Admiral UK motor profit soars as Confused slumps

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Insurer ‘gobbled up market share’ as rates rose

Admiral’s UK motor insurance business made a pre-tax profit of £275.9m for the full year of 2010, a 33% increase on the 206.9m profit it made in 2009.

The division reported a combined ratio of 83.5% for 2010 (2009: 84.9) at a time when many UK insurers are posting combined ratios of in excess of 100% on their UK motor books.

However, profit at Confused, Admiral’s price comparison site, fell 34% to £16.9m from £25.7m.

The company attributed this to dwindling market share caused by a poorly-performing advertising campaign during the year.

“The big success was the UK motor insurance business. It’s a snowball going like a freight train. Downhill. Wow!” said Admiral chief executive Henry Engelhardt in a statement.

In addition to improving profits in its UK book, Admiral also reported a 51% jump in turnover to £1.4bn from £939.1m. Total premiums written increased 54% to £1.2bn from £804.7m. Admiral says it is now among the top 3 UK motor insurers.

“Big price hikes in the market pushed consumers to shop. We raised our rates some, but also took advantage of our combined ratio advantage in the market to gobble up market share,” said Engelhardt. “We are now home to about 10% of the UK private car insurance market by value.”

Admiral finance director Kevin Chidwick expressed his disappointment with Confused’s result.

He said the company had expected to lose market share as more companies entered the price comparison market, but he added: “It is a source of disappointment that we lost as much share as we did and we have to hold our hands up and concede that at least some of that was of our own making.”

Chidwick said that, although Confused’s share of the UK motor insurance price comparison market dropped to 23% from 27% during the year, it had now stabilised.

He added that the company was encouraged by the results so far of the new advertising campaign, which was launched at the end of 2010, but it was too early to say whether it had been truly successful.

Group-wide, Admiral made a profit before tax of £266m in 2010, up 23% on 2009’s £216m. Turnover was up 47% to £1.58bn (2009: 1.08bn). The group-wide combined ratio came in at 89.3% for 2010 (2009: 92.1%)

Admiral 2010 highlights in £m (compared with 2009)

UK motor