Admiral profits and ancillaries jump as underwriting slumps

Motor insurer Admiral made a group-wide profit after tax of £116.5m for the first half of 2011, up 29% on the £90m it made in last year’s first half.

Profit before tax was up 27% to £160m (H1 2010: £126.9m.

“All in all we’re pleased with the numbers for the first half of 2011. As a result, every member of staff will receive £1,500 of free shares in the group, worth over £8 m in total,” Admiral chief executive Henry Engelhardt said in a statement.

Profit before tax in UK motor, Admiral’s largest business, rose 28.1% to £168.2m (H1 2010: 131.5m). This was due in part to a 38% surge in ancillary income, which makes up the bulk of Admiral’s UK motor profit, to £90.7m (H1 2010: 65.5m).

Ancillary income now makes up 54% of Admiral’s UK motor profits (H1 2010: 50%) and contributes £78.9 per insured vehicle (H1 2010: £74.5). The average number of vehicles insured in the first half of 2011 was 31% up at 2.51m (H1 2010: 1.91m).

UK motor underwriting profit dropped 7% to £21.7m (H1 2010: £23.3m), and the combined ratio increased 7.5 percentage points to 90.4% (H1 2010: 82.9%).

Underwriting profitability was hit in part by a sharp drop in reserve releases to £4m (2.1% of premium) in the first half of 2011, from £17.3m (14.8% of premium). The loss ratio excluding reserve releases improved thee points to 78% (H1 2010: 81%).

Admiral’s UK price comparison site Confused.com also had another disappointing result, with profits falling 7% to £8.2m despite a 10% increase in turnover. The aggregator’s market share remained flat.

Make-up of Admiral’s H1 2011 motor profits (compared with H1 2010)

• Underwriting profit: 21.7 (23.3)

• Profit commission: 45.3 (36.9)

• Net ancillary income: 90.7 (65.5)

• Other revenue: 10.5 (5.8)

• Total profit before tax: 168.2 (131.5)