Daily briefing: Wednesday - Admiral reveals all

Admiral has finally come clean about the proportion of its income that it generates from referral fees. Today, the company’s finance director David Stevens told Insurance Times that such income generated 5.6% of its total profits in the first half of this year.

Stevens’ comments follow widespread speculation about the extent of the insurer’s dependence on this source of income. Authoritative sources put the figure much higher – at around 15%.

Given the political furore that has surrounded referral fees over the last couple of months, Admiral probably had little option but to show its hand. With no less a figure than the prime minister throwing his weight behind action to clamp down on the practice, a ban looks increasingly likely.

So far, the motor specialist’s results have not suffered from its exposure to referral fee income. But it was only a matter of time before the Citys demands for more clarity on the issue became too great to resist.

Ageas on the up

Admiral wasn’t the only insurer to report today. Ageas reported a four-fold increase in profits before tax to £34.5m for the first half of 2011 when compared with the same period last year. The bulk of this was accounted for by a massive growth in non-life insurance profits, from an anaemic £900,000 in H1 2010 to £23.4m for the first six months of 2011. The recovery in profits was built on a dramatic turnaround in the insurer’s motor combined ratio, which improved 12.1 points, from 109% to 96.9%.

Ageas UK chief executive Barry Smith clearly sees the results as vindication for the company’s efforts over the last two years to improve its underwriting. Its recovery reflects an across-the-board improvement in the motor insurers’ fortunes after the ‘annus horriblis’ of 2010. But the turnaround in the ex-Fortis motor business is greater than for the market as a whole.

However, with indices showing that recent rises in motor premiums are tailing off, it will become ever-more important to maintain the sound disciplines that Smith extols.

Snowball stays in the Sun

Insurance Times reported earlier today that Patrick Snowball is planning to stay put at Australian financial services company Suncorp until 2015.

Before today, the suspicion was that the ex-Aviva UK executive director, who left the composite in 2007, wanted one last hurrah as chief exec of a big-hitting UK insurer. But he has agreed on stay on at Suncorp on a rolling contract when his fixed term ends in 2013. Given that Snowball is 60, it looks less likely now that he will be tempted back to Blighty for a big job.

The ex-tank commander will be handsomely rewarded for his loyalty, judging by the bonus and share deal outlined by Suncorp in the announcement. And, following England’s climb to number one in the cricket world rankings this week, unusually for an Englishman Down Under, he will have bragging rights in the next Ashes series.