Insurer Admiral's turnover passes £1bn

Mar 3 2010 by Peter McCusker, The Journal

MOTOR insurance group Admiral said rates rose by an average 12% last year in the largest annual increase for nearly a decade.

The group, which owns brands including Diamond, elephant.co.uk and price comparison site Confused.com, said premiums were rising across the market following a period of minimal increases and to “compensate for claims inflation in recent years”.

But there was better news for the group’s 3,500 staff, who were told today they will benefit from £9m in bonus shares after Admiral notched up a 7% hike in annual profits.

Admiral will distribute the windfall between its staff – worth an average of more than £2,500 each – following a £215.8m profits haul in 2009.

Investors will also get a 10% increase in the annual dividend payout after the record result.

Admiral said the cost of car insurance was likely to rise again by a similar amount over 2010 amid the rise in personal injury claims, made easier in recent years by the explosion of “no win, no fee” compensation lawyers.

Insurers were also battered by poor returns on premium money invested, which they use to offset losses on insurance business, according to Admiral.

It said that while its insurance business remained profitable, the group was forced to raise rates in line with the market to avoid being swamped by new business.

Admiral added that its average written premium stayed largely the same, at £430, as canny customers shopped around on price comparison sites to get the best deal and as it targeted lower risk business, such as older drivers.

The Cardiff-based firm reported a 15% rise in profits for its UK car insurance business to £206.9m in 2009 after boosting customer numbers by 17%.

Total group profits set another record, while it surpassed the £1bn turnover milestone for the first time – with total revenues up 18% to £1.08bn.