

And if you think that’s all a bit tortuous, try this…

Insurance Times’ Celtic West this week made a spirited last minute bid to clinch the prize for 2011’s most thoroughly mixed metaphor in noting that whilst Admiral was once ‘the pin-up boy of motor insurance,’ it could now ‘be sailing into very stormy waters’ whilst a quick look ‘under the bonnet’ reveals that ‘several profit generators in the distribution arm are coming under attack.’

The gist of West’s analysis is that Admiral’s in for a buffeting from several simultaneous directions. First up: referral fees – 5.6% of profits – going, going… Next up: credit hire referrals – OFT investigating – too few motor accidents around… Boom, there goes another profit generator! Plus also: “the recession may focus customer attention on the basic insurance product rather than paying for ancillaries,” West reckons. Quite so! What have ancillaries ever done for us?

Another worry, West reckons, is that the jolly old Admiral may be poised at the very apex of the super-scary bodily injury rollercoaster that ‘has plagued’ rival motor insurers. As it swooshes down into the soupy-stagnant splash pool below it could face ‘a deluge of ‘small’ whiplash claims.’

The real concern, however, he reveals (having – what? – just traipsed us through a litany of phony concerns) is that (after a couple of years of phony pain?) ‘Admiral is yet to face the real pain for 2010 and 2011, years when it grew its business aggressively to take up a 10% market share.’

If Admiral’s result were to take a turn for the worse, West opines, its reliance on reinsurers to provide around 3/4s of the operation’s capacity could see its dividend-rich capital-light ‘coinsurance’ model unravel as disheartened reinsurers jostle in their haste to leave a sinking ship. All of which makes 2012 a fairly crucial year for Wales’ number one employer.

Meanwhile, the Daily Telegraph believes Admiral has a cunning plan to stave off attacks on one at least one of its distribution arm profit generators by setting up its own personal injury law firm. See, those storm clouds are starting to clear already!


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