Admiral sinks to travel and household loss

Admiral has reported a disappointing year for its home insurance book, despite seeing overall group profits rise for the year ended December 2018.

Severe weather and subsidence claims (£11m) saw the group post a £3.0m loss last year compared with a £4.1m profit the previous year. Travel also made a small loss. 

Nevertheless, Admiral saw pre-tax profit rise by 18% to £479.3m last year, but this was boosted by Ogden.

Admiral got a £66m boost from a change in assumption on the Ogden discount rate to 0% from the previous 0.75%.

Its combined ratio was 89.3%, compared with 87.7% the previous year (81.9% for motor). 

”Yet again our results have been impacted by Ogden (Personal Injury Discount Rate), this time in a positive way. Following Royal Assent of the Civil Liability Bill in the UK Parliament just before Christmas, the Group has applied a best estimate assumption for the Ogden rate at 0%, which has had a significant positive impact on our 2018 profits,” the company said in its earnings statement. With this boost, profits would have been “slightly” up, it added.

Other positive metrics were an increase in turnover by 11% to £3.28bn and a 14% growth in customer numbers to 6.5m. 

The solvency ratio however declined slightly from 205% in 2017 to 194% last year. 

Confused.com produced a 40% rise in profit year over year, with overall price comparison channel business contributing £9m.

In a statement, group chief executive David Stevens said the year had been characterised by “some ‘yes, but’s’ [sic], as well as some unequivocal ‘Yes’s’ “.

“Yes, we delivered record profits and dividends, but we were helped by the UK government’s decision to unwind partially the change in the Ogden discount rate from a couple of years ago,” he said.

“Yes, we grew rapidly pretty much across the board, but growth in the core UK Motor business slowed in the second half as we reduced our competitiveness in the face of rising claims costs.

“Yes, our biggest price comparison site Confused.com, grew both market share and profits, but Compare.com, our US site, struggled as other advertisers upped their spends,” Stevens added.