The insurer’s group chief executive says she is ’proud of the agility and adaptability that Admiral demonstrated’ in 2022
Admiral Group has posted a combined operating ratio (COR) of 101.7% in its 2022 full year results, released today (8 March 2023).
This represented a 17 percentage point increase on 2021’s ratio of 85.2%.
The insurer’s profits before tax result also took a significant 39% tumble to £469m for last year – down from £769m in 2021.
According to a statement, the fall in profit was largely due to higher claims costs in the UK, the ongoing Russia-Ukraine war and FCA reform.
Group turnover for 2022, however, reached £3.68bn, growing by 5% from a 2021 figure of £3.51bn.
Milena Mondini de Focatiis, Admiral Group chief executive, said: “[Admiral has] not been immune to the changes in external conditions including the implementation of the FCA’s pricing reforms, increased claims frequency post-Covid, supply chain challenges, adverse weather and high levels of inflation – which had a very big impact on our business, particularly on the costs of claims”.
Motor focus
In UK motor, insurance profit reached £623m in 2022– a fall from £872m in 2021.
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Admiral Group reduced the size of its margin for motor in its booked reserves at the end of 2022.
The insurer’s chair, Annette Court, who is set to retire in April, said: “This is driven by UK motor insurance profitability. Admiral has led the market in taking strong pricing action to combat claims cost inflation and continues to focus on long-term value creation.
“This year has, once again, been challenging for the sector due to the macro-economic environment. Despite the challenging backdrop, our customer numbers are up 11% to 9.28m and our solvency remains strong at 180%.”
Court added that the UK motor insurance marketplace was “cyclical” and that she believed it was now close to the bottom of this cycle.
The firm said it had invested in technology for its UK businesses to reduce claims settlement time.
Steering into the wind
Commenting on Admiral’s 2022 performance, Mondini de Focatiis said: “At times, over the last 12 months, it has felt similar to sailing in the middle of a storm – knowing the desired destination but with the challenge of recognising when to steer into the winds that try to blow us off course – whilst never losing focus on where we’re going.”
She noted that international markets were also under pressure, with very low market average premiums in Italy and Spain.
For example, Elephant – a motor insurance subsidiary of Admiral Group – took a loss of £48.9m in 2022, compared to only £13m of losses in 2021.
Elephant applied aggressive remedies to market conditions across 2022, such as premium increases in excess of 25% and a drastic reduction in advertising spend.
Mondini de Focatiis added: “I am proud of the agility and adaptability that Admiral demonstrated in 2022.
“We have yet again shown focus and discipline, reacting quickly to emerging trends – we implemented price increases ahead of others in response to higher inflation whilst maintaining a conservative approach to reserving and capital management.”
Meanwhile, Court added: “Admiral has a proven track record of quickly adapting to navigate the cycle and remains focused on continuously evolving its existing competences while creating sustainable businesses for the future.”
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