Munich Re and Hannover Re take a one third of US risks
Admiral has reinsured its new US Elephant car insurance business with Munich Re and Hannover Re and has extended its Munich Re cover for its UK, Spanish and Italian businesses.
The existing agreement for Admiral’s German business remains in place.
Munich Re and Hannover Re will each take one third of the USA risks and Admiral will retain one third for its own account from 1 January.
The Hannover Re contract is for up to 10 years and the Munich Re deal is for up to 15 years. Both agreements include break clauses at earlier dates. Further details
Spain and Italy
Admiral has extended its reinsurance agreements with Munich Re in Spain and Italy to a total of 15 years. Both agreements have also been
revised to include a stronger alignment of long term interests and higher profit commissions for Admiral if results are more positive.
In the UK Admiral has extended its current agreement with Munich Re for two further years to at least the end of 2016. Munich Re will retain 40% of Admiral's UK risks for these additional years. Admiral has committed to retain at least 25% for the duration of this agreement whilst the allocation of the balance is at Admiral's discretion.
High return on capital
Admiral chief executive, Henry Engelhardt, said: "These deals will help us perpetuate our model that minimises risk and consistently produces a high return on capital.
“We believe it is in our shareholders best interest to reduce our risk, particularly in the early development stage of a business, in return for sacrificing some of the profit down the road. This helps us to couple good growth with solid dividends.
"We have a long-standing relationship with Munich Re that now is likely to go on past 2020. We are pleased that an organisation of such stature would have the faith in us to commit to such a long-term agreement. We hope to reward this faith by producing substantial profits for them in the future.
“We are also pleased to increase our co-operation with Hannover Re. Hannover has been a growing part of our UK reinsurance programme over the last two years and we look forward to continuing our mutually beneficial relationship for many years to come.”
