Insurer also said its focus on profit over growth has paid dividends
”Unusually large” reserve releases and a strategy to prioritise profit over growth has seen the Gibraltar-based insurer post a record pre-tax profit for 2019.
Admiral saw a £526m profit last year, 10% up on its 2018 figures. Pre-tax profit for motor was £591m, an £30m increase on the year before, it said as it released its results on 5 March.
Underwriting profit was £238m, up from £211m the year before while it’s motor combined operating ratio improved to 79.8% compared with 81.9% the year before.
The profits on motor were driven by higher than expected reserve releases that “resulted from from improved reserve estimates across a number of years.
”This in part is due to some ‘unclogging’ of large claims settlements caused by the recent certainty, but also generally much more positive trends on big claims than we expected”, the company said.
The group added that if the releases had been in line with the average over the past five years, group profit would have been in the £430m-£450m range as opposed to the £526m.
Admiral said damage claims costs continued to rise, but did not put a figure on it, while it also noted ”a slowdown in the reduction in small injury claims frequency”.
”The group experienced continued positive development of claims costs on previous underwriting years as a result of increased speed of large bodily injury settlements and increased certainty related to the Ogden rate, in addition to a small number of positive very large claims settlements”, it added.
The group’s household segment also faired well last year, reporting an £8m profit, as did its comparison business with Confused.com posting an operating profit of £20.4m compared with £14.3m the previous year.
The group also announced that chief executive and company co-founder David Stevens would be stepping down in 12 months to be replaced by Milena Mondini de Focatiis, currently head of UK and European insurance.
The group’s final year performance was in line with a trading update it released last month where it predicted pre-tax profits of between £510-£540m.
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