Celebrating 30 years
BETTER
TOGETHER
Annual Report and Accounts 2023
2023 Financial and
Strategic Highlights
Contents
1
Financial Highlights
Group profit before tax1,2
£443m
EPS1,2 (pence)
111.2p
2023
2022
£443m
£361m
2023
2022
ROE1,2
36%
2023
2022
Turnover1
£4.8bn
Insurance revenue1,2
£3.5bn
36%
29%
2023
2022
£3.5bn
£3.0bn
Customers3 (million)
9.7m
2023
2022
2021
£4.8bn
£3.7bn
£3.5bn
2023
2022
20214
Dividend per share (pence)
Solvency ratio1 (post dividend)
103.0p
200%
2023
2022
2021
103.0p
112.0p
2023
2022
2021
187.0p
9.7m
9.2m
8.4m
200%
180%
195%
Sustainability Highlights
Gender split across the Group4
(2022: 50% female, 50% male)
Female
50%
Male
49%
Emissions5 (tonnes CO2 per employee)
0.15 tonnes
2023
2022
0.08*
0.15
0.14
* Excluding one-off leak event
Net Promoter Score (NPS)
Group average across our operations6
>45
(2022: >50)
1 Alternative performance measures, see page 316.
2 Group profit before tax, Earnings per share, Insurance revenue and Return on equity for 2022 are restated for IFRS 17.
3 2021 and 2022 Customer numbers restated – refer to the end of the report for definition and explanation.
4 1% includes non-binary and other genders, and colleagues who’d prefer not to say.
5 Scope 1 and 2 market based emissions per employee per SECR on page 71.
6 Relational NPS, methodology updated in 2022. We've seen a decrease in the NPS mainly due to increased prices,
which are a reflection of current market conditions.
Company Overview
6
8
10
11
12
13
About us
Our Business Model
– What we do
– The drivers of our success
– Creating value for our stakeholders
2023 Awards
111.2p
Strategic Report
95.4p
15 Chair’s statement
18 Chief Executive Officer's statement
22 Our Strategy
28
Q&A with Milena, Geraint, Cristina
and Costantino
International Insurance review
31 Key Performance Indicators
32 Group Chief Financial Officer's review
2023 Group overview
34
38 UK Insurance review
45
50 Admiral Money review
52 Other Group Items
53 Group Capital Structure and Financial Position
56
71
Sustainability
Streamlined Energy and Carbon
Reporting (SECR)
Task Force on Climate-related Financial
Disclosures (TCFD)
Section 172 Statement
Non-Financial and Sustainability
Information Statement
Principal Risks and Uncertainties
73
87
96
98
109 Viability Statement
Corporate Governance
114 Chair's Introduction to Governance
116 Q&A with the Chair
118 Board of Directors
125 Board Leadership and Company Purpose
140 Division of Responsibilities
146
Nomination and Governance
Committee Report
161
Audit Committee Report
168 Group Risk Committee Report
172 Remuneration Committee Report
174 Remuneration at a Glance
176 Director's Remuneration Policy
185 Annual Report on Remuneration
198 Directors’ Report
Financial Statements
Independent Auditor's Report
205
216 Consolidated Income Statement
Consolidated Statement of
217
Comprehensive Income
218 Consolidated Statement of Financial Position
219 Consolidated Cashflow Statement
220 Consolidated Statement of Changes in Equity
221
Notes to the Consolidated
Financial Statements
Appendix to the Group Financial Statements
(unaudited)
303
305 Parent Company Financial Statements
306
Notes to the Parent Company
Financial Statements
Additional Information
316 Glossary
30 years ago in Cardiff, Wales, Admiral was born.
We started as a small motor insurance Company, but
have grown to become an established multinational
and multi-product insurer, putting our customers first,
doing business in five countries and proud to be
Wales’ only FTSE 100 Company.
We are always striving to be ‘better together’, as
outlined in our purpose statement – and it’s our unique
culture and dedicated colleagues that help us achieve this.
Thank you to every single person who, over the last
30 years, has contributed to our purpose to help more
people to look after their future.
Celebrating
30 YEARS
of Admiral
People who like what they do,do it better.Company OverviewAdmiral Group plc Annual Report and Accounts 2023 22
3
Starting
SOMETHING
BETTER
Admiral was launched in 1993 by Henry Engelhardt, David
Stevens and their team. With only one brand and 57 colleagues,
they built Admiral from the ground up. They chose to do
things differently. They were happy to embrace innovation,
new technology, new ways of working, and to take risks.
They put customers at the heart of what they did and believed
in the power of the team. In 2004, Admiral floated on the
London Stock Exchange, and in 2007 became, and still is,
the only Welsh Company in the FTSE 100.
Henry
Engelhardt
David
Stevens
Happy colleagues = happy customers
Supporting
OUR PEOPLE
#1Best Big Company to
Work for in the UK
ALWAYS S TRIVING
FOR BE T TER,
TOGE THER.
The secret to our success is our people and our culture.
We recognise that “people who like what they do, do it better”
and it’s because we care, that we get exceptional results.
From 57 to over 13,000 people worldwide,
we have always done things the Admiral way.
Read more on page 62
Company OverviewAdmiral Group plc Annual Report and Accounts 2023Company OverviewAdmiral Group plc Annual Report and Accounts 2023 44
5
H e l l o , w e l c o m e
t o A d m i r a l
Our aim is to achieve
Net zero by 2040
Caring
ABOUT OUR
CUSTOMERS
Focusing
ON THE FUTURE
Today we serve over 9,700,000 customers
with products that reflect their extensive
and changing needs. We aim to be there for
them when they need us most.
Read more on page 90
After 30 years of innovation, we continue
to focus on technology and agility; diversifying
our businesses; and progressing with the
evolution of motor. Through all this change our
culture and customer focus remain at our core.
Read more on page 22
Company OverviewAdmiral Group plc Annual Report and Accounts 2023Company OverviewAdmiral Group plc Annual Report and Accounts 2023 66
About us
Admiral Group plc is an established financial
services provider offering Motor, Household,
Travel and Pet insurance, as well as personal
lending products. We are trading in five countries,
namely the UK, France, Italy, Spain and the US.
International Insurance (US)
UK Insurance
UK Loans
International Insurance (EUR)
People employed globally:
Customers worldwide:
Turnover worldwide7:
>13,000
9.7m
£4.8bn
Our Business Segments
7
UK Motor Insurance
Admiral is one of the largest car
and van insurers in the UK
Brands
Customers:
4.9 million
(2022: 4.9 million)
Turnover7:
£3.4 billion
(2022: £2.5 billion)
Insurance revenue:
£2.6 billion
(2022: £1.9 billion)
UK Household Insurance
Admiral has growing Household, Travel
and Pet insurance businesses.
Customers:
1.8 million
(2022: 1.6 million)
Brands
Turnover7:
£339 million
(2022: £255 million)
Gross insurance revenue:
£293 million
(2022: £237 million)
International Insurance8
Admiral has Motor insurance businesses
in Italy, France, Spain, and the US, a
Household insurance business in France
and a Pet business in Italy.
Customers:
2.2 million
(2022: 2.1 million)
Turnover7:
Brands
£895 million
(2022: £795 million)
Insurance revenue:
£843 million
(2022: £750 million)
Loans
Admiral offers unsecured personal loans
and car finance products.
Customers:
152,000
(2022: 143,000)
Brands
7 Alternative Performance Measures – refer to the
end of the report for definition and explanation.
8
International Insurance numbers include Motor,
Home and Pet.
Total revenue:
£67 million
(2022: £45 million)
Gross balances:
£1 billion
(2022: £0.9 billion)
Company OverviewCompany OverviewAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 88
Our Business Model
9
Creating
VALUE FOR ALL OF
OUR STAKEHOLDERS
Everything starts with our purpose:
Help more people to look after their future.
Always striving for better, together.
Our strategy is
the foundation for
future growth.
So we can maximise the
value we create for our
stakeholders.
What we do
Our drivers of
success help achieve
our purpose.
Excellent
customer service
• Simple and clear communication
• Responsible sales and transparent
claims processes
• Satisfied customers
Unique
Company culture
• Communication
• Equality
• Recognition and reward
• Fun
Operational
excellence
• Good value financial products
• Risk selection and data analytics
• Efficient claims management
• Financial discipline
Efficient capital
employment
• Good risk management
• Strong shareholder returns
Track record
of long-term
profitable growth
Accelerating towards
Admiral 2.0
Diversification
Customers
People
Partners &
Suppliers
Shareholders
Communities
Environment
Our customers pay us an agreed premium to insure themselves
against a specific risk. We efficiently pool these risks and manage
our capital with discipline to protect our customers when they need
us. We generate further income from investing premiums, selling
ancillary add-ons and unsecured personal lending products, and
from fees generated over the lifetime of a policy. The difference
between our revenues and our paid and expected claims and
operating costs drives our profitability. The majority of our profits
are paid out in dividends, with a proportion held back to continue
investing in our capabilities and business opportunities, and to
support growth.
Our customers
We provide a broad range of
insurance and lending products
to meet our customers’ specific
needs, enabling more people to
look after their future.
Managing claims
We engage closely with our
customers throughout the
claims process, ensuring
they are supported and
receive a fair outcome in a
timely manner.
Partners/suppliers
These include our partners
in reinsurance, IT hosting,
distribution and claims
management, and finance.
Read more about how we are
working with partners and
suppliers on page 95
Our people
People are at the heart
of our business. We have
always focused on providing
a supportive environment
that allows people to develop
and grow. Our unique culture
drives openness, equality
and employees who care
about their work.
Managing risk
We underwrite carefully
selected risks and share a
proportion of that risk with
reinsurers and co-insurers,
earning profit commission
where the business
generates overall profits.
Co-insurers/re-insurers
Managing investments
We prudently invest the
premiums we collect to
generate investment income.
Dividends
Investors
• Prudent reserving philosophy
• Test-and-learn approach
• Responsible and sustainable operations
Evolution of Motor
Read more on page 11
Read more on page 22
Read more on page 87
Read more about what we do on page 10
Company OverviewCompany OverviewAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 1010
Our Business Model
continued
What we do
Insurance underwriting
and other products
Our primary business is to sell car,
van, home, travel, and pet insurance.
The majority of our customers buy our
products through the price comparison
channel, with a smaller proportion buying
either directly or through brokers and
agents. We generate further income from
the sale of ancillary add-ons and from fees
generated over the lifetime of a policy.
The UK is our core market and we have
an estimated 19% share of the private
car insurance market (2022: 17%) and
a 8% share of the private home insurance
market9 (2022: 7%). We leverage the
capabilities and resources from our
established UK business to grow our
international businesses.
Outside of our core underwriting
activities, we sell a range of unsecured
personal loans and car finance products
in the UK through Admiral Money.
We also invest in new ventures through
Admiral Pioneer, which is designed to
test new products and identify future
sources of earnings.
Optimising capital structure
through reinsurance
A key feature of our business model
and success is the extensive use of
reinsurance and co-insurance partnerships.
These include proportional and non-
proportional risk-sharing agreements,
where insurers outside of the Group
underwrite the majority of the risk
generated. These arrangements include
profit commission terms which allow
us to retain a significant portion of the
profit generated.
Investing premiums
We also generate income by investing
the premiums we collect. Our investment
strategy is focused on capital preservation
and low volatility of returns relative
to liabilities. We have an asset liability
matching strategy to manage interest
rate and currency risk. We hold a prudent
level of liquidity and the investment
portfolio has a high-quality credit profile.
Competing
IN THE
ADMIRAL
GAMES
In 2023, colleagues from around
the Group had a great time taking
part in the first Admiral Games.
Every business put a team together
and came to Cardiff with high spirits
and an aspiration to win, competing
in sports ranging from athletics,
swimming, football and a pentathlon!
Admiral Pioneer was crowned the
2023 champion, with UK Business
Support coming second and Admiral
Seguros third.
Emma Huntington, Admiral Pioneer
CEO: “I am so proud of our team and
how well we competed during the
Admiral Games. We had an amazing
team that supported each other
through the whole two days. It was a
defining two days for me at Admiral.”
Andrea Ferri, ConTe: “You find yourself
spending four days on a university
campus in Wales, with 160 athletes
and colleagues from different parts
of the world, competing in ten sports,
carrying the Italian and ConTe flag:
this is Admiral!”
9 Estimated based on 2023 Gross Written Premium data from the Association of British Insurers (ABI).
These numbers are an approximation and consistently calculated year-on-year.
11
The drivers of our success
Our drivers of success help us achieve our purpose, maximise
the value we create for our stakeholders, and stand out as a
go-to insurance provider.
Excellent customer service
Our focus on providing good customer
service remains as crucial today as it was
in 1993.
We aim to create insurance products
that are easily understood and accessible
through simple and clear communication.
Our sales teams provide all relevant
information, including limitations, so our
customers can make informed decisions
and choose the right products for
their needs.
To ensure responsible sales and
transparent claims processes, we actively
review our practices against internal
policies and regulatory requirements.
We provide clear guidance and focus
on delivering good outcomes to
our customers in a timely manner.
Customers can reach us via multiple
channels and we have controls in place
to identify and appropriately support
vulnerable customers.
We regularly measure customer
satisfaction across key benchmarks,
such as the Net Promoter Score® (NPS),
to stay close to customers’ views and
understand areas where our service needs
improvement, as well as where we are
doing well.
Unique Company culture
A great culture goes a long way towards
building long-term commercial success.
Our four pillars of culture are the
foundation for why we enjoy coming
to work every day and why Admiral is
celebrated as a Great Place To Work®.
We encourage open and transparent
communication at all levels.
Our management operate an open-door
policy, and our Group CEO engages with
colleagues through the ‘Ask Milena’
initiative.
We promote equality and an environment
where everyone can succeed and be
themselves. Employee-led diversity and
inclusion groups empower colleagues
to actively shape our employee policies.
Our share ownership scheme
plays an important role in how we
recognise and reward our colleagues.
When people own a part of their
Company, they share in its success.
Since day one we’ve said, ‘if people like what
they do, they do it better’. Our ‘ministry of
fun’ organises events so that colleagues can
spend time together, have fun and connect.
Operational excellence
We take great pride in providing good value
financial products and services that meet
customer needs.
Our focus on risk selection and data
analytics shapes our decision-making and
is built upon extensive claims experience,
underwriting capabilities, and insights
from big data.
Our efficient claims management is backed
by a culture of continuous improvement,
proactive engagement, decades of
experience in claims handling, and great
customer service.
We remain focused on building long-term
sustainable and profitable businesses
through financial discipline. Our cost-
conscious approach is strongly embedded
across the organisation as our employees
are shareholders, and this translates into
a competitive expense ratio.
Efficient capital employment
Our partnerships with our reinsurers are
underpinned by a track-record of strong
underwriting results and good risk
management. Sharing risk allows us to hold
less capital whilst ensuring protection from
losses, thus supporting our commitment
to strong shareholder returns. We include
an assessment of the projected solvency
and principal and emerging risks as
part of our capital plan and Own Risk
and Solvency Assessment.
Track record of long-term
profitable growth
Our success is in part due to our prudent
reserving philosophy. We release reserves
over time as we gain more information
on the development of claims or defaults
across our insurance and loans businesses.
2023 highlights
Excellent customer service
• 4.7 “Excellent” Trustpilot score
in ConTe10
• >45 Group average NPS11 score
across our operations (2022: >50)
• >80% of customers likely to renew
after a claim12 (2022: >80%)
Unique Company culture
• 87% of colleagues believe Admiral
is a Great Place To Work®13
(2022: 86%)
• 90% of colleagues feel that
management is approachable and
easy to talk to13 (2022: 88%)
• 96% of people feel they are treated
fairly regardless of race or sexual
orientation13 (2022: 96%)
Long-term profitable growth and
efficient capital employment
• Total shareholder return of 296%
over the last 10 years14 (2022: 259%)
• 49% of customers are now
from non-UK Motor businesses
(2022: 46%)
• 200% solvency ratio (2022: 180%)
Our strong culture of innovation and
organic growth has helped build our
businesses from the ground up using our
test-and-learn approach. We identify
opportunities, take measured steps to
test our understanding of the challenges,
and acquire learnings.
Central to our approach to lasting value
creation is our continued dedication
to drive positive outcomes for our
stakeholders. As their needs evolve,
we consciously adapt to remain a
responsible and sustainable business
for the long-term.
10 ConTe Insurance sales only.
11 Relational NPS, methodology updated in 2022.
12 UK Motor Customers, monthly score averaged over the
year. 2022 figure is restated as methodology changed
in 2023.
13 Great Place To Work Survey (GPTW) result.
14 Total shareholder return is defined as the percentage
change over the period, assuming reinvestment
of income.
Company OverviewCompany OverviewAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 1212
Our Business Model
Creating value for our stakeholders
Our Customers
Our People
The needs of our customers shape
the products we deliver, and the ways
in which we do so. We strive to create
good value financial products to help
more people look after their future.
Value created in 2023
• We implemented new online
processes across our businesses to
improve customer journeys and
deliver a smoother experience
• During storm events, we handled
c6,000 claims. During our busiest
periods we sustained an average
weekly call answer rate of 97%,
demonstrating our commitment
to our customers when they need
us the most
• Our affordability team supported
many of our customers during the
cost of living crisis.
People who like what they do, do
it better. This attitude enables our
test-and-learn culture, operational
excellence, happier and more
productive employees, and ultimately
better outcomes for all stakeholders.
Value created in 2023
• We became an official Real Living
Wage accredited employer15 in the
UK and helped colleagues during
the cost of living crisis
• We launched the ‘leading at
Admiral’ framework throughout
the Group, which equips leaders
with deeper skills in managing
our people
• We are proud to be recognised in
all our markets as a great place to
work in a number of awards and in
varying categories.
Our Business:
Partners and Suppliers
Our partners and suppliers are
integral to us achieving our strategic
goals and we work hard to foster
strong relationships and mitigate
risks. They comprise financial,
reinsurance, IT hosting, distribution,
and claims services partners.
Value created in 2023
• We optimised our UK repair network,
providing greater oversight of our
customer and supplier interactions
and improving customer outcomes,
post the network reconfiguration at
the end of 2022
• We partnered with the AA to now
provide all our UK EV customers with
free out-of-charge recovery, after a
successful test in 2022
• Our Italian Pet Insurance business
partnered with the biggest pet store
chain in Italy, Arcaplanet, to sell our
products in-store and online.
Our Business:
Shareholders
Our Society:
Communities
Our Society:
Environment
Market engagement is key to helping
investors understand our business,
strategy, and investment case.
It also provides opportunities for
shareholders and investors to share
their views.
Value created in 2023
• Visits to our Cardiff head office
provided investors with the
opportunity to meet managers
from across the business
• IFRS 17 Q&A sessions helped
analysts and investors understand
the new accounting standard and
its impact on our results
• Our new Group Chair and several
Board members held meetings
with our largest shareholders
encouraging open dialogue.
A culture of giving and a sense of
responsibility for our communities
is shared across the Group.
Our employees play a key role in how
we engage with our communities to
drive long-term change both inside
and outside the Group.
Value created in 2023
• We invested over £1.4m into
employability programmes, helping
people into jobs
• We donated over £400,000
through our Global
Community Fund
• We supported over 200
organisations via our Community
and Match Fund initiatives
• We launched Admiral 5-9 Club
with Welsh ICE16 to support
female entrepreneurs.
It is increasingly important to
demonstrate responsible business
behaviour and reduce environmental
impacts, in line with our values and
those of our stakeholders.
Value created in 2023
• We fully offset our carbon emissions
by purchasing Gold Standard
carbon credits,17 and additionally
supported charities dedicated to
sequestering emissions
• Our MSCI ESG rating assessment24
remained at AA, and our Carbon
Disclosure Project (CDP) score
increased to B in 2023, from D
in 2022
• Due to a one-off leak event our
overall Scope 1 and 2 market-based
emissions have increased 26%.19
Without this event we would have
seen a decrease of 33%.
15 Accredited Living Wage Employer with the Living Wage Foundation.
16 Welsh ICE is an innovation centre for enterprise.
17 Gold Standard carbon credits represents the reduction or removal of one tonne of C02 (tC02e).
2023 Awards
Great Place
To Work UK®20
GPTW Best Workplaces
6th
GPTW Best Workplaces for Women
3rd
GPTW Best Workplaces in Financial
Services and Insurance
1st
GPTW Best Workplaces for Wellbeing
14th
13
Great Place
To Work®
International
GPTW World’s
Best Workplaces
13th
GPTW Best Workplaces
in France
6th
GPTW Best Workplaces
Europe Multinational
GPTW Best Workplaces
in Canada
14th
2nd
GPTW Best Workplaces
in Italy
GPTW Best Workplaces
in Spain
10th
2nd
Other Awards
People Awards
Best Big Companies to Work For in the UK
Best Companies, 1st
Bigger, Bolder and Braver Partner Award
Women in Data
Commended Home Insurance Provider of the Year
Moneyfacts UK
Highly Commended in the STEM21 Educational
Programme of the Year
Wales STEM Awards
Best Data Academy or Skills Development
Programme shortlist
DataIQ
Best Environment and Sustainability Strategy
Welsh Contact Centre Forum, 1st
Best Performing FTSE 100 Companies
for Women on Boards
FTSE Women Leaders Review, 4th
Outstanding Achievement Award
Wales UK Fast Growth 50 Index
Best Leader
Milena Mondini de Focatiis, Group CEO,
in Best Companies Awards
Milena Mondini de Focatiis, Group CEO,
15th in Insurance Post Power List
Antonio Bagetta, ConTe CEO,
Recognised in the Social Impact category of the
CEOforLIFE Awards Italia
Dan Caunt, Company Secretary,
Named in UK Legal 500 GC Powerlist
Hannah Davies, Head of UK Data Academy,
Named in WeAreTechWomen’s #Techwomen100 Awards
Michael Lewis, Group Chief Privacy Officer,
Named in DataIQ’s 100 most influential people in data
Pankaj Kane, Chief Engineer in UK,
Named in Computing’s IT Leaders 100 list
Owen James, Senior Lawyer,
Named in Managing IP’s Ones to Watch
18 The use by Admiral Group of any MSCI ESG research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship,
endorsement, recommendation, or promotion of Admiral Group by MSCI. MSCI services and data re the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty.
MSCI names and logos are trademarks or service marks of MSCI.
19 Scope 1 and 2 market based emissions per the SECR report on page 98. Increase due to one-off leak event due to activation of a fire suppression system. This is the only location to use this type of
gas in the UK and will be replaced in 2024.
20 Awarded by the Great Place To Work (GPTW) Institute.
21 Science, Technology, Engineering and Mathematics (STEM).
Company OverviewCompany OverviewAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 1414
15
Chair’s statement
STRATEGIC
REPORT
In this section
International Insurance review
15 Chair’s statement
18 Chief Executive Officer’s statement
22 Our Strategy
28 Q&A with Milena, Geraint, Cristina and Costantino
31 Key Performance Indicators
32 Group Chief Financial Officer’s review
34 2023 Group overview
38 UK Insurance review
45
50 Admiral Money review
52 Other Group Items
53 Group Capital Structure and Financial Position
56 Sustainability
71 Streamlined Energy and Carbon Reporting (SECR)
73 Task Force on Climate-related Financial Disclosures (TCFD)
87 Section 172 Statement
96 Non-Financial and Sustainability Information Statement
98 Principal Risks and Uncertainties
109 Viability Statement
Celebrating
OUR RESILIENT
PERFORMANCE AND
AUTHENTIC CULTURE
“Admiral’s vision to
help more people look
after their future is
evident in the strong
2023 performance.”
Mike Rogers
Group Chair
As I reflect on the challenges
and triumphs of the past
year, I am pleased to present
my inaugural Chair statement
for Admiral Group.
This was certainly a challenging
year, with high inflation and macro-
economic uncertainty. Against this
backdrop, Admiral remained steadfast
in its commitment to providing peace
of mind for our colleagues, customers
and shareholders. Having worked in the
insurance industry for a number of years,
I can say that there is an authenticity of
culture and strong commercial thinking at
Admiral. The pace and passion for better
consumer outcomes is infectious.
Exceptional leadership
in difficult times
Milena and her Executive team have
exhibited exceptional leadership
throughout a challenging period within
the industry and economic cycle.
Our customers, suppliers, colleagues
and shareholders have all endured a
very demanding year – our ability to not
only weather these storms, but to adapt
and grow is a testament to the collective
strength and strategic foresight of
our management team.
Dividend per share (pence)
103.0p
2023
2022
2021
103.0p
112.0p
187.0p
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 1616
Chair’s statement
continued
Resilience in performance
Admiral’s vision to help more people
look after their future is evident in the
strong 2023 performance. The Group
demonstrated its traditional ability
to adapt, evolve, and deliver results.
This resilience is no accident; it reflects
our financial discipline and longstanding
commitment to looking after our people
and customers; thereby safeguarding our
shareholders’ interests and ensuring the
sustained success of Admiral Group.
Admiral retains outstanding competitive
advantage in the UK motor market:
defending and extending this remains
our number one priority.
We are also mindful of our opportunity
to leverage our brand, capabilities and
customer relationships into new products
and markets.
Presently, we cater to the needs of
nearly ten million customers across five
countries. We have made good progress
in Admiral Money and Household, Pet,
Travel and Van insurance in the UK, along
with our European franchises. We believe
that diversifying our income streams
where we have competitive advantage
will add significant shareholder value.
Green transition
Our commitment to sustainability remains
strong. Businesses, now more than ever,
play a critical role in the transition to
a greener economy. Admiral recognises
this responsibility and underscores its
commitment in our latest Sustainability
Report. Our journey toward a greener
future is not just a reflection of corporate
responsibility but a strategic imperative
reflected in the Group’s Net Zero
ambition. From supporting our customers
in the adoption of electric vehicles to
using renewable energy in our sites,
sustainability is becoming embedded
throughout the business.
30 years of growth
None of the Group’s achievements would
be possible without the dedication and
resilience of our thousands of colleagues
worldwide. Their energy, adaptability,
and commitment have been the
driving force behind Admiral’s success.
From Cardiff to Rome, their commitment
to each other and our customers is the
beating heart of our organisation.
This year marked a significant milestone
as Admiral celebrated its 30th anniversary.
The insurance industry and the nature
of work have evolved since Admiral’s
inception in 1993, and the Group has
consistently adapted to remain a leader
in the field.
I extend my thanks to Annette Court
who joined the Board in 2012 and was
appointed Chair in 2017. Annette guided
the management team through the
transition from a founder-led business,
strengthening leadership development
and succession, helping the business
navigate regulatory, economic, and
global challenges.
We also fondly remember Jean Park,
who retired from the Board earlier this
year and sadly passed away soon after.
Jean’s contributions, particularly as the
Chair of the Group Risk Committee
and Senior Independent Director,
were invaluable. Her legacy of steadfast
support and wise counsel will be greatly
missed. I welcome the addition of Fiona
Muldoon to the Board. Fiona enhances
our collective expertise and strengthens
our customer-centric approach.
Staying true to our values
While the industry has undergone
changes, Admiral’s core values remain.
Looking ahead, we remain optimistic
about the future. The Group’s strategic
roadmap is designed to drive long-term
value for our shareholders. We are
confident that our diversified portfolio,
agile business model, and unwavering
commitment to achieve the best
outcomes for our customers, will position
us for continued success.
I extend my gratitude to the Board,
management team, and colleagues for
their dedication and support. Together,
we will continue to shape the future
and continue our journey of sustained
growth and success.
Mike Rogers
Group Chair
6 March 2024
17
Rewarding
COLLEAGUES THROUGH
OUR SHARE SCHEME
Cheya: “I used my shares to pay for
three months travelling across Australia,
New Zealand and Thailand when I had a
career break at Admiral. It was an amazing
experience and I loved every minute of
it. The shares helped me save up money
without even having to think about it.
It’s great to feel like I own a part of the
business I work for!”
Aaron: “Like a lot of other people across
the Company, I’ve cashed my shares with
the intention of putting together a house
deposit. However, after a bit of accounting
I realised I had some spare and decided
to treat myself to a new guitar!”
Since 2004, Admiral Group has
given colleagues up to £3,600 worth
of share awards per year through
the employee share scheme1.
Our colleagues play a very important
role in our success, and we want
them to benefit financially from
their hard work and dedication.
We caught up with some of our colleagues
to find out how they have used their
shares over the years and what the
scheme means to them:
Will: “The Admiral share scheme has
made a huge difference to me; I feel
invested in the success of the business and
motivated to do my best to contribute to
it. The scheme has also helped me to look
after the future of my family – including
making it possible for us to fund the
construction of a house extension.“
Embedding
OUR PURPOSE
In 2021 we formalised our purpose
statement and framework:
Help more people to look after
their future. Always striving for
better, together. Our purpose
defines the reason we exist and
underpins everything we do, from
creating products to supporting
customers as well as our approach
to sustainability.
In October 2023, we launched our
purpose toolkit for managers across the
Group. It supports “Leading with purpose”
workshops where teams explore our
framework in more detail, leading to an
increased understanding of individual,
team and departmental roles in delivering
our purpose. Continuing to cascade and
embed our purpose at all levels of our
Company ensures it remains top of mind
when engaging with all stakeholders.
Having one common statement brings
us together so we all strive to achieve
the same goal.
Our Group Governance and UK Household
product teams held their workshops
in November, where they considered
how they play a part in helping more
people to look after their future
and looking after our stakeholders.
During the workshops colleagues shared
their individual purpose, writing on
jigsaw pieces that all fitted together to
demonstrate how each colleague plays
their part and the importance of working
together as a team.
1 Employees working at Admiral for more than one year
receive shares through our Approved Free Share Plan (SIP)
or equivalent schemes.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 1818
Chief Executive Officer’s statement
19
Doing
THE LITTLE THINGS
THAT ADD VALUE FOR ALL
OUR STAKEHOLDERS
“Our core values of
putting our customers
and people first and
enjoying what we
do are as true today
as they were in 1993.”
Milena Mondini de Focatiis
Group Chief Executive Officer
2023 was a strong year.
In the context of challenging
market conditions, we
reported another set of solid
results with strong Group
profit of £443 million and
turnover up 31%.
We welcomed more than 500,000
additional customers across the Group,
an increase of 6% and substantially
improved our loss ratios, while continuing
to strengthen and diversify our business.
Over the past couple of years, the industry
was hit by the worst inflation in recent
history and we faced a cost-of-living
crisis in the UK. This had a negative
impact on our customers and our people,
who needed more support too.
Once again, we maintained pricing
discipline and acted ahead of the
market to adapt to these trends.
We continued to build on our historical
strengths and to look after our customers
and our people, whilst at the same
time making positive progress on
our strategic objectives.
The combination of these three
things has left us well placed to achieve
further growth, increase underwriting
margins and better provide for more
customers’ needs.
Celebrating 30 years together
Our 30th anniversary served as a great
reminder to reflect on Admiral’s journey.
From a small start-up in Wales, the
Admiral team built a £4.8 billion business
catering to over nine million customers
across five countries. We became the
market leader in UK Motor insurance, with
cumulative profits of around £7 billion
over our 30 years and a dividend payout
ratio of around 90% for our shareholders
Our strategic progress
One of Admiral’s historical characteristics
is to navigate the ups and downs of
the insurance cycle well, together with
continuing to enhance our capabilities
and preparing for the next climb.
This year we made strong progress in
all of our three core strategic pillars:
Admiral 2.0, business diversification and
motor evolution.
Customer experience and outcomes
have remained our primary focus,
including embracing the new Consumer
Duty act in the UK. Something I’ve been
particularly proud of was the smooth
implementation of some large technology
delivery projects, including Guidewire
claims systems for our UK customers
and a new platform for lending.
We completed the transformation
to scaled agile across all our businesses,
materially reducing the cost of
technology change.
We continued to diversify the business
with the number of policies beyond UK
Motor up 12% and now accounting for
almost half of total Group customers.
It has been pleasing to see, despite
the challenging market conditions,
that all our businesses older than
3 years improved their results.
It wasn’t only organic growth that
we achieved in 2023. We accelerated
our diversification strategy in the UK,
announcing our intention to acquire
the renewal rights for RSA’s pet and
home direct insurance businesses,
under the More Than brand. It marked
our first acquisition of relevant size
but more importantly, the opportunity
was a perfect fit with our strategy.
We achieved double digit growth in
our electric vehicle book, supporting
more of our customers to transition
to green mobility, and through Veygo
we are offering differentiated propositions
to customers to meet their evolving
mobility needs.
over the last few years. We continued
our historical trend of strong capital
efficiency and a return on equity of 36%
in 2023. This is a growth story fueled
by a strong combination of core technical
competence and continuous innovation
in every part of the value chain: service,
pricing, products and distribution.
Whilst so much has changed, I am proud
that so much has also stayed the same.
Our core values of putting our customers
and people first and enjoying what we
do are as true today as they were in 1993.
A year of two halves
Something else that sets us apart is our
ability to focus on the long term whilst
being pragmatic in how we steer the
business in different parts of the insurance
cycle. We do not forego difficult decisions
for short term targets. This has been
a year of two halves, and our approach
serves as a perfect example of
this mindset.
In January it felt like we were standing
at the foot of a mountain. We knew we
had a steep climb ahead of us. As we
entered 2023, we were still helping
customers with the freeze events of 2022.
The year began with a spike in inflation,
which persisted, and the onset of new
supply chain concerns.
As in 2022, we acted fast. We continued
to increase premiums ahead of the market
to account for inflation, even if this meant
a further reduction of our UK Motor
book, which was 7% down year on year
at the end of June (albeit this reduction
was more than compensated by growth
in other parts of the Group).
After a few challenging months we
reached the summit of the mountain
and started to get comfortable with
our pricing levels, but it still felt like
we needed a stronger foothold amidst
the macro-economic uncertainty.
As the summer arrived, we started to
have a better outlook and a clear sight
of the downward path. Inflation and claims
trends started to stabilise. As the rest
of the market followed by increasing
their premiums, our competitiveness and
our retention improved and in the second
half of the year we reversed our loss of
policies in UK Motor.
Recognising
OUR COLLEAGUES
WHO HAVE
BEEN HERE
FROM THE START,
30 YEARS AGO.
TimTim started in Admiral on 7 June
1993, working in the post room.
After various positions in IT,
he now works as a systems
monitoring engineer.
Bethan
Bethan joined Admiral on
19 July 1993 as an analyst
programmer. 30 years
later, after working some
time as a team manager,
she now works as a senior
analyst programmer.
Teri
Teri began her journey with
Admiral on 29 September 1992 as a
programmer and analyst. She’s had
a number of roles in IT and is now an
IT consultant.
Read more about Tim, Bethan and Teri
on page 35
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 2020
Chief Executive Officer’s statement
continued
21
Our people
It was another memorable year of
accolades for our culture. Not only
were we voted as the number one
Best Company to work for in the UK
and recognised as a diversity leader
in Europe, we were also ranked 13th
globally as one of the World’s Best
Workplaces™ by 2023 Great Place to
Work®. We now have over 13,000 amazing
colleagues and we celebrated Admiral’s
30th birthday together with the
first edition of the Admiral Games
sporting event.
Together, we also stepped up our
contribution to ‘employability’
supporting around 2,000 people
to find new jobs and volunteering
over 14,000 impact hours.
2024 and beyond
Despite persistent geopolitical and
macro-economic uncertainty, our
outlook is more positive. We are
benefiting from better market conditions
and a stronger position, thanks to
the discipline we maintained over
the past year.
I am always mindful that the descent
from a mountain can be more dangerous
than the climb up. There is no room
for complacency or distractions.
We will focus on every single step,
with clear priorities, strong execution
and continuing to leverage on our
historical competencies.
We are well positioned for further
growth and diversification.
Assuming no unforeseen market
disruptions, I am confident that
we should expect stronger underwriting
performance across all our geographies.
And in the long term, I look forward
to seeing Admiral celebrate another
30 years of success.
Milena Mondini de Focatiis
Group Chief Executive Officer
6 March 2024
Donating
£400,000 AS PART
OF OUR GLOBAL
EMERGENCY FUND
In 2023, we sadly saw many
difficult events devastate
communities across the world.
Helping more people to look after
their future is part of our core
purpose, and so in 2021 we set
up our Global Emergency Fund,
allowing a process to speed up
making donations when people
and organisations need it most.
In 2023, we donated over £400,000 to a
number of urgent appeals, including:
Canada
The wildfires in Nova Scotia brought
devastation to its communities with
over 200 homes and structures lost or
damaged, and over 16,000 residents
having to evacuate. To support the
recovery, we donated CAN$50,000
through our Global Emergency Fund and
created an emergency colleague support
fund to provide immediate assistance to
employees affected by the fires.
Italy
The region of Emilia-Romagna suffered
severe flooding in May, resulting in more
than 36,000 people displaced across
100 cities and towns. Through the Global
Emergency Fund, and working with
ConTe’s Charity Team, we donated €25,000
to the Civil Protection Department that
supported relief efforts on the ground.
Turkey and Syria
We donated £250,000 to the Disasters
Emergency Committee (DEC) Turkey
and Syria Earthquake Appeal following
the devastating effects of the
Kahramanmaras earthquakes in February
2023. This supported aid efforts including
emergency food for 2,000 families for ten
days, plus tents for 240 families who lost
their homes.
Our UK business also matched any
donations made from colleagues to
Turkey-Syria appeals via our Give-As-You-
Earn programme, from February to April,
raising an additional £6,250.
Helping
OUR CUSTOMERS
THROUGH IMPACTS
OF EXTREME WEATHER
Weather events can be extremely
disruptive and stressful if homes
are damaged. One of our customers
and their family were faced with the
possibility of months out of their
home after Storm Babet left their
house flooded. Their daughter had
been diagnosed with an aggressive
form of cancer a few weeks prior to
the event, and their home had been
set up to care for her.
As their insurer, we wanted to do
whatever was possible to get them safely
back in their home before Christmas,
knowing that claims of this magnitude
can mean restoration works take a very
long time. We worked closely with our
suppliers to assist the family in finding a
rental property suitable for their needs,
however as the restoration process was
expedited with the help from suppliers,
the family decided to remain in the
hotel instead.
Thanks to the effort of all involved, the
family were back in their home in time
for Christmas.
We understand the value of quality
products and efficient service, and are
proud to have helped the family get back
into their home quickly. Supporting our
customers is at the heart of what we do:
we focus on being there for our customers
when they need us the most.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 2222
Our Strategy
23
• L’olivier introduced a welcome
bot which uses AI to identify and
authenticate the customer and
their reasons for calling. This means
customers can quickly be put through
to the right person to help
• Admiral Seguros opened new customer
communication channels, including
WhatsApp for service, chat online for
quotes, and online claims help for ‘first
notification of loss’
• ConTe launched a digital assistant that
identifies customer needs and guides
them to a solution, avoiding the need
for a phone call when appropriate.
Smart working
• We continued to evolve our hybrid
working model to focus on making
the time in the office meaningful
with more spaces for engagement
and collaboration
• We regularly complete Pulse surveys
to ensure the happiness of staff
and effectiveness of our new way of
working, and have continued to ensure
we support all colleagues no matter
where and how they work.
Data and advanced analytics and
enhanced risk selection
• In the UK, we have implemented the
NextGen Application Programming
Interface (API) platform alongside
a range of services, to improve the
experience of our contact centre
agents by swiftly providing them with
the information that they need when
they are on calls with customers
• We are nearing completion of our new
European data platform. This is a suite
of innovative technologies which will
deliver faster and more insightful data
to support decision-making
• We continued to enhance our risk
selection capabilities, and we leveraged
our cloud-based machine learning
platform by implementing our first
models in our Van insurance business
and continued to develop models in
our other businesses.
Relevant Principal Risks
A
B
C
D
E
F
G
H
I
J
K
L
Read more on page 98
1. ACCELERATING
TOWARDS
ADMIRAL 2.0
Overview
Our ambition is to accelerate the
evolution of our core businesses
toward what we refer to as Admiral 2.0,
continuing to leverage our historical
strengths whilst becoming even more
agile, digital and technology-focused.
Admiral 2.0 puts the customer first and
leverages data and advanced analytics to
constantly be more efficient to improve
their overall experience.
Core competencies:
• Digital first
• Scaled agile
• Customer-centric innovation
• Smart working
• Data and advanced analytics and
enhanced risk selection
Progress in 2023:
Digital first
• We have continued transitioning to the
cloud. This enables us to better serve our
customers by using modern, feature-
rich technology platforms with a good
digital experience
• In 2023 >50% of Group digital
interactions, sales and renewals were
completed online, allowing customers to
reach us in the way that suits them best
• The Elephant UK app brand in the UK
now has the ability for breakdown
customers to report a breakdown
directly through the Elephant app,
thus accessing AA breakdown recovery
assistance easily and quickly.
Scaled agile
• All businesses have further embedded
agile ways of working. Scaled agile
enables better collaboration between
functions and quicker customer
feedback, leading to improved products
and processes
• Our UK insurance business created
a new operating model that ensures
greater alignment between IT and
business areas, further reducing
dependencies between teams and
creating an optimised flow of value
delivered to our customers
• Implementing scaled agile has helped to
better organise people and outcomes,
with dedicated focus on growth,
customer and efficiency targets.
Customer-centric innovation
• Our UK operations have continued to
develop our virtual assistant capability
in our contact centres. Customers are
effectively directed to the right service
to them, whether digital or an agent
Transitioning
TO THE CLOUD
We have updated our US and UK
core product systems that manage
customer payments and policies and
have migrated these to the cloud.
We have also started the process
of upgrading the systems in our
European businesses. This will drive
better outcomes for our customers,
upgrade our technology stack and
future-proof our businesses.
This upgrade helps to mitigate
technology and security risk, improves the
speed of release, reduces the overhead
of upgrades going forward and the total
cost of ownership of the estate.
Our UK Insurance business now performs
the majority of its transactions in the
cloud, and crucially all new policies
and most claims are cloud managed.
This increases agility and speed to market
by reducing the cost and risk of launching
new products.
Security remains paramount and is
embedded into all cloud-based processes:
anything hosted externally is managed
with directory-integrated, role-based
access and multi-factor authentication.
Celebrating
DATA ACADEMY
TURNING ONE!
It’s been a hugely successful first
year for the UK Data Academy.
The Academy was set up to supply
training and development programmes
and events, increase data awareness
and education, and improve diversity in
the data world. It has surpassed its 2023
target of 3,000 training hours, with over
500 people across 50 different teams
engaging with the Academy during the
year, and over 70 mentoring relationships
established. The training has focused on
learning events, cloud tooling, our data
strategy and topics such as generative
AI. Our people have benefitted from
access to training, learning events such
as lunch and learns and community
drop-in knowledge sessions, including
more than 50 people benefitting from
individual development programmes since
launching. As well as this, the Academy
has continued to partner with Women in
Data, providing us access to their 35,000
strong Data Community. This has given us
a unique opportunity to advertise roles to
their members and be represented at the
Women in Data Flagship event.
As of October 2023, our Data Community
figures are at 28% female, with the
industry benchmark from WiD being
25%. This is a great result for us – but we
recognise that there’s still more to do.
We are delighted that in 2023, the
Academy was a finalist across three
industry recognised awards2 in the UK for
Best Data Academy, and our UK business
has been represented at 16 external
events including podcasts, panels and
conference talks.
2 British Data Awards 2023 Finalist – Education
Initiative of the Year/Wales STEM Awards 2023
Highly Commended STEM Educational Programme
of the Year/DataIQ 2023 Finalist – Best data academy
or skills development programme.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 2424
Our Strategy
continued
25
Strengthen customer propositions
• Our Italian and Spanish operations have
focused on expanding distribution
channels by scaling their broker
networks and building their teams,
in line with our strategy to reach more
customers through different channels
in these markets
• We kicked-off our digital experience
platform project this year, which will
enable digital self-service across further
products, improving our customers’
experience online. We recognise the
importance of offering customers a
choice in how they deal with us, either
online or over the phone
• UK Household launched the home
emergency digital notice of loss
form, facilitating the registration
of emergency claims online, should
customers wish to
• UK Household also released a Storm
Hub website in 2023, which sends
timely weather warnings to customers
ensuring they are aware of any extreme
weather events that may affect them
• We have launched new functionality
for new and existing customers to add
a van onto MultiCover through digital
channels, whilst also optimising and
improving our existing customers’
journey.
Leverage core strengths
• We are leveraging our strengths and
knowledge from our core business into
new products and businesses
• Our UK Pet product turned one in
2023 and went live with renewals in
July 2023. It was great to see a number
of furry friends joining us again for a
second year
• After reporting its first profit in 2022,
Admiral Money has continued to
deliver sustainable profits, up nearly
five-fold to £10.2m, despite a difficult
economic environment.
Relevant Principal Risks
A
B
C
D
E
F
G
H
J
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L
Read more on page 98
2. DIVERSIFICATION
Overview
Diversification is essential to our strategy
to keep building a sustainable and resilient
business. Our approach is to leverage
the capabilities and knowledge from our
established businesses to build future
successful propositions and to transition
to a low carbon economy. We make
focused and gradual investments in
new opportunities that strengthen and
complement our existing customer
offerings and leverage our core strengths.
In just over a decade, we have launched
numerous products including Household,
Travel and Pet insurance and a personal
lending business. Our diversified business
model means that customers can engage
with us across a number of products,
and we can support a growing variety of
their needs.
Core competencies
• Scale up promising products
• Strengthen customer propositions
• Leverage core strengths
Progress in 2023
Scale up promising products
• This year we saw growth in turnover for
all key diversification areas with 33% in
UK Household, 56% in Admiral Money
and 17% in European Motor. 49% Of
customers are now from non-UK Motor
businesses (2022: 46%)
• UK Travel insurance expanded customer
numbers by 41%, a positive turn after
the challenges faced post-pandemic.
UK Travel also expanded its footprint,
pricing for a wider range of customers,
enabling more access to our products
• ConTe in Italy remained profitable
and reached the milestone of selling
one million policies during the year
(2022: 0.97 million policies), showing a
good growth trajectory for the business
• L’olivier in France returned to
profitability, driven by rate
increases and improvement in
expenses, strengthening our Group
diversification objective.
Celebrating
PET TURNING ONE!
Throughout 2023, we achieved strong
growth in sales and market share.
The acquisition due in 2024 of the “More
Than” Pet and Household renewal rights
from RSA will help accelerate the growth
we have seen this year in our Pet product
and we are looking forward to welcoming
more pets on board in 2024.
We successfully entered a new
market in 2022 with the launch
of our UK Pet insurance product.
In July 2023 we went live with
renewals and enjoyed seeing many
customers keeping their cover
with Admiral. Fun fact: our most
popular pet name is Luna!
The Pet insurance team are continually
looking for new ways to enhance the
product. In partnership with Burns Pet
Nutrition, we launched new puppy
parenting classes, with help from
Lioness Bethany England and the TikTok
influencer Ben the Vet, to support new
pet parents. These 15-30 minute sessions
were streamed live and customers could
ask our special guests any question from
pet health and training, to finding the
right breeder.
Reaching
MORE CUSTOMERS AS CONTE
SELLS OVER ONE MILLION
POLICIES DURING THE YEAR
Our learnings from ConTe are being
applied across our businesses and drive
our diversification achievements forward.
ConTe in Italy is our largest
operation outside the UK and
provides customers with Motor
and Pet insurance. In 2023 ConTe
sold over one million Motor
policies and continued to increase
customer numbers (7%) profitably.
This success demonstrates our
ability to take what we do well in
our UK Motor business and leverage
our core strengths into other
markets and products.
ConTe is also advancing channel
diversification, by exploring alternative
acquisition methods. This year they have
been dedicating time to expanding their
broker networks and connections.
In line with their customer-centric
approach, ConTe made several digital
improvements in 2023, such as
introducing a digital assistant to their
website. This tool helps to identify what
the customer needs and quickly provides
a solution, for example a correct phone
number, an informative video or a link
to their online portal.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 2626
Our Strategy
continued
27
Evolve our proposition
• During the year, we saw a double-digit
increase in electric vehicle customers.
We have a bespoke electric vehicle
customer journey to ensure our
policyholders are well informed of the
benefits and cover we provide
• Out of charge recovery was rolled out
to all our UK EV customers at the start
of 2023 after a successful test in 2022.
This means customers in the UK and
the Channel Islands who completely
run out of charge will be recovered
alongside their vehicle and taken to
either the nearest charging point, their
home address, or any other destination
• We have continued to strengthen
our electric vehicle proposition by
launching wall box cover for our
customers. This means that their
home vehicle charger will be covered if
damaged during an accident or fire, or
from theft
• Veygo, our short-term car insurance
provider, launched a new subscription
service offering customers rolling
monthly insurance cover. Customers pay
monthly and can cancel at any time
with no fees, allowing customers to
easily buy insurance when they need it
at the right price.
Develop competencies for
the future
• In partnership with Ford Credit we
launched Ford Insure Live, a connected
car insurance product for Ford private
car customers. This will allow us to
further explore connected car data and
what it means for the future of mobility
• Through Admiral Pioneer, we are testing
new propositions around changing
consumer preferences. This includes the
rise in popularity of subscription models
and the growth of embedded insurance
at the point of sale.
Relevant Principal Risks
C
D
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Read more on page 98
3. EVOLUTION
OF MOTOR
Overview
Our Evolution of Motor strategic pillar is
built on evolving our proposition for the
changes that are happening in mobility
worldwide. Different views exist on future
mobility trends and where the greatest
future impact will be, but all agree that
the way people move is changing. It is
an exciting time for the industry, and
we want to make sure that we fully
understand the changes and what they
will mean for our customers and for
our business.
To stay close to these trends, we are
harnessing our test-and-learn philosophy,
looking at emerging propositions, and
developing core competencies that will be
relevant for the future.
Core competencies
• Understand changes in mobility
• Evolve our proposition
• Develop competencies for the future
Progress in 2023
Understand changes in mobility
• Our dedicated mobility team continues
to investigate how changes in mobility
will impact our customers and ways we
can adapt our products to changing
customer needs
• We continue to explore new methods
of mobility and what that means for
the insurance industry through the
work of our dedicated Autonomous
Vehicle team
• We have entered into a collaboration
agreement with ZF, We Know, BP Pulse
and Ferrovial to explore the feasibility
of autonomous transportation between
Heathrow Airport and nearby hotels.
We aim to understand the insurance
requirements and processes, and the
fundamentals of what a successful
autonomous transportation business
would look like.
Strengthening
OUR PARTNERSHIP
WITH WAYVE
Recently Wayve partnered with grocery
brands ASDA and Ocado to explore the
future of last mile delivery and self-driving
technology and Admiral supported them
by sharing our experience. We are proud
of this collaboration and excited about
the future of autonomous technology.
Wayve are one of the leading
autonomous vehicle software
companies in the UK. We first
partnered with Wayve at the
beginning of their journey in
April 2018, insuring their very
first test vehicle. The partnership
has expanded over time to now
insure their fleet of autonomous
test vehicles in central London.
This allows us to remain close to
the forefront of autonomous vehicle
development, gaining real world
experience by working with new
and emerging technologies, and
understanding what it takes to prepare
for the future of autonomous mobility.
Launching
FORD INSURE LIVE
“Our partnership
with Admiral has proven
instrumental to our
development to date.
With their support,
we are able to conduct
real-world testing of
autonomous vehicles
on UK public roads and
operate the UK’s largest
autonomous grocery
delivery trial with ASDA.”
Alex Kendall
Co-Founder & CEO, Wayve
Understanding our customers’
is essential to delivering products
and services that really meet their
needs and provide added value.
We partnered with Ford Credit in
2019, and together in 2023 we
launched Admiral Live and Ford
Insure Live, both for Ford private
car drivers.
The products utilise Ford’s connected car
technology, which shares live data and
has tracking capabilities to help provide a
more personalised and accurately priced
product based on how customers drive.
Data is only shared with us if the customer
permits it, and ranges from the speed of
the vehicle to the status of seatbelts and
number of passengers.
Data is sent directly from the vehicle’s
modem, which replaces the need for
an engineer to install a telematics
box, making the experience smoother
for customers.
The introduction of Admiral Live and Ford
Insure Live will enable us to learn more
about connected car technology and how
it can benefit customers now and in the
future. Their introduction encapsulates
how we collaborate with the motor
industry and embrace technological
changes to provide ever-improving,
customer-focused products and services.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 2828
29
Q&A with Milena, Geraint, Cristina and Costantino
Navigating
CHALLENGING
MARKET CONDITIONS
Q: How does Admiral stay ahead of
the game and look to the future?
I believe our strategic pillars –
diversification, Admiral 2.0, and evolution
of motor – provide a good foundation
to serve our customers, strengthened
by our unique Company culture. As we
progress in all three, we aim to maintain
our competitive edge in the long term
and ensure sustainable value creation
for our stakeholders.
Embracing technology through Admiral
2.0, such as the roll out of Guidewire
10 and transitioning to the Cloud,
has improved efficiencies and our
tech foundations. We use large data
sources and data analytics to refine
our risk selection and decision making,
and our extensive claims experience
and underwriting capabilities leave
us well placed to effectively manage
claims. In addition, we have a strong
culture of managing costs well. All of
these have resulted in a market leading
combined ratio. Diversifying into non-
Motor insurance markets is essential
to building a sustainable and resilient
business. It creates more options for our
customers and leverages our brand and
experience. 49% of our customers are
now non-UK Motor customers, including
one of our more recent propositions, UK
Pet business, that just turned one.
Evolving with emerging mobility trends,
for example electric vehicle insurance,
makes it easier for customers to find the
right insurance for their needs and make
greener choices. Our EV growth was again
double digits in 2023.
We continue to challenge ourselves
to improve and strengthen our
fundamentals, and I believe Admiral’s
proven track record of growth, agility
and discipline positions us well for 2024
and the future!
3 Proposed baseline year for emissions cuts is 2021,
still to be verified by SBTi.
“It’s been an amazing
30 years and whilst so
much has changed,
I’m proud that so much
has also stayed the same.
Our core values of
putting our customers
and people first and
enjoying what we do are
as true today as they
were in 1993.”
Milena Mondini de Focatiis
Group Chief Executive Officer
Q: How is Admiral helping
communities and meeting its
sustainability objectives?
Considering long-term sustainability has
been part of Admiral’s DNA long before we
had a sustainability team. We have people
that have been here since we started 30
years ago, we’ve established long-term
partners and strong relationships, and
our employees are engaged in their work
and invested in the performance of the
business, as they’re shareholders through
our share scheme.
Admiral donates to worthy causes across
our businesses using many avenues.
A large part of our community investment
is focused on skills development and
employability, reducing inequalities
so that people can lead more secure
lives. Through our Global Emergency
Fund we have helped communities
through devastating events such as the
wildfires in Canada, flooding in Italy, and
earthquakes in Turkey and Syria. We also
fund many environmental causes and
through our Match Fund employees can
nominate charities they’d like to support.
I am proud that our people have given
over 14,000 hours of their time to such
great causes. Volunteering for charities,
mentoring, and planting trees are just
a few ways our employees got involved
and made a difference in 2023.
From a customer perspective, our
affordability team has supported our
customers with their payments and
concerns during the cost of living crisis
and we have helped them enjoy improved
customer journeys. During storm events
we maintained an average weekly call
answer rate of 97%, demonstrating
our commitment to our customers
when they need us.
From an environmental perspective,
we have targets to reach Net zero by
2040, and to cut emissions in half by
20303. Our UK scope 2 emissions have
already reduced to zero. We are well on
our way to setting Science Based Targets
for our emissions which we aim to share
in the future alongside our Net Zero
transition plan. Our focus is to do the
right thing, and this has been reflected in
an MSCI index rating of AA, as well as an
improved CDP rating to B.
Q. Are you confident with the
solvency position and do you have
any updates on the internal model?
I am confident that our capital position
remains strong and well above risk
appetite level. We had a successful debt
issue during the year and our improved
solvency rate of 200% is still supportive
of a stable dividend payout and the
ability to make future investments.
We’ve demonstrated over the past 15
years that we’ve been able to grow
five insurance businesses from scratch,
a lending business, and multiple price
comparison businesses whilst maintaining
a 90% average pay-out ratio.
In addition, we have been progressing
on the internal model process and expect
to enter a pre-application process with
our regulators soon. We will provide
a further update when we have more
information to share.
Geraint Jones
Group Chief Financial Officer
Q: What are your thoughts on
the 2023 results and what should
we expect going forward?
I am pleased with how we have come
through two challenging years, having
managed a lot of change and navigating
a complex cycle. Our teams also worked
very hard as we transitioned to the new
accounting standard, IFRS 17, to provide
clear information.
It was a solid set of results with a healthy
Profit Before Tax of £443 million driven
by improvements in almost all businesses.
We are gaining customers in the UK, Spain,
Italy and France with Group customer
growth of 6%. Admiral Money has grown
profit nearly five-fold to £10.2 million;
whilst having maintained our cautious
approach to growth and prudently held
provisions within the uncertain economic
context, which we believe continues to
build a good foundation for the future.
We said 2022 was probably the worst
point of the cycle, and we are now starting
to see the benefits of our pricing actions.
In particular, this is reflected for UK Motor
Insurance where we slowed growth in
the first half but managed to grow in the
second half of 2023, and are well placed
moving into 2024.
Cristina Nestares
CEO, UK Insurance
Q: What has been the biggest
challenge for UK Insurance this year?
It’s once again been a year of balancing
pricing increases with the continued
high claims inflation and macroeconomic
uncertainties. Our aim has been to
navigate this cycle well, focussing on
profit over growth and maintaining
pricing discipline. We are now seeing the
benefits of raising prices ahead of the
market, with a return to customer growth
in the second half of the year. Inflation was
high but stable with high repair costs
and used car prices impacting claims, as
well as supply chain pressures and labour
shortages. Uncertainty on small bodily
injury claims together with the potential
impact of wage inflation on large
bodily injury claims have added to the
challenges, but we adapted the business
where needed, with prudent reserving
and with some changes in our supply
network having a positive impact.
Our customer base has remained stable
despite the year’s challenges showing
that we can offer our customers good
quality products and services and give
them more options through MultiCover
which saw even more customers take
up these great products.
We were well placed for the
implementation of Consumer Duty
regulation, which aligns with our
commitment to deliver good value and
good outcomes for our customers.
I am also proud to say we were voted the
#1 Best Big Companies to Work For in the
UK and also #1 in Great Place To Work®
Best Workplaces in Financial Services and
Insurance. This along with our 4.4 ‘Excellent’
Trustpilot score means we must be doing
something right for our people and our
customers – which will remain key going
into 2024!
Q: How is Home Insurance
performing?
The Home Insurance book continues to
show promise, with customer growth
of 12% and a profit of £7.9 million.
Weather events were less severe in 2023,
but some of the severe weather in 2022,
particularly the December freeze event,
continued to impact the 2023 result.
Weather impacts will naturally come
through every few years, but the reported
loss ratio – excluding prior period releases
and the impact of severe weather - was
only marginally higher due to inflation as
we continued to improve risk selection
and claims capabilities. In response to
the threat of more regular and severe
weather, we regularly review our approach
from a pricing and risk selection and
claims perspective and continue invest
in associated areas.
We have been part of Flood Re since
2016. Flood Re is an agreement between
insurers and the UK government which
allows insurers to offer more affordable
insurance for UK homes in areas most at
risk of flooding that were built before 2009.
This allows us to help more customers get
the products they need at a fairer price.
Cost efficiencies were observed due
to our increased scale and higher inflation
was countered by raising prices ahead
of the market. The acquisition due in 2024
of RSA’s direct home and pet operations
will strengthen our offering and scale
in these businesses and I am excited
to welcome our new colleagues from
the More Than business.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 3030
31
Q&A with Milena, Geraint, Cristina and Costantino
continued
Key Performance Indicators
)
Costantino Moretti
CEO, International Insurance
Q: Are you pleased with the
progress in EU Insurance after
a challenging 2022?
I’m very proud of our hard work this year
and of the Admiral culture that is so
embedded in our businesses, reflected
in having been voted in the top 10 in
Great Place To Work®4 across all our
European entities.
We continued to prioritise margin over
growth and to strengthen business
fundamentals in tough market
environments, and delivered much
improved results overall with a £6 million
profit before tax in European Motor
from strong rating action and improved
efficiency. As Admiral celebrates a big
birthday, I’ll take a moment to reflect
back on our journey so far.
Our first international operation,
Admiral Seguros, was launched in
2006. The Spanish insurance market is
challenging, with intense competition.
Within this context, we focused on
building strong fundamentals and
adapting our strategy to market
dynamics. We now have over 440,000
customers, a growing direct channel,
and are setting the basis for future growth
by investing and expanding our broker
and partnership channels, for example
with our ING partnership.
4 Great Place To Work® Best Workplaces in Italy 10th,
France 6th, Spain 2nd.
ConTe, which was launched in Italy in 2008,
is our largest business outside the UK
with more than one million customers.
We delivered another year of profit and
a 19% year on year increase in turnover.
We continue to explore new distribution
channels while remaining focused on
our direct channels, efficiency and
advanced analytics, and market-leading
customer service.
In France, we launched L’olivier in 2011,
steadily building scale in the direct market
and now insuring over 470,000 customers.
Our sustained focus on margin protection,
cost controls and efficiency has made
us very competitive and we are now
accelerating our product diversification
with our Household proposition to unlock
cross-selling opportunities.
We have built good businesses in Europe,
customer-centric and well set-up for
sustainable growth and creating long-
term value for the Group, and we intend
to continue to deliver on our strategy.
Q: What is the outlook
for the US business?
We launched Elephant in 2009 and
the last couple of years have seen
an exceptionally challenging market
environment with strong competition
and very high levels of claims inflation.
We have taken strong action by increasing
prices to combat claims inflation, cost
reductions, and improved risk selection.
The reduced loss reported in 2023 is
encouraging, and we expect to see further
benefits from our recovery plan earned
through in 2024.
In addition, we have built a solid tech
platform that allows us to service our
customers better and faster and we
continued to maintain our commitment
to Admiral 2.0 with upgrades to our main
policy and billing IT platform, Guidewire,
during the year which contributed to
improving efficiencies.
Looking ahead, we have made good
progress in exploring options for Elephant
to reach its full potential in a huge market.
These assessments take time and are
receiving our full attention.
In order to implement, develop and measure the Group’s
strategic performance, we monitor several financial and
non-financial key performance indicators (KPIs).
Financial Measures
Group profit
Group profit before tax
Growth
Group customer numbers
£443m
(2022: £361m)
+6%
(2022: +10%)5
Diversification
UK Household customers
+12%
(2022: +19%)5
Shareholder returns
Dividend per share
103p
(2022: 112p)
Non-Financial Measures
Customer satisfaction
Customers likely to renew after a claim
6
>80%
(2022: >80%)7
Customer service
Net Promoter Score
8
>45
(2022: >50)
International growth
International customers
+4%
(2022: +15%)5
Capital position
Solvency ratio
200%
(2022: 180%)
Digital progress
Customer engagement
>50%
>50% MTAs9 done online
Great Place To Work®
GPTW rankings
6th
Positive impact on society
Number of hours donated
by employees
+14,000
(2022: +3,300)
Net zero by 2040
Carbon emissions reductions
+26%
(-33%)10 excluding one-off leak event
(2022: -22%)11
5 2022 Customer numbers restated– refer to the end of the report for definition and explanation.
6 UK Motor Customers, monthly score averaged over the year.
7 Restated figure, methodology changed in 2023.
8 Relational NPS, methodology updated in 2022. We’ve seen a decrease in the NPS mainly due to increased prices,
which are a reflection of current market conditions.
9 Mid Term Adjustments (UK operations) – adjustments made to a policy mid-term, by the customer.
10 Scope 1 and 2 (market based) emissions per SECR on page 71. Per SECR the 2022 comparative data is restated
to reflect final 12 month verified data.
11 Restated figure. Scope 1 and 2 (market based) emissions per SECR on page 71.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 3232
Group Chief Financial Officer’s review
33
Rising
TO EXTERNAL
CHALLENGES TO DELIVER
SOLID RESULTS IN 2023
The past few years have
surely been some of the most
challenging in the Group’s
30-year history – exiting the
pandemic into two heavily
inflationary years leading
to tough conditions for the
industry (and of course for
our customers). And that’s
not to mention several major
UK regulatory changes in
the past couple of years –
well navigated by our teams.
Our clear goal for 2023 was to significantly
improve underlying insurance results
and it’s very positive to see clear
evidence of that emerging through the
year. I’ve been very satisfied with the
disciplined approach taken across the
Group, even if that resulted in a shrinking
customer base for a period in the UK
motor business.
“In 2023, the Group
delivered a solid set
of results. 2023 was
clearly a year where the
strong actions taken
since early 2022 started
to bear fruit.”
Geraint Jones
Group Chief Financial Officer
The 2023 numbers are the first full year
results reported under the major new
insurance accounting standard, IFRS
17. I want to repeat my huge thanks to
the team involved in getting the Group
ready to produce these results, which was
definitely no small achievement A really
great team effort!
As usual I’ll begin with a quick review
of the group profit versus last year*
in the table on the next page.
Considering the impact of the lower
profitability of the 2021/22 years is still
an important factor in the 2023 result,
the near £600 million profit for the main
business was very positive. Only three
years have seen higher UK profit and
two of those were very impacted by
reduced frequency during the pandemic.
Critically the impact of significant price
increases over 2022 and 2023 has led to
much improved underwriting year results
which will feed into the results over the
next few years. The business is well placed
moving into 2024 too.
The UK Household business continued
to grow and delivered a profit of around
£8 million, benefitting from reinsurer
profit commission related to older years.
Price increases led to higher average
premiums which should improve margins
as we head into 2024.
Outside the UK our businesses
substantially improved their combined
result compared to 2022, with the
European businesses returning to overall
profit (despite continuing to invest
in new products beyond motor and
diversified distribution within Motor).
In the US, whilst the reported loss was still
not small, underlying results showed sharp
improvement year-on-year thanks to the
strong actions of our team there.
And a few observations on the other lines:
• Admiral Money’s £10 million profit
was a clear highlight; the team took a
cautious approach to volume through
the year and paused growth in the
second half of the year to focus on
high quality risk selection. We’re very
comfortable with arrears trends and our
cautious credit loss provision and the
business is well set to restart growth
in 2024
• In Admiral Pioneer, the tremendous
growth and continued steps forward in
products in Veygo stood out, though
one particularly large claim impacted
the bottom line. Pioneer continues to
invest in testing its small commercial
insurance business line
• The cost of the Group’s share schemes
was basically in line with the previous
year, but other overheads and charges
increased fairly notably. There are
a number of factors explaining the
increase, many of which shouldn’t be
repeated in 2024 (e.g. M&A project fees,
£m
UK Insurance
Europe Insurance (motor & other lines)
US Insurance
Admiral Money
Admiral Pioneer
Share scheme cost
Other costs
Pre-tax profit
adverse currency movement, costs
to settle a historic Italian tax matter).
Fuller details on page 52. I definitely
expect a much lower number in 2024
(barring anything unexpected).
More Than acquisition
As mentioned through the report,
Admiral’s first significant acquisition
will complete during H1 2024. We will
fund the upfront payment of £82.5 million
from free cash.
As the acquisition is entirely of intangible
assets with no new capital raised to fund
it, the transaction will result in a reduction
to the Group’s solvency ratio of around
10 points. Given the Group’s very strong
capital position, this is comfortably
absorbed. More details on the accounting
will feature in 2024’s accounts.
Internal model
The Group has been developing an
internal model to calculate its solvency
capital requirement (SCR) in a way
that reflects Admiral’s risk profile more
accurately than the standard formula and
allows management to better incorporate
capital considerations into business
decisions. The model will calculate the
SCR for the Group’s main UK lines of
business and for most of market risk.
Progress to application and approval
by the Group’s two main prudential
regulators has been slower than we’d
have liked, though huge effort from our
team has gone, and continues to go
into the project. We expect to enter the
regulatory pre-application process soon
and will then hopefully have a clear path
to application and approval thereafter.
It’s too early to give concrete information
on the exact timing of the application or
likely financial outcome of the process
and more information will follow at the
appropriate time.
Dilution
Starting in 2024 we will make a change
to the way we provide shares to the
Group’s employee share schemes.
Historically we’ve issued new shares to
the trusts each year, mindful of a 10%
rolling ten-year cap. We will no longer
dilute shareholders to fund the share
schemes, initially (probably for 2024
and 2025) making use of shares already
within the trusts and thereafter buying
shares in the market, funded through a
reduction in special dividend. This change
will increase earnings per share by around
1% per year from now on compared to
our previous approach.
Wrap-up
Whilst the current year reported profit
won’t break many records, 2023 was
clearly a year when the strong actions
taken since early 2022 started to bear
fruit. We enter 2024 with much improved
margins across our insurance businesses
and a strong position in Admiral Money.
I look forward to seeing the improvements
start to feed through into the reported
results in 2024.
Geraint Jones
Chief Financial Officer
6 March 2024
A note on the 2022 IFRS 17 comparatives:
As explained more fully on page 37, the
restated 2022 IFRS 17 insurance profits
are lower than the originally reported
IFRS4 numbers. This is due to differences
in the movements in reserve strength or
risk adjustment position over 2022 under
each standard.
IFRS 17
2023
597
2
(20)
10
(16)
(54)
(76)
443
IFRS 17
2022
510
(20)
(36)
2
(14)
(52)
(29)
361
Change v
2022
+87
+22
+16
+8
(2)
(2)
(47)
+82
IFRS 4
2022
616
(5)
(49)
2
(16)
(52)
(27)
469
* See important footnote below on the basis of preparation of the 2022 IFRS 17 numbers. The original IFRS 4 numbers are also shown.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 3434
2023 Group overview
2023 Group overview
£m
Group turnover (£bn)*2
Net insurance and investment result
Net interest income from financial services
Other income and expenses
Operating profit*1
Group profit before tax*1
Analysis of profit:
UK Insurance
International Insurance
International Insurance – European Motor
International Insurance – US Motor
International Insurance – Other
Admiral Money
Other
Group profit before tax*1
Key metrics
Reported Group loss ratio*1*2 *3
Reported Group expense ratio*1*2 *3
Reported Group combined ratio*1*2 *3
Insurance service margin*2 *3
Customer numbers (million)*2*4
Earnings per share*1
Dividend per share
Special dividend from sale of Penguin Portals
Return on equity*1*2
Solvency ratio*2
2023
4.81
363.1
68.1
31.7
462.9
442.8
596.5
(18.0)
6.1
(19.6)
(4.5)
10.2
(145.9)
442.8
63.9%
24.8%
88.7%
10.2%
9.73m
111.2p
103.0p
–
36.0%
200%
2022
(restated) *1
3.68
207.5
46.1
119.6
373.2
361.2
% change vs.
2022*1,5
+31%
+75%
+48%
-73%
+24%
+23%
509.7
(56.2)
(16.5)
(36.4)
(3.3)
2.1
(94.4)
361.2
70.6%
26.2%
96.8%
7.4%
9.20m
95.4p
112.0p
45.0p
29.4%
180%
+17%
Nm
Nm
Nm
Nm
+386%
-55%
+23%
-7pts
-1pts
-8pts
+3pts
+6%
17%
-8%
Nm
+7pts
+20pts
*1. Operating profit, profit before tax (including analysis by segment), earnings per share, return on equity, and reported group loss, expense ratio and combined ratios restated following the
implementation of IFRS 17. See later in the report for further details.
*2. Alternative Performance Measures – refer to the end of the report for definition and explanation.
*3. Reported Group loss and expense ratios are calculated on a basis inclusive of all insurance revenue – this includes insurance premium revenue net of excess of loss reinsurance, plus revenue from
underwritten ancillaries, an allocation of instalment and administration fees/related commissions. See glossary for an explanation of the ratios and Appendix 1a for a reconciliation of reported loss
and expense ratios, and insurance service margin, to the financial statements.
*4. 2022 Customer numbers restated – refer to the end of the report for definition and explanation.
*5. For % change vs 2022, + shows favourable movements, – shows unfavourable movements.
Nm – not meaningful.
35
Tim
Bethan
Teri
Celebrating
COLLEAGUES
THAT HAVE
BEEN HERE
SINCE THE START
As our co-founder Henry Engelhardt
said “people who like what
they do, do it better”, and this
has underpinned our culture
across the Group for the last 30
years. Since starting out in our
Cardiff office in 1993 with just
51 colleagues, to growing to over
13,000 across the world today,
we have always put our people at
the heart of what we do. We are
incredibly proud that some of those
51 colleagues have stayed with us
for the last 30 years and helped
make us the Company we are today.
We asked them what they remember
about their first day at Admiral and what
has kept them here…
What do you remember about your
first day at Admiral?
Tim: This should be fun!
Bethan: How small the department was!
I’d followed my friend Teri to Admiral from
our previous jobs (she started September
1992 and is also still here) so I wasn’t
nervous, and it took about 10 minutes
to meet everyone. IT were based on floor
11 of the building along with ex-CEO
and founder Henry, the server room, post
room and Marketing – a tight squeeze!
Teri: I was convinced I’d made a horrible
mistake. When I accepted the job, we were
called DIAL and that’s what my contract
said. On my first day I came into the office
to find we’d changed our name, we had
desks and PCs but no chairs so I had to sit
on a pile of boxes of listing paper. Bear in
mind that this was only three months
before we were due to launch. I spent
the first couple of weeks at offices in
Reading amending I/90 to fit our model
of direct insurance.
What has been your best Admiral
memory from the past 30 years?
Tim: Probably the day we floated
after many years of waiting to see if it
would happen.
Teri: There have been a few days that
stand out; my first day, the day we opened
for business, the day we floated!
Bethan: I know most people say it was
when we floated on the Stock Exchange,
but I was on maternity leave then and
missed all the excitement in work! Other
highlights for me have been the Stay
at Home Refund during the pandemic.
A few of us worked on that, and after it
was tested and live - which was done really
quickly - we monitored and ran the job
every day for a month to get them all out
by when we’d promised. Twitter was
good for instant feedback, I loved seeing
people post about what they were doing
with their £25. My favourite was a girl
who bought new slippers and spent the
rest on cider!
What kinds of roles have you had
during your time at Admiral?
Bethan: I’ve been in IT Development
since I joined - I started as an Analyst/
Programmer, then Senior Analyst/
Programmer, Team Manager.
Tim: I started in the Post Room, then
moved to IT. Then within IT I’ve moved
from Operations in Cardiff to Swansea
and back again to Cardiff again!
What makes Admiral special to you?
Teri: Every day is different and every
day is a challenge. What makes Admiral
special; even seeing the business grow
from 30-odd people to over 13,000,
it’s never lost its small local Company
feeling. I doubt you’d see senior managers
in the lift dressed in pyjamas in every
major Company.
Bethan: The answer to this has changed
as the Company has grown and changed.
In the early days, it was that we felt like
a family and everyone knew everyone.
When we got too big for that, it was the
way Admiral looks after us and the rewards
that come as a by-product of that.
Along the way it’s been the interesting
work, and more recently it’s been how
we give back to the community and the
world. There’ll always be something to
be proud of.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023
3636
2023 Group overview
continued
Reporting
ANOTHER SOLID
SET OF RESULTS
Group highlights
Admiral reports another solid set of results
in 2023 against a backdrop of continued
elevated levels of claims inflation, and
resulting significant rate increases.
Highlights of the Group’s results for 2023
are as follows:
• Businesses across the Group grew
strongly in 2023, with customer
numbers up 6% and turnover up
significantly more at 31% year-on-year:
– UK Motor customers were broadly
flat at the end of 2023 having
fallen in the first half. Market price
increases accelerated relative to
Admiral in the second half, leading
to improved competitiveness and a
return to growth
– UK Household grew turnover by 33%
as a result of an increase in customers
of 12% and continued increases in
average premium. Including Travel
Insurance, (which reported its first
small profit), and Pet Insurance,
overall UK insurance customers grew
by 6%
– Outside the UK, International
Insurance customer numbers
increased by 4%, made up of a 7%
increase in Europe and a reduction
in the US. Increases in average
premiums to reflect the level of
claims inflation led to a growth in
turnover of 12%
– Admiral Money has employed a
controlled approach to growth, with
a total loans balance at the year end
of £0.96 billion, 8% growth since
December 2022 and slightly lower
than the HY 2023 position.
• Group pre-tax profit was £443 million,
23% higher than 2022, restated on an
IFRS 17 basis:
– UK Motor Insurance profit was
£593 million, 13% higher than 2022
(£525 million) as the significant
increases in average premium
over the last year started to earn
through, as well as higher investment
income due to the higher interest
rate environment
– UK Household reported a profit of
£8 million (2022: loss of £11 million),
with 2023 less impacted by severe
weather events, and benefitting from
the positive impact of a commutation
of quota share arrangements on prior
underwriting years.
• The International Insurance business
reported a notably lower loss of
£18 million (2022: £56 million):
– The EU Motor business returned
to a profit of £6 million for the year
(2022: loss of £16 million), as a result
of a lower current year combined
ratio arising from higher average
premiums and small releases on prior
underwriting years
– The result in the US also improved
from a loss of £36 million in 2022
to a loss of £20 million in 2023,
following actions taken to improve
the underwriting result through
large price increases and a focus on
reducing costs.
• Admiral Money reported a higher profit
of £10 million (2022: £2 million), the
increase in the average loans portfolio
year-on-year driving the positive result
through increased net interest income
• Other Group costs increased to
£146 million (2022: £94 million), the
adverse movement driven by higher
central costs due to a number of one-
off items, as well as higher business
development costs and finance charges.
Earnings per share
Earnings per share for 2023 is 111.2 pence
(2022: 95.4 pence, restated on an IFRS 17
basis). The increase from 2022 is aligned
to the increase in pre-tax profit above,
offset partly by a higher effective tax rate,
with the increase in the UK corporation
tax rate to 25% (from 19%) from 1 April
2023 being a significant driver of the
higher effective rate.
Return on equity
The Group’s return on equity was
36% in 2023, 7 points higher than the
restated 29% for 2022. Average equity
for 2023 is lower than 2022 as a result
of the transition to IFRS 17 and higher
dividends were paid out compared to
profits recognised on an IFRS 17 basis.
2022 full year post-tax profits on an
IFRS 17 basis were £86 million lower
than those reported under the previous
standard, IFRS 4. Further information on
the restatement of 2022 financials follows
later in the report.
“We enter 2024 with
improved margins across
our insurance businesses
and a strong position
in Admiral Money.”
Geraint Jones
Group Chief Financial Officer
Dividends
The Group’s dividend policy is to pay 65%
of post-tax profits as a normal dividend
and to pay a further special dividend
comprising earnings not required to be
held in the Group for solvency or buffers.
The Board has proposed a final dividend
of 52.0 pence per share (approximately
£156 million) split as follows:
• 35.4 pence per share normal dividend
• A special dividend of 16.6 pence
per share
The 2023 final dividend reflects a pay-out
ratio of 97% of second half earnings
per share. 52.0 pence per share is in line
with the final 2022 dividend (52.0 pence
per share).
The total 2023 dividend, including the
interim dividend of 51.0 pence per share,
declared with the Group’s interim 2023
results is 103.0 pence per share, 8% lower
than the 112.0 pence per share paid
in 2022.
The total 2022 dividend also included the
final additional special dividend of 45.0
pence per share arising from the phased
return to shareholders of the proceeds
from the sale of the Penguin Portals
comparison businesses which completed
in 2021. The total 2022 dividend was
157.0 pence per share.
The 2023 final dividend payment date is
7 June 2024, ex-dividend date 9 May 2024
and record date 10 May 2024.
Re-statement of prior
period comparatives following
IFRS 17 adoption
IFRS 17, the new insurance contracts
accounting standard has been effective
from 1 January 2023. As a result, the
opening balance sheet as at 1 January
2022, the 2022 comparative Income
Statement and the balance sheet as at
31 December 2022 have been restated
under IFRS 17, using a fully retrospective
approach (i.e. as though IFRS 17 had
always been in place).
The new accounting policies and choices
adopted in the implementation of IFRS
17 are disclosed in the notes to these
financial statements. Both the policies
and transition impact are consistent with
the key accounting policy decisions and
transition impact set out on page 234 of
the 2022 Annual Report.
Throughout this report, the Group’s
results under IFRS 17 at 31 December
2023 are compared to the 31 December
2022 comparatives which have been
restated under IFRS 17.
IFRS 17 reported profits for 2022 are
lower than the previously reported IFRS 4
profits. The difference primarily arises as
a result of differences in the movements
in reserve strength or risk adjustment
position over 2022 under each standard.
Under IFRS 4, Admiral moved down to the
95th percentile over the course of 2022,
with a greater proportion of this move
taking place in the second half of the
year. Under IFRS 17, Admiral moved down
to the 95th percentile at the transition
date of 1 January 2022, and remained at
that percentile during 2022. This results
in lower reserve releases under IFRS 17 in
2022, and therefore lower profit.
Note 1 to the financial statements
provides further information regarding
the key factors driving the differences
between the IFRS 4 and IFRS 17 reported
results in 2022.
37
Economic backdrop
Global inflation continued to impact
claims inflation across Admiral’s markets
in 2023, although with some positive signs
of improvement in the second half of
the year, particularly in the Group’s main
UK market.
The main drivers of this claims inflation
continue to be higher repair costs,
longer repair timescales and high levels
of wage inflation which impacts the
projected costs of bodily injury claims.
Used car prices continue to be one of
the largest contributors to damage
inflation, although they stabilised in 2023
with inflation easing in the latter part of
the year.
Admiral continues to focus on medium
term profitability, and has maintained a
disciplined approach to business volumes,
increasing prices to reflect the elevated
claims inflation. The Group customer
base has continued to grow, although this
disciplined approach has resulted in slower
growth in some businesses. UK Motor
customers were broadly flat year-on-year
at the end of 2023, having slowed in the
first half as a result of price increases
ahead of the market since 2022, offset by
growth during the second half of the year
as Admiral increased prices at a slower rate
than the market. The Group continues to
set claims reserves cautiously.
Admiral Money grew its consumer loans
book year-on-year, though the portfolio
reduced in size in the second half due
to a prudent approach reflecting the
macroeconomic environment and
potential financial impact on consumers.
The business continues to hold
appropriately cautious provisions for
credit losses.
The Group’s results
are presented in the
following sections:
• UK Insurance – including UK
Motor (Car and Van), Household,
Travel and Pet
• International Insurance –
including L’olivier (France),
Admiral Seguros (Spain), ConTe
(Italy), and Elephant (US)
• Admiral Money
• Other Group Items – including
Admiral Pioneer and other
central costs
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 3838
UK Insurance review
Finding
WAYS TO MAKE
A DIFFERENCE
2023 was a more encouraging
year after a difficult 2022 for
the industry. Inflationary pressures
began to stabilise and our early
and strong pricing response
positions the business for a robust
improvement in results.
Product proposition and pricing
enhancements and the Group’s
commitment to helping more people
to look after their future, led to the
growth of the UK customer base by
6% while achieving a Trustpilot rating
of 4.4 (one of the best in the industry).
Further, to remain competitively
priced, we continued to focus on
improving operational efficiencies
and sustaining our leading position
in claims management.
The cost-of-living crisis has created
a lot of pressure for our people and in
addition to the energy support payments
and package improvements in 2022,
we officially recognised that we were
paying our people the real living wage
by signing up to the Real Living Wage
Foundation in 2023.
Our award winning culture was again
recognised by being placed in the Top 10
Great Places to Work survey and number
three for Great Places to Work for women.
A feature of our culture throughout our
history is to support our communities
and in 2023 our teams provided over
14,000 impact hours and helped over
a thousand people into work or helped
them to gain new skills with funding
and support for our community partners.
Inflation remained elevated compared
to pre-pandemic years. Supply chain
pressures across the global repair network
led to slower damage repair times during
2022 and early 2023, resulting in service
pressures across the industry. In response,
Admiral leveraged our scale and strong
working relationships with our repair
network partners to counter these
effects, leading to good improvements in
repair times and easing service challenges
faced by our teams. Overall, damage
inflation appears to have moderated
towards the end of the year from the
levels seen during 2022, but higher wage
inflation is likely to feed into bodily injury
claims over time, which we have provided
for in our reserves.
Beyond motor, our diversification
businesses continued to show growth
and deliver against key objectives.
Our strong multi-product proposition
and retention performance supported
further growth in our Household insurance
business, despite unprecedented rate
increases during the year to offset
inflation pressures. Enhanced pricing
capabilities and improvements to the
Household proposition has established
a great platform to capitalise on
future opportunities. The refreshed
Pet proposition that was relaunched
in late 2022 appears to resonate with
our customers and the book has grown
strongly (albeit from a low base).
The acquisition of the More Than Pet
and Household renewal rights from Royal
Sun Alliance (RSA) will give a further
boost to these businesses, significantly
accelerating our growth ambitions for Pet.
Our Travel business has bounced back
very well post-pandemic with record sales
volumes and a growing renewal book,
and reports a profit for the first time.
“A solid set of results,
demonstrating the
resilience of the business
during challenging
economic conditions,
whilst continuing to
invest in the business,
and support our
customers and people.”
Cristina Nestares
CEO, UK Insurance
We’re very pleased that our motor book
has returned to growth in the last six
months of 2023, after 12 months of
contraction following our disciplined
approach of strong price increases
to offset the impact of inflation.
Our relatively early pricing response
led to a fall in our competitiveness and
market share in the second half of 2022
and first half of 2023. We recognise that
the market moves in cycles and there
are times when it’s better to protect
margin at the expense of growth,
with a view to capturing volume when
the market opportunity arises.
39
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
Supporting
OUR
CUSTOMERS
DURING THE
COST OF
LIVING CRISIS
Formed during the Covid pandemic,
our Affordability team, has helped
to further focus on how we look
after vulnerable policyholders.
With high inflation and the high
cost of living in the UK, the team
has been working with our most
impacted policyholders to get
their insurance payments back
on track. The team plays a pivotal
role in helping customers who
are struggling, as well as those
dealing with other concerns
such as terminal illness, loss of
employment, disability, and
mental health.
In 2023, we trained over 3,000 colleagues
on vulnerable customer awareness
to better identify and support these
customers. We also introduced a
phone line that UK customers can call
for support and discuss alternative
payment arrangements. The feedback
has been resoundingly positive, with one
customer saying:
“The amount of stress I’ve been in
lately in terms of finances has been
very overwhelming. I lost my dad in
December, prior to that he had remained
in hospital. I’m now the only driver in
my household and I passed my test
because I needed to take responsibility
for my family. I’ve never been in financial
difficulty, and I’m just trying to get back
on track. I can’t thank you enough for
helping me in my lowest time.”
To sustain our competitiveness and
operational resilience, we’ve continued
to invest to refresh our technology
estate and transform our channel and
distribution capabilities. During the
year, a key pillar of the strategy was the
migration of over 6.5 million customer
risks to a new policy and billing centre
on Guidewire, which I’m proud to say
was successfully completed.
2023 will be defined as the key turning
point in the recent challenging
insurance cycle and I believe we’re well
positioned with a strong team and
good fundamentals to capture market
opportunities for profitable growth in
2024 and further earnings momentum.
UK Insurance financial performance
£m
Turnover*1*2
Total premiums written*1*3
Insurance revenue
Underwriting result including net investment income*1
Co-insurer profit commission and net other revenue
UK Insurance profit before tax*1
Split of UK Insurance profit before tax
£m
Motor
Household
Travel and Pet
UK Insurance profit before tax
Key performance indicators
Vehicles insured at period end
Households insured at period end
Travel and Pet policies at period end
Total UK Insurance customers
2023
3,776.0
3,502.6
2,596.9
438.6
157.9
596.5
2022 (restated)
2,784.3
2,555.0
2,174.1
301.6
208.1
509.7
2023
593.3
7.9
(4.7)
596.5
2022 (restated)
524.9
(10.7)
(4.5)
509.7
2023
4.94m
1.76m
0.69m
7.39m
2022 (restated)
4.94m
1.58m
0.44m
6.96m
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation
*2. Alternative Performance Measures – refer to note 13 for explanation and reconciliation to statutory Income
Statement measures
*3. Total premiums restated for prior periods to include premiums for all underwritten ancillary products.
There is a corresponding reduction in Other net income, and no impact on turnover
Highlights for the UK Insurance business include:
• In UK Motor Insurance:
– Customer numbers grew in the second half of the year, to finish at 4.94 million,
in line with a year earlier. Admiral’s price increases to account for claims inflation
in the second half of 2022 and early 2023 were more significant than the wider
market, but this gap closed over the latter part of 2023. Turnover increased by
35% to £3.4 billion from £2.5 billion
– Profit growth of 13% to £593 million (v £525 million) as the rate increases
implemented over the past year are now earning through, and the higher
interest yield environment results in increased investment income.
• In UK Household Insurance:
– Customer numbers grew by 12% to 1.76 million (31 December
2022: 1.58 million). As in Motor, price increases have led to higher average
premiums which contributed to a strong 33% increase in turnover
– Profit was £7.9 million (2022: loss of £10.7 million) as a result of less severe
impact of weather in 2023 compared to 2022, along with the benefit of the
commutation of quota share arrangements on prior underwriting years.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
4040
UK Insurance review
continued
UK Motor Insurance financial review
£m
Turnover*1
Total premiums written*1*2*4
Gross earned premium*1
Gross other insurance revenue
Insurance revenue
Insurance revenue net of XoL*2*5
Insurance expenses*1*2*3
Insurance claims incurred net of XoL*2*5
Insurance claims releases net of XoL*2*5
Quota share reinsurance result*2*3
Movement in onerous loss component net of
reinsurance*2
Underwriting result*2
Investment income
Net insurance finance expenses
Net investment income
Co-insurer profit commission
Other net income
UK Motor Insurance profit before tax*1
2023
3,371.8
3,118.2
2,115.4
134.8
2,250.2
2,188.6
(451.2)
(1,729.0)
392.8
(16.8)
2022 (restated)
2,493.0
2,271.3
1,795.7
114.0
1,909.7
1,865.1
(389.6)
(1,596.0)
327.2
95.2
4.1
388.5
111.8
(58.2)
53.6
76.5
74.7
593.3
5.2
307.1
53.8
(36.4)
17.4
127.5
72.9
524.9
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation
*2. Alternative Performance Measures – refer to Appendix 1 for explanation and reconciliation to statutory Income
Statement measures
*3. Insurance expenses and quota share reinsurance result excludes gross and reinsurers’ share of share scheme charges
respectively. For share scheme charges refer to Other Group Items
*4. Total premiums restated for prior periods to reflect premiums for all underwritten ancillary products. There is a corresponding
reduction in Other net income, and no impact on Turnover
*5. XoL. Refers to Excess of Loss (non-proportional) reinsurance; see glossary at end of report for further information
Key performance indicators
Reported Motor loss ratio*1*2
Reported Motor expense ratio*1*3
Reported Motor combined ratio*1*2
Reported Motor Insurance service margin*1*4
Core Motor loss ratio before releases*1*5
Core Motor claims releases*1*5
Core Motor loss ratio*1*5
Core Motor expense ratio*1*6
Core Motor combined ratio*1*7
Core Motor written expense ratio*7
Vehicles insured at period end*1
Other revenue per vehicle*8
2023
61.1%
20.6%
81.7%
17.7%
87.0%
(20.2%)
66.8%
21.4%
88.2%
17.8%
4.94m
£62
2022 (restated)
68.0%
20.9%
88.9%
16.5%
95.7%
(20.0%)
75.7%
21.6%
97.3%
20.8%
4.94m
£58
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation.
*2. Reported Motor loss ratio defined as insurance claims incurred and claims releases divided by insurance revenue, net of excess
of loss reinsurance. Reconciliation in Appendix 1b.
*3. Reported Motor expense ratio defined as insurance expenses divided by insurance revenue, net of excess of loss reinsurance.
Reconciliation in Appendix 1b.
*4. Reported Motor insurance service margin defined as underwriting result divided by insurance revenue, net of excess of
loss reinsurance.
*5. Core Motor loss ratio defined as insurance claims incurred and claims releases divided by core product insurance premium
revenue, net of excess of loss reinsurance. Presented to enable analysis of core Motor result excluding other ancillary income.
Reconciliation in Appendix 1b.
*6. Core Motor expense ratio defined as insurance expenses divided by core product insurance premium revenue, net of excess of
loss reinsurance. Reconciliation in Appendix 1b.
*7. Core Motor written expense ratio defined as insurance expenses divided by core product written insurance premium, net of
excess of loss reinsurance.
*8. Other revenue per vehicle includes other revenue included within insurance revenue. See “Other Revenue” section for
explanation and reconciliation.
UK Motor profit increased by 13% to
£593.3 million (2022: £524.9 million) as
a result of a lower current period loss
ratio as the significant rate increases
from late 2022 and early 2023 start
to earn through, as well as higher net
investment income due to the higher
interest rate environment. This was partly
offset by lower quota share recoveries
due to both the more favourable
current period loss ratio and continued
loss ratio improvements on prior
underwriting years, and lower co-insurer
profit commission.
By year end 2023, customer numbers
were flat when compared to the end of
2022, with growth in the second half
of 2023 due to market price increases
resulting in Admiral becoming increasingly
competitive, after lower customers
earlier in the year due to the strong price
increases implemented by Admiral ahead
of the market in late 2022 and early 2023
reflecting the inflationary environment.
Gross earned premium at
£2,115.4 million is 18% higher than 2022
(2022: £1,795.7 million), reflecting the
significant increase in average earned
premium as the price increases over the
last year start to earn through.
The UK Motor core expense ratio
decreased to 21.4% (2022: 21.6%),
with the written expense ratio decreasing
by 3 points to 17.8% (2022: 20.8%), as
a result of the higher premiums noted
above. Insurance expenses are higher
in 2023, driven by wage increases,
higher amortisation of intangible assets
from the new systems that are now
in use, and a short-term increased cost
of claims handling as new claims systems
were implemented.
The movement in onerous loss
component reflects the movement in
the provision for projected claims costs,
inclusive of risk adjustment, on unearned
premium. The onerous loss component at
the start and end of 2023 was small (less
than £2 million), with movements over the
course of both years leading to immaterial
impacts in the Income Statement.
41
Claims incurred
Claims inflation remains high and
continues to be influenced by the average
costs of repairing vehicles, in turn due to
the elevated cost of replacement parts
and paint, as well as high labour costs
and shortages. Used car price inflation
has stabilised, showing signs of slowing
down in the second half of the year,
and repair times have also started to
reduce resulting in stabilising costs for
replacement vehicles.
Average claims cost inflation for 2023 is
approximately 10%, with higher inflation
in the first half of 2023, easing modestly
in the second half. Claims frequency was
also slightly higher in 2023 compared to
2022 as a result of increased miles driven,
although remains below pre-Covid levels.
The longer-term impacts of inflation on
bodily injury claims remain uncertain.
Admiral has not observed material
changes in inflation for bodily injury
claims settled in 2023 when compared to
2022. However, an allowance in the best
estimate reserve to reflect the potential
impacts of higher than historic levels of
future wage inflation on certain elements
of large bodily injury claims reserves,
is maintained.
There is still a relatively high level of
uncertainty within motor claims across
the market arising from inflation and the
future developments relating to both
whiplash reforms and the Ogden discount
rate. The review of the Ogden discount
rate is due to start in mid-2024, with the
new rate, and any change to methodology,
unlikely to be known until late 2024 or
early 2025. Admiral’s assumption for the
Ogden discount rate within best estimate
reserves continues to be the prevailing
rate of minus 0.25 per cent.
Admiral holds significant and prudent risk
adjustment above best estimate reserves,
which has reduced (93rd percentile
confidence level) when compared to the
end of 2022 (95th percentile confidence
level), the movement being in line with
expectations given the slightly less
volatile inflationary environment and a
perceived lower likelihood of an adverse
movement in the Ogden discount
rate, together with the continued
diversification of the business. Whilst the
underlying methods to calibrate the
reserve risk distribution from which the
percentile is selected are consistent year
on year, a number of developments in the
reserve risk modelling in 2023 result in a
slightly less volatile distribution than at
the end of 2022.
Further information is included in notes 2,
3 and 5 to the financial statements.
The core Motor loss ratio has reduced to
66.8% (2022: 75.7%) as a result of a lower
current period loss ratio. Movements in
the current period loss ratio and prior year
reserve releases were as follows:
Core Motor loss ratio*1
FY 2022
Change in current period loss ratio
Change in claims reserve release
FY 2023
Core Motor
loss ratio before
releases
95.7%
(8.7%)
–
87.0%
Impact of
claims reserve
releases
(20.0%)
–
(0.2%)
(20.2%)
Core Motor
loss ratio
75.7%
(8.7%)
(0.2%)
66.8%
*1. Reported Motor loss ratio shown on a discounted basis, excluding unwind of finance expenses
The current period loss ratio improved
by 8.7 points which can be primarily
attributed to higher average premium
in the period following significant
price increases.
The benefit from prior period releases
was flat at 20.2% (2022: 20.0%), with the
absolute level of prior period releases
increasing by £65.6 million or 20% to
£392.8 million, from £327.2 million.
The benefit includes both favourable
development of the best estimate reserve
for prior period claims, and the movement
in the risk adjustment as set out above.
Reserve releases as a percentage of
premium are heavily impacted by the 18%
increase in earned premium in the year.
Quota share reinsurance
Under IFRS 17, Admiral’s quota share
reinsurance result reflects the net
movement on ceded premiums, reinsurer
margins and expected recoveries (claims
and expenses) for each underwriting
year on which quota share reinsurance
is in place (primarily 2021 underwriting
year onwards).
Admiral’s UK Motor quota share
contracts operate on a funds withheld
basis, with Admiral retaining ceded
premium (net of the reinsurer margin)
which then covers claims and expenses.
If an underwriting year is not profitable,
investment income is allocated to the
withheld fund and used to delay the point
at which cash recoveries are collected
from the reinsurer. Other features of the
arrangements include expense ratio caps
and commutation options for Admiral
that become available 24-36 months after
the start of the underwriting year.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
4242
UK Insurance review
continued
Quota share reinsurance result
The quota share reinsurance result by underwriting year is as follows:
£m
2020 & prior
2021
2022
2023
Total
The adverse quota share result in 2023 is
therefore driven by:
– Lower recoveries of £30.3 million on
the 2023 underwriting year (UWY
2023) compared to £91.0 million
recoveries on the 2022 underwriting
year (UWY 2022) in 2022 due to the
significantly improved loss ratio on
UWY 2023 compared to UWY 2022
– A significant reversal of recoveries
that had been previously recognised
on the 2021 underwriting
year, as a result of favourable
developments in loss ratio.
Other revenue
UK Motor Insurance Other revenue:
2023
2.3
(57.6)
8.2
30.3
(16.8)
2022 (restated)
(2.9)
7.1
91.0
–
95.2
Co-insurer profit commission
Co-insurer profit commission is lower
in 2023 (£76.5 million) compared to
2022 (£127.5 million). In 2022, a greater
proportion of the reserve releases were
related to older underwriting years
(2019 and prior) which have lower
combined ratios, with the releases
therefore attracting higher profit
commission. In addition, in 2023 no profit
commission has been recognised on
underwriting years 2021 and 2022
due to the current combined ratio
positions on those years.
Net investment income
Net investment income benefitted
significantly from the higher yield
environment during 2023, increasing to
£53.6 million from £17.4 million in 2022.
Investment income before insurance
finance expense more than doubled
to £111.8 million (2022: £53.8 million)
primarily as a result of the yield
environment. Further information on
the Group’s investment portfolio and
the income generated in the period
is provided in the Investments and Cash
section later in the report.
Net insurance finance expense reflects
the unwind of the discounting benefit
recognised when claims are initially
incurred. The expense has increased
significantly in 2023 (£58.2 million;
2022 £36.4 million) as a result of the
significant increase in risk-free interest
rates since the start of 2022, with a
significant proportion of the insurance
finance expense in 2023 relating to claims
incurred during 2022 and, to a slightly
lesser extent, 2023.
£m
Premium and revenue from additional products & fees*1
Instalment income and administration fees*2
Other revenue
Claims costs and allocated expenses*3
Net other revenue
Other revenue per vehicle*4
Other revenue per vehicle net of internal costs
£m
Premium and revenue from additional products & fees*1
Instalment income and administration fees*2
Other revenue
Claims costs and allocated expenses*3
Net other revenue
Other revenue per vehicle*4
Other revenue per vehicle net of internal costs
Within underwriting
result
107.8
134.8
242.6
(70.0)
172.6
2023
Other net
income
89.4
29.3
118.7
(44.0)
74.7
2022 (restated)
Within underwriting
result
113.3
114.0
227.3
(63.4)
163.9
Other net
income
90.5
21.9
112.4
(39.5)
72.9
Total
197.2
164.1
361.3
(114.0)
247.3
£62
£52
Total
203.8
135.9
339.7
(102.9)
236.8
£58
£48
*1. Premium from underwritten ancillaries is recognised within the insurance service result (underwriting result). Other income from non-underwritten products and fees is included within other net
income, below the underwriting result but part of the insurance segment result.
*2. Instalment income and administration fees are recognised within insurance revenue (% aligned to Admiral’s share of premium, net of co-insurance) and other revenue (% aligned to co-insurance
share of premium).
*3. Claims costs relating to underwritten ancillary products, along with an allocation of related expenses, are recognised within the insurance result. Expenses allocated to the generation of revenue
from non-underwritten ancillaries are recognised within other net income.
*4. Other revenue per vehicle (before internal costs) divided by average active vehicles, rolling 12-month basis. Presented here based on all ancillary income.
43
Admiral generates other revenue from
a portfolio of insurance products that
complement the core car insurance
product, and fees, generated over the
life of the policy. The most material
contributors to other revenue continue
to be:
• Profit earned from Motor policy
upgrade products underwritten
by Admiral, including breakdown,
car hire and personal injury covers
• Revenue from other insurance products,
not underwritten by Admiral
• Fees such as administration and
cancellation fees
• Interest charged to customers paying
for cover in instalments.
Under IFRS 17, income from underwritten
ancillaries and an allocation of instalment
income and administration fees in
line with Admiral’s gross share of the
core motor product premium, are
included within Insurance Revenue in
the underwriting result as ‘Gross other
insurance revenue’. The remaining income
from instalment income, fees as well
as income from other non-underwritten
ancillary products is presented in other
net income.
Overall contribution increased to
£247.3 million (2022: £236.8 million),
primarily as a result of increased
instalment income following an increase
in the proportion of customers paying
by instalment and the increase in
average premiums.
Other revenue was equivalent to £62
per vehicle (gross of costs), with net other
revenue per vehicle at £52 per vehicle,
both favourable compared to 2022 as
a result of the above-mentioned increases
as well as a broadly flat customer base.
UK Household Insurance financial review
£m
Turnover*1
Total premiums written*1*2
Insurance revenue
Insurance revenue net of XoL*1
Insurance expenses*1
Insurance claims incurred net of XoL*1
Insurance claims releases net of XoL*1
Underwriting result, net of XoL reinsurance*1
Quota share reinsurance result*1*3
Underwriting result*1
Net insurance investment income
Other income
UK Household Insurance result before tax*1
2023
338.6
318.8
292.8
275.3
(80.9)
(199.8)
6.4
1.0
(1.4)
(0.4)
1.6
6.7
7.9
2022 (restated)
255.4
245.7
236.9
222.8
(70.0)
(198.1)
16.5
(28.8)
9.2
(19.6)
1.2
7.7
(10.7)
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation.
*2. Total premiums restated for prior periods to reflect premiums for all underwritten ancillary products. There is a corresponding reduction in Other net income, and no impact on turnover.
*3. Quota share reinsurance result within the segment result excludes reinsurers’ share of share scheme costs.
Key performance indicators
Reported Household loss ratio*1
Reported Household expense ratio*1
Reported Household combined ratio*1
Household insurance service margin
Household loss ratio before releases
Impact of severe weather and subsidence on reported loss ratio*1
Impact of severe weather and subsidence on result before tax*1 (£m)
Households insured at period end (m)
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation.
2023
70.2%
29.4%
99.6%
(0.1%)
72.6%
11.3%
9.8
1.76
2022 (restated)
81.5%
31.4%
112.9%
(8.8%)
88.9%
29.0%
33.3
1.58
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 4444
UK Insurance review
continued
The UK Household business enjoyed
strong top line growth in 2023 with a
33% increase in turnover to £338.6 million
(2022: £255.4 million) as a result of
significant price increases in response to
higher claims inflation.
The number of households insured
increased by 12% to just under 1.8 million
with Admiral’s multicover offering
contributing strongly to the growth.
The result for the year also improved
materially, with the business delivering
a profit of £7.9 million compared to a loss
of £10.7 million in 2022. The improvement
was due to two factors:
• The impact of severe weather and
subsidence in 2023 was significantly
lower in 2023 than 2022. Whilst the
final quarter of 2023 saw a run
of named storms which were the main
contributor to the £9.8 million weather
impact in the year, 2022 was impacted
by a significant winter freeze event
which impacted the prior year result
by £33.3 million.
• The 2023 result benefitted from a
one-off recognition of reinsurer profit
commission relating to prior period
following a commutation. This benefit
is recognised in the quota share
reinsurance result, with the prior period
quota share result being negatively
impacted by the original de-recognition
of that profit commission following
significant weather events.
The reported loss ratio for the period
was 70.2%, increasing to 72.6% when
excluding prior period releases which
primarily reflect the reduction in risk
adjustment in the current period.
The impact of releases on the 2023
reported loss ratio (benefit of 2.4 points)
is lower than the prior period (benefit
of 7.4 points) partly as a result of an
increase in the estimate of the ultimate
cost of the December 2022 freeze event.
The reported loss ratio - excluding prior
period releases and the impact of severe
weather - for 2023 was 61.3%, marginally
higher than the equivalent ratio for 2022
of 59.9%. The impact of higher claims
inflation was largely matched by the
increases in average premium, which
earned through in the second half of the
year and are expected to continue earning
through into 2024.
Admiral’s expense ratio improved to
29.4% (2022: 31.4%), with the impact
of continued investment in technology
more than offset by increasing
average premiums and the benefits of
increased scale.
The quota share result for the period was
a loss of £1.4 million (2022: £9.2 million
profit). Despite the benefit from the
one-off recognition of reinsurer profit
commission, the quota share result was
materially lower than 2022 as there was
no repeat of the recoveries made from
reinsurers following the December 2022
freeze event.
Overall, excluding the impact of severe
weather, profit for the period was
£17.7 million, £4.9 million lower than 2022
(2022: £22.6 million), primarily as a result
of the slightly higher attritional loss ratio.
International Insurance review
45
Establishing
A DIVERSIFIED
SET OF CHANNELS
AND PRODUCTS
In 2023, markets continued
to be challenging with high
claims severity inflation,
and the Motor insurance
industry has reported high
combined ratios. Within this
context, we continued to
prioritise margin over growth
and managed to achieve
solid customer and turnover
growth, with average
premiums finally growing
in all geographies.
Despite the inflation decelerated
compared to 2022 it remains high, placing
pressure on claims, so it is imperative
to continue to stay prudent and
prioritise profitability.
The overall profit in Europe is a combined
outcome of the positive contribution
from Italy and France, while Spain has
reported a loss. France and Italy are now
both profitable, and we will continue to
grow the book with discipline and invest
in diversification (distribution in Italy;
product with Household in France).
“Markets hit the worst
part of their cycle in 2023,
but we have continued
to demonstrate strong
performance and results.”
Costantino Moretti
CEO, International Insurance
The Spanish result is a function of the
unprecedented high combined ratio
of the Motor insurance industry, as well
as continued investment to build our
distribution diversification capabilities.
We have taken strong action and have built
good foundations, which we believe will
result in improved performance in 2024.
The US has shown a strong improvement
of all KPIs and has reported a lower loss
compared to last year. We are confident
that the actions taken will continue to
have a positive impact and contribute to
move Elephant closer to breakeven.
Due to those improvements, Elephant
did not require a capital injection from
the Group and we expect this will also
be the case in 2024. We have made good
progress on assessing strategic options
and we are now deep diving on a short list
of them, aiming to get to a final decision
in the first part of 2024.
I am grateful for the hard work of
our employees who have made our
companies a Great Place to Work. I am
also proud of the focus we have put on
helping our customers and supporting
the communities in which we operate.
Well done to the team, as we look forward
to a positive 2024!
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 4646
International Insurance review
continued
France
“L’olivier adeptly navigated
market uncertainties
and I am pleased
to report a profitable
Motor performance.”
Pascal Gonzalvez
CEO, L’olivier
Italy
“In a difficult market
environment, we
delivered good results and
operational successes.”
Antonio Bagetta
CEO, ConTe
In 2023, L’olivier performed well in the
context of challenging market conditions.
Amidst escalating inflation and sluggish
market volumes that fell short of
projections, L’olivier adeptly navigated
these uncertainties by prioritising margin
protection. This approach inevitably
moderated our growth trajectory,
resulting in a 6% year-on-year increase
in our motor policy base up to 420,000
customers. Concurrently, our turnover saw
a 15% increase to £219 million, bolstered
by a robust average premium.
By proactively adjusting our pricing
strategies ahead of competitors, we
saw favourable loss ratio development.
This, combined with stringent expense
control and continuous enhancements in
operational efficiency, culminated in our
fifth year of written profits, achieving a
robust 95% written combined ratio.
Looking ahead to 2024, L’olivier is set to
further leverage our commitment to
digitalisation and artificial intelligence
deployment (for example, pushing
100% of new claims notification online).
This pivotal focus aims to serve our
customers faster and enables better
service while increasing our cost efficiency.
We are also poised to expedite our
product diversification with further
development in household insurance,
continuing our 2023 trend when turnover
grew by more than 100% (albeit from a
low base). This aligns with our ongoing
strategy to enhance cross-selling and our
multi-product offering.
Finally, I would like to thank all L’olivier
staff for their energy, enthusiasm
and great contribution to these good
2023 results.
2023 was a positive year for ConTe, with
continued focus on sustainable growth:
+20% revenue increase led by higher
average premiums (+13%) and customer
growth (+7%). Market conditions have
been improving, following a challenging
2022 which saw the market combined
ratio increase to 108% and 128% for
the direct channel. These inflationary
pressures, together with regulatory
changes, led direct competitors to raise
prices materially, allowing ConTe.it to do
the same.
Our key aim is to be a very profitable
insurer in Italy through advanced
technologies and analytics.
We strengthened our fundamentals with
a new data platform which improves
the time to market for analytics
model releases.
Sustainability has been a cornerstone of
our operations making significant strides
in being more efficient (4pp of written
expense ratio reduction), responding
to customers’ needs and expectations,
investing in data capabilities and ensuring
long term-viability.
ConTe also achieved the highest NPS in
the industry and the best Trustpilot score
for online insurance, largely reflecting our
excellent operational service levels.
Our people remained a key priority in
2023. We implemented several wellbeing
initiatives and increased our GPTW
Trust index by 9 points to 87 in 2023.
We were also awarded by Milano Finanza
for our innovative approach to people
management, and in particular for our
Corporate Welfare, Employee Benefit and
Family Care Welfare.
It has been a year of operational
successes, with sustainable growth of the
Italian business driven by higher average
premium and number of customers,
continuing to strengthen our data and
technological innovation and the launch
of new channels. In addition, we continued
to focus on our customers and our people,
and I would like to thank the ConTe team
for their continued commitment and hard
work in 2023!
47
Spain
“We are starting to
see the benefit of strong
actions taken during
tough market
conditions in 2023.”
Sarah Harris
CEO, Admiral Seguros
US
“Despite very challenging
market conditions,
Elephant materially
improved its result with
reduced losses in 2023.”
Alberto Schiavon
CEO, Elephant
Claims inflation was the major theme
for the Spanish car insurance industry in
2023. Q4 market results showed a market
combined ratio12 exceeding 100% for the
first time in two decades. Market price
correction started early in the year and
accelerated in the second half, we expect
this trend to continue into 2024.
Admiral Seguros was not immune to this
market context. Inflation in the first two
quarters was ahead of our expectation,
putting pressure on loss ratios for both
the 2022 and 2023 underwriting years.
We took strong action, raising prices more
than the market across all channels with
a focus on protecting margin. Q4 average
premium was up 16% vs a year earlier,
despite a portfolio shift towards lower-risk
profiles. The increasing trend in income
per policy contributed to an improved
expense ratio and sets the business up
well going into 2024.
With a more medium-term perspective,
we continued to invest in new distribution
channels as routes to future scale.
June saw the successful launch of our
digital insurance product for ING bank,
“Seguro de Auto NARANJA”. This has
attracted positive feedback about both
the product and purchase experience.
In the broker channel, we reinforced our
commercial management team and
made pleasing progress in underwriting.
We improved productivity, and enhanced
our digital servicing platforms, increasing
our digital sales ratio by 30%, becoming
even more responsive to customer needs.
For another consecutive year, we were
voted 2nd Great Place to Work in Spain,
winning the special prize “Better for
People” in recognition of a collaborative
and open team culture. I would like to
thank all of my colleagues for their hard
work and contribution during 2023.
In 2023, Elephant materially improved its
result with a reduced loss of £20 million
from £36 million in 2022, in line with our
commitment to turn around our financial
performance and despite very challenging
market conditions with sustained severity
inflation. Our combined ratio decreased
by around 9 points13 (compared to an
industry projection of 3.514 points lower)
driven by improvements in both our loss
and expense ratios.
Our expense ratio was 5 points15 better
than 2022, benefitting from efficiency
initiatives (including a reduction in
headcount) and a more favourable
acquisition market. The latter was driven
by reduced competition in a difficult
market, as many players lowered their
growth appetite to protect their bottom
line while increasing rates.
Our loss ratio improved by 4 points16
as a result of strong rating action and
intentional mix shift towards lower loss
ratio segments and away from newer
channels and states. We increased base
rates by an additional 38% in 2023,
compared to circa 16% across the top
five players in our states.17 Important to
note is that the most recent underwriting
quarters continue to show improving
results compared to prior ones, at the
same point of development. It remains
early days but this is promising.
Our significant rate increases over the last
few years have led to a 18% reduction in
vehicles insured throughout 2023, but at
a substantially higher average premium,
leading to an overall growth in turnover
of 1%.
I am very grateful to the Elephant team
for the dedication, hard work, and
commitment in delivering excellent
customer service, modernising our
technology stack, while improving our
business fundamentals at a much faster
rate than the market.
12 ICEA market data, net of reinsurance.
13 Earned whole account basis net of XoL.
14 Data is from S&P Global Market Intelligence 2023 Auto
Insurance Market Report.
15 Insurance expenses, excluding share schemes divided
by insurance revenue net of XoL.
16 Insurance claims incurred and claims releases divided
by insurance revenue net of XoL.
17 State filing rate changes for Virginia and Texas.
Weighted average change from top 5 players based
on market share.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
4848
International Insurance review
continued
International Insurance financial performance
£m
Turnover*1
Total premiums written*1*2
Insurance revenue
Insurance revenue net of XoL*1
Insurance expenses*1
Insurance claims net of XoL*1
Underwriting result, net of XoL*1
Quota share reinsurance result*1*3
Movement in net onerous loss component
Underwriting result*1
Net investment income
Net other revenue
International Insurance loss before tax*1*4
2023
894.9
840.0
842.6
811.8
(249.4)
(565.2)
(2.8)
(22.1)
0.6
(24.3)
4.3
2.0
(18.0)
2022 (restated)
795.9
744.2
750.0
732.0
(254.6)
(547.1)
(69.7)
13.9
(1.0)
(56.8)
1.1
(0.5)
(56.2)
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation
*2. Total premiums restated for prior periods to reflect premiums for all underwritten ancillary products. There is a corresponding reduction in Other net income, and no impact on turnover
*3. Quota share reinsurance result within the segment result excludes reinsurers’ share of share scheme costs
*4. Costs related to the settlement of a historic Italian tax matter during 2023 are excluded from the International Insurance result and presented within Group other costs, given that these are not
reflective of the underlying trading performance of the International Insurance business.
Key performance indicators
£m
Loss ratio*1
Expense ratio*1
Combined ratio*1
Insurance service margin*1
Customers insured at period end*1 (million)
2023
69.6%
30.7%
100.3%
(3.0%)
2.17
2022 (restated)
74.7%
34.8%
109.5%
(7.8%)
2.08
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation
International Motor Insurance – Geographical analysis *1
2023
Vehicles insured at period end
Turnover (£m)
2022
Vehicles insured at period end
Turnover (£m)
Spain
0.45m
121.8
Spain
0.43m
104.6
Italy
1.04m
272.4
Italy
0.97m
227.9
France
0.42m
219.1
France
0.40m
190.4
US
0.19m
271.2
US
0.24m
268.5
Total
2.10m
884.5
Total
2.04m
791.4
*1. Alternative Performance Measures – refer to the end of this report for definition and explanation
Split of International Insurance result
£m
European Motor
US Motor
Other
International Insurance loss before tax
2023
6.1
(19.6)
(4.5)
(18.0)
2022 (restated)
(16.5)
(36.4)
(3.3)
(56.2)
49
In the US, Admiral underwrites motor
insurance through its Elephant Auto
business. After a disappointing 2022 and
in a context of high inflationary pressures,
Elephant focused on materially improving
its underwriting result in 2023 with
strong rating action and cost reduction.
The conscious decision to focus on
improving underwriting results led to an
18% decrease in the number of vehicles
insured to 0.19 million (2022: 0.24 million),
a moderately higher turnover of
£271.2 million (2022: £268.5 million) and
a reduced loss before tax of £19.6 million
(2022: loss of £36.4 million). In light of
this early progress, the business did not
need further capital from the Group in
2023. Elephant will continue to prioritise
improving the loss ratio ahead of growth
in the immediate future.
Admiral’s International insurance
businesses continued to grow, with
customers increasing by 4% to
2.17 million (2022: 2.08 million) and
turnover growth of 12% to £894.9 million
(2022: £795.9 million).
Inflation remained high throughout
2023 and had a material impact on the
International results, driving increased
market premiums particularly in Italy,
Spain and the US. Admiral continues to
focus on medium term profitability.
Admiral Seguros (Spain) grew its customer
base by 3% to 0.45 million customers
over the past year (2022: 0.43 million)
despite strong price increases in a
competitive market with high claims
inflation. The business continues to
focus on improving margins, enhancing
digital and data capabilities, as well as
sustainable growth through distribution
diversification through the broker channel
and other partnerships.
The Group’s largest international
operation, ConTe in Italy, increased
vehicles insured by 7% to
1.04 million (2022: 0.97 million) and
Motor turnover by 20% to £272.4 million
(2022: £227.9 million) reflecting
disciplined growth and price increases.
The business continued to focus on risk
selection and expense reduction as well
as growth in the broker channel.
L’olivier (France) increased its
customer base by 6% to 0.42 million
(2022: 0.40 million). The business has
focused on margin protection in a difficult
market with risk selection and loss
ratio improvements, alongside strong
cost control and the development of
household insurance to leverage cross-
selling opportunities and further support
future growth.
The insurance service margin also
improved to -3.0% (2022: -7.8%),
driven by an improved combined
ratio. This, together with increased
investment income, resulted in a lower
reported loss before tax of £18.0 million
(2022: £56.2 million).
The combined ratio improved to 100.3%
(2022: 109.5%), due to the combined
effect of higher premiums, increased scale
in the European businesses, and a strong
focus on expense efficiency in Europe
as well as a reduced cost base in the US.
This resulted in the loss ratio improving to
69.6% (2022: 74.7%) while the expense
ratio reduced to 30.7% (2022: 34.8%).
Investment in diversification continued
with a focus on distribution in Italy
and Spain, and Household insurance in
France. This will further facilitate the
long-term growth and profitability of
these businesses.
The European insurance operations
in Spain, Italy and France insured
1.91 million vehicles at 31 December
2023 – 6% higher than a year earlier
(2022: 1.80 million). Motor turnover
was up 17% to £613.3 million
(2022: £522.9 million), driven by strong
price increases and the larger book sizes.
The combined European Motor profit was
£6.1 million (2022: loss of £16.5 million),
an improvement driven by higher average
premium and an improved expense ratio
despite continued inflationary pressures.
The combined ratio reduced to 95.4%
(2022: 104.2%).
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 5050
Admiral Money review
51
Admiral Money financial review
£m
Total interest income
Interest expense*1
Net interest income
Other fee income
Total income
Credit loss charge
Expenses
Admiral Money profit before tax*2
*1. Includes £1.5 million intra-group interest expense (FY 2022: £1.5 million).
*2. Alternative Performance Measures – refer to the end of this report for definition and explanation.
Admiral Money distributes and
underwrites unsecured personal
loans and car finance products for UK
consumers through price comparison,
credit scoring applications and direct
channels. The proposition is focused on
offering real rates to provide customers
with upfront transparency and certainty.
Admiral Money recorded a pre-tax profit
of £10.2 million in 2023 (improved from
£2.1 million profit in 2022), continuing
the positive trajectory seen since 2020.
Gross loan balances grew 8% to
£0.96 billion (2022: £0.89 billion),
with a £81.7 million (2022: £63.7 million)
credit loss provision, leading to a net loan
balance of £875.1 million
(2022: £823.7 million). The increase
in average portfolio size year on year
contributed to a 49% increase in
net interest income to £66.4 million
(2022: £44.6 million).
As with prior year, Admiral Money
continued to carefully manage
affordability and credit criteria for
new lending in 2023 to reflect the
higher interest rate and elevated
inflation environment. At the same
time interest rates on new loans were
increased to reflect the rising cost
of funding. These measures will help
ensure sustainable financial performance
into the future.
2023
94.7
(28.3)
66.4
0.1
66.5
(33.4)
(22.9)
10.2
2022
58.7
(14.1)
44.6
0.3
44.9
(20.6)
(22.2)
2.1
The credit loss charge increased to
£33.4 million (2022: £20.6 million).
Overall, an appropriately cautious
approach has been taken to calculating
the credit loss provision, including
post model adjustments for model
performance, cost of living, economic
scenarios forecast uncertainty, reflecting
the level of uncertainty in the current
economic environment. For further
information, refer to note 7 in the
financial statements.
Admiral Money is funded through a
combination of internal and external
funding sources. The external funding
is secured against certain loans via
transfer of the rights to the cash-flows
to two special purpose entities (SPEs).
The securitisation and subsequent issue
of notes via SPEs does not result in a
significant transfer of risk from the Group.
Enhancing
OUR DIGITAL
CAPABILITIES
“I’m proud of how we
have navigated these
uncertain times,
and I am absolutely
delighted with our
first double digit profit
of £10 million.”
Scott Cargill
CEO, Admiral Money
2023 has also been a year of significant
and successful investment in our
capabilities, particularly in technology
and data. We are especially looking
forward to seeing the benefits of our
new origination platform in 2024.
This new technology also provides us
with options to broaden our participation
in the consumer lending market in
the future.
We have also completed the delivery
of several enablers for realising our goal
to be the lender of choice for Admiral
Insurance customers. This is a key pillar
of our strategy and where we have
the most significant and sustained
competitive advantage. Over 50% of
our new customer flows in 2023 came
from either current or recent Admiral
Insurance customers.
Looking to 2024, we enter the year
with good momentum. We expect to
benefit from our strong position in a
growing market as we see a continued
shift to comparison and credit score
marketplaces. I expect to see further
growth in our loan balances towards
the £1.2 billion range during 2024,
assuming current economic conditions.
Combined with a tightly controlled
cost base, we should see continued
improvements in the economics in the
coming years.
I’d like to finish by thanking our
customers and all of my colleagues
and wish everyone the best for 2024.
I’m pleased to be able to say
it has been a positive 2023
for Admiral Money.
Coming into the year we knew there
would be continued uncertainty with
higher interest rates and inflation
impacting on the cost of living. I’m proud
of how we have navigated these uncertain
times and I am absolutely delighted with
our first double digit profit of £10 million.
I would also draw particular attention to
our cost income ratio which is below 40%
for the first time and which represents
growing evidence of a likely long-term
competitive advantage.
Through the year we have continued to
focus on high quality risk selection and
a controlled and conservative approach
to growth. Our on-balance sheet loan
book at end of December stands at
£0.96 billion, 8% growth since FY 2022
and slightly down on the HY 2023
position. Our net income of £66 million
has increased by 49% from 2022, largely
reflecting the higher average balances
through the year as well as margin
improvements to provide risk resiliency.
We retain a firm focus on prime
lending and are seeing a high level of
resilience from our customers despite
inflation and higher interest rates.
Where loss experience has varied from our
expectation, in true Admiral fashion we
have adapted our approach quickly and
decisively and have remained well below
our IFRS 9 expected credit loss (ECL)
reserve position. Our NPS score of 68 and
Trustpilot score of 4.5 provide continued
evidence that our commitment to being
an efficient prime focused lender and
providing certainty and transparency
to UK customers on their lending needs
is a successful formula.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 5252
Other Group Items
Other Group items financial review
£m
Share scheme charges
Other central costs*1
Admiral Pioneer result*1
Business development costs*1
Finance charges*2
Compare.com loss before tax
Other interest and investment income*1
Total
2023
(54.4)
(41.7)
(16.2)
(15.3)
(20.3)
(2.6)
4.6
(145.9)
2022 (restated)
(51.7)
(15.6)
(13.5)
(8.8)
(12.1)
(2.8)
10.1
(94.4)
*1. A number of small re-allocations of costs/income have been made between these lines and UK insurance/International insurance segment results for 2022. These include moving costs related to
the French fleet insurance business (closed in H1 2023) out of the Admiral Pioneer operating result, leading to a lower loss in Admiral Pioneer than reported in 2022.
*2. Finance charges within other group items include £1.7 million (2022: £0.7 million) that relate to intra-group arrangements, with the corresponding income presented within the UK
Other interest and investment
income decreased to £4.6 million
(2022: £10.1 million). In 2022, there was
a gain of £4.7 million from the sale of
UK government bonds which was not
repeated in the current period, and
the current period also includes a loss
of £3.6 million in 2023 related to the
re-purchase of bonds as a result of the
debt restructure. Excluding these factors,
underlying interest and investment
income increased to £8.2 million from
£5.4 million, in line with the higher
interest rate environment.
Insurance result.
Share scheme charges relate to the
Group’s two employee share schemes.
The increase in the charge compared to
2022 is driven primarily by the higher
share price in 2023 relative to 2022,
which increases the employer’s national
insurance cost on shares due to vest.
Other central costs consist of Group-
related expenses and include the cost of
a number of significant Group projects,
such as the internal model development
and other regulatory projects, central
management salaries and expenses,
and additional expenses including gains
and losses on amounts held in foreign
currencies. The significant increase in
other central costs is driven primarily by
costs incurred on interest and penalties
on settlement of a historic Italian tax
matter (further details are provided in
the taxation section later in this report);
an adverse impact of foreign exchange
movements (compared to a gain on these
balances recognised in 2022), and higher
costs related to M&A activity.
Admiral launched Admiral Pioneer
in 2020 to focus on new product
diversification opportunities, as part of
the investment in product diversification.
Pioneer businesses include Veygo (flexible
pay-as-you-go and learner driver insurer
in the UK) and small business insurance
in the UK. Pioneer reported a loss of
£16.2 million in 2023 (2022: £13.5 million).
This was mainly driven one particular
large claim in Veygo, for which a cautious
reserving approach has been adopted,
together with continued investment in
small business insurance.
Business development costs increased to
£15.3 million (2022: £8.8 million), primarily
attributed to increased investment in new
businesses within the operations across
the Group as part of the diversification
strategy. Admiral took the decision to
close its small fleet insurance business
in France, which also resulted in modest
closure costs.
Finance charges of £20.3 million
(2022: £12.1 million) primarily related
to interest on subordinated notes, as
well as a small one-off charge in relation
to the renewal of the Group’s revolving
credit facility. In July 2023, the Group
issued £250 million subordinated loan
notes, at a fixed rate of 8.5%, with a
redemption date of January 2034. At the
same time as the new issue, the Group
made a tender offer for the existing
£200 million subordinated loan notes, with
£145 million of the 2024 notes tendered.
At 31 December 2023 the resulting
nominal value of subordinated liabilities
on the balance sheet is £305 million,
which will reduce to £250 million in
July 2024.
A loss of £2.6 million (2022: £2.8 million)
was attributed to compare.com in
the first half of the year, which was
a combination of a small loss in the
business together with a small loss
recognised on disposal. The sale of this
US comparison business completed
during the period, with no cash exchange
as a result, but Admiral receiving a
minority share in the acquiring business.
Group Capital Structure and Financial Position
53
The Group manages its capital to ensure
that all entities are able to continue
as going concerns and that regulated
entities comfortably meet regulatory
capital requirements. Surplus capital
within subsidiaries is paid up to the Group
holding company in the form of dividends.
The Group’s regulatory capital is
based on the Solvency II Standard
Formula, with a capital add-on to reflect
recognised limitations in the Standard
Formula with respect to Admiral’s
business, predominantly in respect
of profit commission arrangements
in co- and reinsurance agreements.
The Group continues to develop its
partial internal model to form the
basis of future capital requirements.
Having taken time to review, update and
extend the scope of the model as well as
completing further cycles of independent
external validation, the Group expects to
enter a pre-application process with its
regulators soon. Once the pre-application
process is complete, the Group expects
to be able to communicate timelines
for a full application.
In the interim period before model
approval, the current standard formula
plus capital add-on basis will continue
to be used to calculate the regulatory
capital requirement.
The estimated and unaudited Solvency
ratio for the Group at the date of this
report is as follows:
Group capital position (estimated and unaudited)
Eligible Own Funds (post-dividend)*1
Solvency II capital requirement*2
Surplus over capital requirement
Solvency ratio (post-dividend)*3
YE 2023
£bn
1.42
0.71
0.71
200%
YE 2022
£bn
1.20
0.66
0.54
180%
*1. 2023 Own Funds include approximately £250 million of Tier 2 capital following the Group’s recent issue of ten-year subordinated loan notes. YE’22 Own Funds include approximately £200 million of
Tier 2 capital.
*2. Solvency capital requirement includes updated, unapproved capital add-on.
*3. Solvency ratio calculated on a volatility adjusted basis.
The Group’s solvency ratio has improved
over 2023 to a strong closing position at
200% (2022: 180%). Strong generation
of economic capital in the core UK
motor business, in particular during the
second half of the year, contributed to an
increase in Own Funds of approximately
£200 million. The increase in Tier 2 Capital
of approximately £50 million (further
detail below) also contributed to the
Own Funds increase as well as smaller
favourable impacts from movements in
yields and spreads in the year, and the
impact of changes in the risk margin
arising from the PRA’s introduction of the
new UK prudential regime for insurers,
‘Solvency UK’.
The SCR also increased over the year,
though to a lesser extent. The increase of
approximately £50 million was primarily as
a result of the increase in premiums across
all Group businesses and the associated
impact on underwriting and operational
risk elements of the capital requirement.
The SCR above includes an updated
capital add-on which is recalculated at
the end of each period. As a result, it is
different to the fixed Group capital add-
on which is included in the regulatory
Quantitative Reporting Templates (QRTs)
reported to the PRA.
During the second half of 2023, the PRA
issued notice of an updated fixed Group
capital add-on of £24 million, which is
lower than the previously approved add-
on of £81 million, but higher than the
Group’s own assessment of the capital
add-on at the end of 2023.
The estimated solvency ratio including
the fixed Group capital add-on of
£24 million, that is calculated at the
balance sheet date rather than the date
of this report, and will be reported in
the Group’s 2023 Solvency and Financial
Condition Report (SFCR) is as follows:
Regulatory solvency ratio (estimated and unaudited)
Solvency ratio as reported above
Change in valuation date*1
Other (including impact of updated, unapproved capital add-on)
Solvency ratio to be reported (SFCR)
*1. The solvency ratio reported above includes additional own funds generated post year end, up to the date of the approval of the dividend.
2023
£m
200%
(11%)
(6%)
183%
2022
£m
180%
(11%)
(20%)
149%
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 5454
55
Group Capital Structure and Financial Position
continued
Issue of subordinated loan notes
During July 2023, Group issued 10.5 year,
8.5% £250 million subordinated loan
notes. At the same time as the new issue,
the Group made a tender offer for the
existing £200 million subordinated loan
notes, due to mature in 2024. £145 million
of the 2024 notes were tendered, with
the remaining £55 million of 2024 notes
not classified as Tier 2 Capital within Own
Funds at the end of 2023.
Investments and cash
Investment strategy
Admiral Group’s investment strategy
focuses on capital preservation and low
volatility of returns relative to liabilities
and follows an asset liability matching
strategy to control interest rate, inflation
and currency risk. A prudent level of
liquidity is held and the investment
portfolio has a high-quality credit profile.
In 2023, the focus remained on matching,
and cashflows were invested into high
quality assets to take advantage of rising
risk-free rates, whilst being appropriately
cautious on the credit outlook. The Group
holds a range of government bonds,
corporate bonds, alternative and private
credit assets, alongside liquid holdings in
cash and money market funds.
A further aim of the strategy is to
reduce the Environmental, Social, and
Governance (ESG) related risks in the
portfolio whilst continuing to achieve
sustainable long-term returns. In 2023,
the portfolio weighted average ESG score
had an MSCI AA rating.
Net investment income for 2023 was
£126.7 million (2022: £66.4 million).
Provisions for expected credit losses
developed favourably, leading to
a £2.5 million release of provisions
(2022: £1.8 million favourable impact).
The investment return on the Group’s
investment portfolio (excluding unrealised
gains and losses and the movement in
provision for expected credit losses)
was £124.4 million (2022: £64.1 million).
The annualised rate of return was higher
at 3.3% (2022: 1.6%), due to higher
reinvestment yields and higher returns
on floating rate securities as interest rates
rose throughout the year.
Solvency ratio sensitivities
£m
UK Motor – incurred loss ratio +5%
UK Motor – 1 in 200 catastrophe event
UK Household – 1 in 200 catastrophe event
Interest rate – yield curve up 100 bps
Interest rate – yield curve down 100 bps
Credit spreads widen 100 bps*1
Currency – 25% movement in Euro and US dollar
ASHE – long term inflation assumption up 50 bps
Loans – 100% weighting to ‘severe’ scenario*2
2023
-11%
-1%
-5%
-1%
+1%
-5%
-3%
-3%
-1%
2022
-11%
-1%
-4%
-2%
+2%
-6%
-3%
-3%
-1%
*1. 2022 credit spread sensitivity restated to include the benefit of offsetting movements in the volatility adjusted yield curve
used for discounting liabilities.
*2. Refer to note 7 to the financial statements for further information on the ‘severe’ scenario.
Investment return
£m
Underlying investment income yield
Investment return
Unrealised (losses)/gains on derivatives
Movement in provision for expected credit losses
Total investment return
Cash and investments analysis
£m
Fixed income and debt securities
Money market funds and other fair value instruments
Cash deposits
Cash
Total*1
2023
3.30%
124.4
(0.2)
2.5
126.7
2023
2,825.9
918.8
116.7
353.1
4,214.5
2022
1.6%
64.1
0.5
1.8
66.4
2022
2,372.7
934.7
101.4
297.0
3,705.8
*1. Total Cash and Investments include £278.2 million (2022: £198.2 million; 2020: £74.8 million) of Level 3 investments. Refer to
note 6e in the financial statements for further information.
Cashflow
£m
Operating cashflow, before movements in investments
Transfers to financial investments
Operating cash flow
Tax payments
Investing cash flows (capital expenditure)
Financing cash flows
Loans funding through special purpose entity
Foreign currency translation impact
Net cash movement
Unrealised gains/(losses) on investments
Movement in accrued interest, foreign exchange and
unrealised gains/(losses) on derivatives
Net increase in cash and financial investments
2023
697.5
(285.5)
412.0
(133.0)
(75.9)
(216.7)
44.9
24.8
56.1
98.1
69.0
508.7
2022 (restated)
379.1
189.0
568.1
(91.2)
(101.0)
(692.8)
267.8
(26.6)
(75.7)
(255.6)
113.2
(407.1)
The main items contributing to the operating cash inflow are as follows:
£m
Profit after tax
Change in net insurance contract liabilities
Net change in trade receivables and liabilities
Change in loans and advances to customers
Non-cash Income Statement items
Taxation expense
Operating cashflow, before movements in investments
2023
337.2
309.5
(42.3)
(73.6)
61.1
105.6
697.5
2022 (restated)
285.3
248.6
(21.2)
(280.6)
71.1
75.9
379.1
In 2023, there were no significant
commutations, with the majority of quota
share reinsurance covering underwriting
year 2020, and all arrangements covering
the 2019 and prior underwriting years,
having now been commuted.
UK Household Insurance
The Group’s Household business is
supported by long-term proportional
reinsurance arrangements covering
70% of the risk, that run to at least
2024. In addition, the Group has non-
proportional reinsurance to cover the
risk of catastrophes stemming from
weather events.
International Car Insurance
In both 2022 and 2023 Admiral retained
35% (Italy), 30% (France), 30% (Spain) and
40% (USA) of the underwriting risk in each
country respectively.
Excess of loss reinsurance
The Group also purchases excess of loss
reinsurance to provide protection against
large claims and reviews this cover annually.
The UK Motor excess of loss cover remained
similar to prior years with cover starting at
£10 million.
UK Motor Insurance
Munich Re and its subsidiary entity,
Great Lakes, currently underwrites 40%
of the UK Motor business. From 2022,
20% of this total is on a co-insurance basis
(via Great Lakes) and will extend to 2029.
The remaining 20% is on a quota share
reinsurance basis and these arrangements
now extend to 2026.
The Group also has other quota share
reinsurance arrangements confirmed
to at least 2024, covering 38% of the
business written.
The nature of the co-insurance proportion
underwritten by Munich Re (via Great
Lakes) in the UK is such that 20% of all
Motor premium and claims accrue directly
to Great Lakes and are not reflected in the
Group’s financial statements. Similarly,
Great Lakes reimburses the Group for its
proportional share of expenses incurred in
acquiring and administering this business.
The quota share reinsurance
arrangements result in all Motor
premiums, claims and expenses that
are ceded to reinsurers being included
in the Group’s financial statements.
These agreements operate on a funds
withheld basis and include certain
features such as expense caps and an
allocation of investment income earned
on the funds held by Admiral on behalf
of the reinsurers. These features result
in higher profit commission should the
underwriting year reach profitability.
Admiral tends to commute its UK Car
Insurance quota share reinsurance
contracts 24-36 months after inception
of an underwriting year, assuming there
is sufficient confidence in the profitability
of the business covered by the
reinsurance contract.
After an underwriting year is commuted,
movements in financial statement
loss ratios result in reserve releases (or
strengthening if the loss ratios were
to increase) rather than reduced or
increased profit commission.
An increase in the market value
of the portfolio of £98.1 million
(2021: £255.6 million reduction)
primarily relates to the reversal of losses
recognised in 2022 as the bonds are
held closer to maturity. That movement
is reflected in the Statement of Other
Comprehensive Income.
The Group continues to generate
significant amounts of cash and its
capital-efficient business model enables
the distribution of the majority of
post-tax profits as dividends. Total cash
and investments at 31 December 2023
was £4,214.5 million (31 December
2022: £3,705.8 million), the increase
reflecting market value gains noted
above, an increase in assets at the Group
level following the refinancing of the
Group’s subordinate debt during 2023,
and growth in premiums written.
The net increase in cash and investments
in the period is £508.7 million (2022:
decrease of £407.1 million).
Taxation
The tax charge for the period is
£105.6 million (2022: £75.9 million),
which equates to 23.8% (2022: 21.0%)
of profit before tax. The increase in the
UK rate of corporation tax to 25% (from
19%) from 1 April 2023 is a significant
driver of the increase. In addition, in
late 2023 the Group settled an amount
related to a historic Italian tax matter.
This is not expected to result in a material
increase in the tax charge going forward.
See note 10 to the financial statements
for further details.
Co-insurance and reinsurance
Admiral makes significant use of
proportional risk sharing agreements,
where insurers outside the Group
underwrite a majority of the risk
generated, either through co-insurance
or quota share reinsurance contracts.
These arrangements include profit
commission terms which allow Admiral
to retain a significant portion of the
profit generated.
Although the primary focus and disclosure
is in relation to the UK Motor insurance
book, similar longer-term arrangements
are in place in the Group’s international
insurance operations and the UK
Household and Van businesses.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 5656
Sustainability
Driving
POSITIVE CHANGE
TOGETHER
The new structure supports the Group’s
ambition to further embed consideration
of sustainability within its commercial
strategy and all business activities and
behaviours. Admiral strives to increase
the impact of its focus on sustainability
through engagement of operations and
supply chain, the leveraging of skills and
volunteering to create more jobs in its
communities, evolution of its investment
portfolio, and the development of
new products and services to support
customers’ lifestyles.
Quick reference guide
Item
Strategy
Material Sustainability Issues
Our Customers
Our People
Our Business
Our Society
External Engagement
Sustainability Ratings
and Rankings
Page
56
58
60
62
64
66
68
70
Our approach to sustainability
Sustainability has always been at the
heart of Admiral’s business, throughout
the Group’s thirty year history. Admiral has
supported millions of customers,
provided a great place for its employees
to work and thrive, and supported
its communities. The Group has sought
to reduce its carbon footprint for
over a decade.
In 2023, the Group further increased its
focus on sustainability. It has brought
together existing sustainability efforts
under a newly-appointed Group Head of
Sustainability, supported by an enhanced
sustainability governance structure.
This approach will provide the dedicated
resource, expertise, and Group-wide
focus needed to co-ordinate all aspects
of sustainability already present across
the Group.
Our Purpose
Admiral Group’s purpose is to help more
people to look after their future, while
always striving for better, together.
The purpose framework demonstrates
how our purpose is embedded across
Admiral Group.
The purpose framework and its
consideration of stakeholders provides
a roadmap for the types of decisions
taken across the business on issues
of sustainability. To see this in action,
please turn to our Materiality Assessment
on page 58.
Sustainability governance
Group Board: The Admiral Group Board is
ultimately responsible for understanding
the Group’s impact on the environment, as
well as the impact of a changing climate
on the Group. It is the principal governing
body for sustainability-related issues and
takes ownership of sustainability and
climate-related topics and associated
stakeholder engagement. The Board
approves the Group’s sustainability
approach and our sustainability ambitions
which can have a material impact
on Admiral. Milena Mondini, Group
CEO, is the accountable Sustainability
representative for the Group and the
Group CRO, Keith Davies has designated
SMCR responsibilities in relation to
understanding and managing the risks to
the business created by climate change.
Board Committees: The Board has
delegated authority to several permanent
committees that deal with sustainability
related matters. The principal committees
of the Board – Group Audit, Group
Remuneration, Group Risk, and Group
Nomination and Governance – play an
important role in the Group’s sustainability
related decision-making processes.
For example, the Group Risk Committee
oversees the management of climate-
related risk and ensures appropriate
oversight is in place for both ‘outside in’
risks and ‘inside out’ risks. The Group Audit
Committee oversees the reporting of risk
disclosures in respect of climate change
and ensures that all external reporting is
complete, accurate and not misleading.
57
Our Purpose framework
Great pl a c e
to w
o r k
Our Purpose
“Help more people
to look after their future.
Always striving for
better, together”
P
o
s
o
i
t
i
n
v
e
i
s
o
m
c
i
e
p
a
t
y
ct
G
r
e
e
x
a
t c
p
e
u
r
i
s
t
e
o
n
c
m
e
e
s
r
u cc essful
u sin ess
b
S
Groups, allowing for a more holistic
assessment of our sustainability approach.
The working groups are chaired by senior
management experts who lead the
Group’s activities in their respective areas:
• Sustainability Positioning
& Communications
• Customer & Product
• Operations, Investments
& Procurement
• Risk, Compliance & Reporting
• People, Learning & Development
Green Team: The Green Team is an
internal colleague-led group which looks
at initiatives on environmental topics,
such as minimising our operational
impact of climate change and engaging
colleagues directly with solutions.
The Green Team is also responsible for
organising environmentally-themed
events within the workplace in
association with partners such as Stump
Up for Trees and Size of Wales.
Sustainability Steering Committee:
To support a more holistic and
co-ordinated approach to sustainability
issues, in October 2023 the Group Board
approved the creation of a management
Sustainability Steering Committee (SSC)
and five supporting Working Groups
(see below), to replace the former
Sustainability Working Group and Climate
Change Committee.
The SSC provides guidance on the overall
programme of sustainability-related work
and ensures a joined-up approach across
the entire Group. Chaired by the Executive
Sponsor for sustainability, it meets
quarterly and comprises the Group CEO,
AECS CEO, Chief Financial Officer, Group
Head of Sustainability and Chairs of the
Working Groups. In addition, the Group
Head of Sustainability provides updates
to the Group Board and relevant entity
Boards and Committees, as required.
The sustainability Working Groups
are based on the key areas of our
sustainability strategy. They discuss
and make decisions on how these areas
impact and are impacted by all the
elements of Environment, Social, and
Governance (ESG). Although the Climate
Change Committee has been retired,
climate – along with other ESG aspects
– is integrated into each of the Working
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
5858
Sustainability
continued
Material Sustainability Issues
Our approach to
sustainability materiality
To capture and address the sustainability
topics that matter most to Admiral
Group’s businesses, we ran a materiality
assessment in 2021. In this assessment,
internal and external stakeholders ranked
topics that they believed material to
Admiral Group’s success. Rankings were
based on topics’ relative importance
operations, not Admiral Group’s current or
historic performance.
We will undertake a revised assessment
in 2024 on a double materiality basis in
readiness for the upcoming EU’s Corporate
Sustainability Reporting Directive (CSRD).
Defining materiality via
stakeholder engagement
Admiral’s Board has affirmed that
Admiral has six stakeholder groups:
Customers, employees, suppliers and
partners, shareholders, community,
and the environment. These six groups
are reflected in the four quadrants of
our purpose framework.
Our materiality assessment was
conducted by reviewing the needs of
each of the six stakeholder groups and
surveying over 500 managers, over 2,000
customers and over 2,000 members
of our communities. The resulting
materiality assessment reflects the
priorities and concerns of stakeholders
during this work.
To view more about our stakeholder
engagement, see our Section 172 report
on page 87
Aligning issues with UN Sustainable
Development Goals
To better align our engagement
on material topics with worldwide
efforts around these topics, in 2023,
we began mapping the topics in our
materiality matrix to the UN Sustainable
Development Goals (see table below).
Whilst the SDGs are a useful tool to help
evaluate our contributions to sustainable
development, not all our material issues
from 2021 are aligned to the 17 goals.
Only those issues that are aligned are
included in the below table.
The UN Sustainable Development Goals
1. No poverty
7. Affordable and
clean energy
13. Climate action
2. Zero hunger
8. Decent work and
economic growth
14. Life below water
3. Good health
and well-being
9. Industry, innovation
and infrastructure
15. Life on land
4. Quality education
10. Reduced inequalities
16. Peace, justice and
strong institutions
5. Gender equality
11. Sustainable cities
and communities
17. Partnerships
for the goals
6. Clean water
and sanitation
12. Responsible
consumption and
production
Read more on our
engagement with the
UN SDGs, see page 68
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Reviewing our materiality assessment
In 2024, we will revisit our materiality assessment to reflect ‘double materiality’. This will allow us to better understand the risks that
sustainability topics pose for us both internally and externally.
Priority
Material issue
United Nations Sustainable
Development Goals
Risk governance and business resilience
Talent acquisition and development
Product quality
Employability and social mobility
Impact of operations on climate change
Eco-friendly products
Innovation
Diversity and inclusion
Educational opportunities
Fair and affordable price
People, health, and wellbeing
Smart, green, and safe mobility
Investing responsibly
Strong ethical partnerships
Community health and wellbeing
External efforts to fight climate change
Sports, arts and culture
Executive remuneration
Financial inclusion
Homelessness and housing
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To read more on the SDG’s, please refer to our Sustainability Report on our corporate website.
Monitor: These topics are part of our ESG tracker, with the view that they may progress to being actively managed in the long term.
Manage: These topics are prioritised on our ESG tracker. They are viewed as topics on which we do well, so they will be managed
and maintained.
Focus: These are topics that the Sustainability Approach will focus on in the short term (18-24 months). Our ambitions for Focus will
evolve over time.
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Sustainability
continued
Our Customers
Customers are at the heart
of everything we do.
Our purpose of helping more people to
look after their future drives us to deliver
products and services that help our nine
million customers meet their needs,
achieve their goals and live resilient lives.
Implementation of Consumer Duty
The UK Financial Conduct Authority’s new
Consumer Duty (‘Duty’) regulation, which
came into force in July 2023, has helped
and will continue to help us demonstrate
how we put customers at the heart
of everything we do. Under the Duty,
customers are to receive communications
they can understand, products and
services that meet their needs and offer
fair value, and receive the support they
need, when they need it.
The Duty builds on our already strong
foundations: for example, where we
undertake regular customer service
monitoring, assessment of customer
demands and needs. We have also,
and will continue to, enhance our
Management Information (MI), reporting
against the four Duty outcomes on a
more granular basis, allowing us to view
outcomes through a customer lens better.
In the case where outcomes are not
as we would like, we make amendments
and enhancements to improve
customer outcomes.
This is particularly important as we
continue to refine our product and service
offerings in line with customers’ changing
sustainability preferences, so that they are
able to pursue their financial objectives
and sustainability goals.
Read more about Consumer Duty on
page 111 of this report
Sustainable and quality products
We strive to create and maintain good
quality, sustainable products for our
customers. Target market and fair value
assessments are undertaken internally,
to confirm that we aim to, and do, meet
customer needs. In the very few instances
where this is not the case, we act quickly
to make changes and improvements
where needed. Our Product and Oversight
Policy also acts as a control to provide
customers with products that perform as
expected and meet their needs.
Financially inclusive products
The nature of insurance means that
individuals, families, and households are
protected from unforeseen financial
difficulties, with the cost of the insured
risk shared amongst many, making it
more accessible to a greater proportion of
the population. It is important to us that
we provide accessible, inclusive financial
products and services that can help more
people plan for the future and protect
themselves against adverse events.
In 2023, this included performing a
premium finance review to ensure our
UK product APRs are delivering fair value,
allowing more customers to finance
insurance payments. In addition, we
continued to develop our tiered UK motor
product offering, which offers an essential
level of cover accessible at lower prices.
Sustainable products
In our UK motor products, we have
worked to support environmentally
friendly products like supporting
our customers with the transition to
alternative-fuel vehicles. In 2023, we are
one of the market-leading underwriters
of electric vehicles by leveraging our core
pricing strengths and developing new
product features.
We expanded our electric vehicle (EV)
insurance proposition by listening to
customer needs and understanding
how they have evolved. In 2023, our UK
motor product launched a range of EV
specific features, such as free recovery
if customers’ vehicles run out of charge,
cover for wall boxes installed at the home,
cover for EV batteries and charging cables
already included in our cover. In 2023, UK
motor launched a partnership with BP
Pulse testing a free six-month ‘On-The-Go’
charging subscription for a subset of our
EV customers. Our aim was to ease the
EV transition by providing customers with
access to charging credit and discounted
charging rates.
As EV adoption continues to evolve in
2024, we will continue to take a customer-
led approach and develop our offering to
support UK customers’ EV transitions.
Climate-resilient products
As a UK insurer, since 2016 our UK
Household business has taken part in the
Flood Re scheme, which is designed to
allow insurers to offer more affordable
insurance for UK homes built before
2009 in areas most at risk of flooding.
Our UK Household business also utilises
quota share reinsurance arrangements,
including both catastrophe and aggregate
cover for the UK household lines.
These agreements allow us to support
more customers with home insurance at
fairer prices. We continue to assess how
we can better support customers affected
by extreme weather events as well as
explore new ways to work with suppliers
to make properties more resilient.
Group average NPS18
>45
Trustpilot Score
4.4
18 Relational NPS, methodology updated in 2022. We’ve
seen a decrease in the NPS mainly due to increased prices,
which are a reflection of current market conditions.
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Launching
STORM HUB
In light of the recent extreme weather
events in the UK, our Household team
launched ‘Storm Hub’ in June 2023.
The Storm Hub aims to improve our
customers’ awareness of weather
events and how they can keep
themselves and their properties as safe
as possible. It also usefully highlights
what their insurance cover includes,
for any subsequent claims they need
to make.
Storm Hub sends weather warnings
to our customers to make sure they
are aware of any extreme weather
events due to happen in the UK, we
use this to direct to information in the
Storm Hub. Our key priority is keeping
our customers safe and helping them
better understand the risks around
extreme weather.
Transparent claims outcomes
As an insurer, we are committed to
providing appropriate claims experiences
that deliver good outcomes for our
customers in a timely manner.
We are continually improving claims
service in all areas. Notable enhancements
in 2023 include in UK Motor, making
handling processes clearer, increasing the
opportunity for additional contact, and
making it easier for our partner garages
to provide updates more regularly to our
customers. These initiatives combined
helped to provide reassurance to UK
customers throughout the claims process.
In Spain and Italy, customers are offered
‘cash settlements’ to reduce claims
settlement times and improve service.
In France, we upgraded our online claims
feature to make it easier for customers
to open claims in the channel of their
preference. Our France-based customers
can now open almost all claims through
the customer portal and chatbot, which
offers automated solutions, in turn
improving customer service and reducing
customer wait times.
Climate-related claims
The impact of climate change continues
to affect our customers through extreme
weather events such as flooding and
increased subsidence in the UK and
hailstorms in the US. In these situations,
it is important that there is clear and
transparent communication between
our claims department and customers.
For example, with our UK insurance
businesses, we send communication to
potentially affected customers ahead
of severe weather events to help them
take steps to reduce the chance of a
loss and to remind them how to make a
claim. In 2023, we launched a ‘Storm Hub’
to provide Household customers with
information on all things storm related.
Taking care of vulnerable customers
Financial inclusion is part of our
sustainability approach. We know
that individual customers may have
different requirements when it comes to
understanding and being informed about
our products, and to be inclusive, we seek
to accommodate those requirements.
Our Vulnerable Customer Policy underpins
our identification, treatment, and
monitoring of vulnerable customers
through their circumstances, whether
temporary or long-term. The Policy
aims to ensure that there are sufficient
controls in place so that these customers
are treated fairly and appropriately and
that their needs are considered in the
development of all products.
In 2023, in UK Motor, we put new
vulnerable customer standards in place,
as well as a process to share the needs of
vulnerable customers with our suppliers.
The aim was to our ensure customers
receive the right level of support
throughout their journey with us. Also in
2023, we launched a feature to allow
customers to update their accessibility
needs in the UK MyAccount portal.
In addition, we re-wrote our in-depth
process guides for customers who need
varying levels of support and rolled out
specific agent training and Company-wide
training to create more awareness.
One example of taking care of vulnerable
customers was in October 2023, when
a fire at Luton Airport affected several
hundred of our customers. We treated
all Luton claims customers as vulnerable
and high need at that stage, due to the
circumstances they faced.
When considering vulnerable customers,
it’s important to not take a ‘one-size-
fits-all’ approach. Our UK business has
dedicated work streams in place to ensure
changes around customer needs are
supported, making it easier for customers
to communicate their needs to us.
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Our People
Our ambition is to be one
of the best places to work
in the world.
‘Always striving for better, together’ is
not only part of our purpose but a key
pillar when it comes to our approach to
our people. All of our people have the
opportunity to shape and contribute
to our unique culture, evolve our test-
and-learn approach, and support our
operational excellence. This opportunity
fosters happier and more productive
colleagues, ultimately shaping better
outcomes for our customers and
other stakeholders.
Diversity and Inclusion
We support Diversity and Inclusion (D&I)
initiatives across Admiral Group, with 94%
of our colleagues around the world stating
in 2023 that they believe that Admiral
Group is a diverse and inclusive employer.
We have Group-wide working groups
focused on maintaining fair processes for
our people and implementing new, better
ways to support diversity in our workspace
(see table below). Cristina Nestares, CEO
of UK insurance, is the Executive Sponsor
of D&I and supports these groups from
the top. Alongside our working groups,
we run D&I training sessions for all
colleagues on topics like neurodiversity,
and also run mandatory D&I training for
all of our line managers.
In the UK in 2023, we became a Foster and
Adoption Friendly Employer. The improved
UK adoption policy mirrors our maternity
policy and allows colleagues to attend pre-
adoption appointments throughout their
journey. Meanwhile, our Foster Carers
Policy gives colleagues paid time off to
attend any meetings or training during
the approval process, and paid leave to
settle a child or young person when they
first arrive. We recognise the different
journeys our colleagues may be on, and
want to ensure everyone has the right
support throughout.
In 2023, we continued to be a Disability
Confident employer in the UK, giving
us the recognition for our devotion
to ensuring that disabled people in
our workplaces are able to participate
fully and receive – a fair chance and
full consideration for job roles, and
development opportunities. In December
2023, we marked the ‘Purple Light Up’,
a global movement celebrating and
drawing attention to the contributions
of our colleagues with disabilities. As part
of our celebration for Purple Light Up,
we shared an inspirational chat event
for colleagues, highlighting the positive
impact of embracing disability at our
UK headquarters.
Diversity and Inclusion Working Groups in 2023
Gender Equality
Ethnicity and Culture
Ty Rainbow LGBTQ+
Age
Disability
Social Mobility
Considers and raises awareness on issues
surrounding gender; continues to support
colleagues and promote an inclusive culture
Supports Admiral in becoming a more ethnically
diverse and inclusive Company through awareness,
discussion, and improvements to the working
environment
Promotes a safe and inclusive environment to
support LGBTQ+ colleagues and customers,
as well as providing a social support network
Focuses on understanding the needs of our
colleagues in various age ranges, including 16-30,
30-50, and 50+. Initiatives in this area include
menopause support, assisting colleagues with
access to appointments
Promotes safe and healthy environments,
raises awareness, and advocates fair and inclusive
workplaces for our colleagues with disabilities
across our Group
Supports work to ensure that regardless of
socioeconomic background, everyone can fulfil
their potential and progress their careers.
Read more about our awards on page 13
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Employee engagement
Part of our culture is making sure our
people feel part of the bigger picture,
and that their contributions matter
and are valued. Our different Employee
Consultation Groups (ECG) across our
international locations provide our people
with a platform to share their views
and give them a voice at the highest
level of the organisation. We encourage
the ECG to share their opinions on any
topic they feel necessary, to ensure
transparent and fair conversations are
happening within Admiral Group, and their
conversations are regularly debated at
the Group Board. In 2023 there have been
four ECG meetings in the UK and many
more across our European operations,
addressing topics such as career
progression, the cost of living crisis, and
our sustainability approach.
As well as the ECG, we engage across the
group with multiple channels, such as
regular one to ones with line managers,
Intranet blogs and articles, colleague
surveys, feedback initiatives such as ‘
Ask Milena’ and ‘Have your say’, and our
global participation in the Great Place
To Work® initiative.
Learning and development
One of our five newly-created
sustainability working groups (see page 57
for more information) focuses on people,
learning, and development, with the
aim of educating colleagues on a range
of sustainability topics such as climate
change and sustainable consumption.
The goal is to support colleagues to
make changes that will have long-lasting,
positive impacts on our community
and planet.
Our specialised Learning and
Development teams act as the core
of our training and support across the
Group. We believe that giving our people
widespread excellent opportunities
to learn and grow elevates our culture
of helping people to love what they
do, and ultimately makes our business
better. Our learning tools include internal
leadership programmes and development
hubs, as well as mandatory training in
core areas.
In 2023 we have made over 5,000 courses
available on our internal development
hub for our UK colleagues, plus over
10,000 courses available globally to
our colleagues via LinkedIn Learning.
We run international, Group-wide
programmes such as Get Discovered,
aimed at supporting our next generation
of female leaders. In 2023 a group of 23
female colleagues took part, getting the
opportunity to extend their network
widely and have mentorship support
from some of our most successful leaders
across the Group.
Our new performance management
tool launched in 2023 across our UK
and European businesses, providing our
colleagues with better tools to empower
their careers, training and progress.
We also continued work on improving
global mobility across the group. In 2023
we set up new global mobility guidelines
and policies, offering more central support
to our colleagues with the aim to aiding
the future mobility of colleagues across
our entities, as well as making it more
accessible to our people.
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Our Business
We strive to build successful
businesses with operational
resilience and deliver on both
financial and non-financial
targets.
Our net zero ambition
We strive to help more people look after
their future, which includes contributing
to global efforts on climate resilience
through limiting our impact upon the
planet, as best we can.
In 2021, Admiral Group formally
committed to achieving net zero
greenhouse gas emissions by 2040 and
to cut these emissions in half by 2030.19
By knowing our market-based
emissions we gain greater control over
our operational footprint. We have
demonstrated this via our UK Scope 2
emissions, which we have reduced to zero.
This is due to purchasing 100% of our UK
energy from renewable sources in 2023.
Across the Group, we purchased 77% of
our energy from renewable sources in
2023, up 8% from 2022.
Greenhouse gas (GHG)
emissions from operations
In 2023 we were on track to reduce our
overall Scope 1 and Scope 2 emissions by
33%, continuing the downward trend.
However, due to a one-off fugitive gas
leak, this was not achieved.
During August 2023, our Admiral Group
House office in Swansea experienced a
one-off emissions event during building
servicing by a third-party vendor.
During the event, a fire suppression
system designed to protect our data
centres was activated, causing a fugitive
gas leak of 295kg of gas equalling 988.25
tonnes of carbon dioxide equivalent
(tCO2e). Due to this event, we saw an
increase in our combined Scope 1 and
2 emissions of 26% compared to the
previous year, despite the 33% fall in other
underlying emissions.
This is the last of our office locations to
use this type of refrigerant gas in the
UK. The refrigerant gas system will be
replaced in 2024, as planned. Otherwise,
we continue to ensure that changes in
operational activities are consistent with
our sustainability objectives. This includes
our environmental and social targets, and
how these are seen by agencies outside
of Admiral.
Successes from our internal
activities include:
• Offsetting emissions by purchasing
Gold Standard carbon offsets
since 2019
• Purchasing electricity in the UK from
100% renewable sources at all sites
• Our Cardiff headquarters is BREEAM
Excellent rated and has photopholtaics
which feed electricity back into the grid
• We have closed 396,000 sq ft of
office space in the last 3 years,
which has significantly reduced our
carbon footprint
• We are installing improved Building
Management Systems (BMS) to
improve the data reporting and adjust
controls accordingly.
Climate impact methodology
In 2017, the Task Force on Climate-related
Financial Disclosures (TCFD) defined
a climate-related risks and opportunities
classification. We have used this as
our starting point for our qualitative
methodology to identify climate risks and
opportunities that might impact Admiral
Group. We assess these risks using our
existing Emerging Risk Matrix.
The output of individual assessments is
an “expected magnitude”, assessed across
three distinct timeframes (0-5 years,
5-10 years, and 10+ years). We apply
this methodology to all our current and
potential future lines of business, our
operations, and our investments. We also
consider existing and emerging regulatory
requirements related to climate change.
Results of this assessment are disclosed in
our annual TCFD report (see page 73).
To quantify the impact of climate-related
issues, we conducted two climate change
scenarios from the Network for Greening
the Financial System (NGFS) 2022 phase
III. Results of these scenarios are disclosed
in our annual ORSA report (see page 109).
We are continually striving for
improvement in evaluating our impact
on climate change. We consistently aim
to improve our methodology by working
with third parties to help ensure we are
matched to industry developments and
standards. In 2023, we submitted our
proposal for Science-Based Targets (SBTs)
to the Science-Based Targets Initiative
after validating past years’ emissions with
Carbon Intelligence, an external advisory
body. Setting SBTs will help us set a clearly
defined path to reduce emissions in
line with Paris Agreement goals. We will
develop further targets and updates
once validated.
Therefore, for 2024, we aim to draft and
implement our net zero transition plan
by leveraging existing work, getting
our SBTs independently verified, and
including the potential impacts of our
identified risks and opportunities on our
financial statements.
Responsible investment
Admiral Group has a responsible
investment policy in recognition of our
duty to protect the interests of our
customers, society, and environment
when investing the premiums we collect.
Our investment portfolio strategy
is focused on Net zero by 2040 to
achieve real economic carbon emissions
reductions. Admiral Group follows the
Institutional Investors Group on Climate
Change (IIGCC) Net zero Framework.
This guides how we decarbonise a range
of investments we hold.
In 2023, with the help of third parties,
we revamped our Environmental, Social,
Governance (ESG) reporting and reviewed
our carbon emissions methodology.
We monitor progress towards our
investment targets by regularly tracking
and reviewing ESG figures and statistics
and this ensures they remain the
most relevant.
We are confident in our approach to
sustainable investment as we continue to
reposition our portfolio to invest in more
assets that reduce carbon emissions and
contribute positively to the environment
and society. Examples of these include
investments in green bonds and
renewable energy infrastructure.
Read more about our responsible investment
portfolio in the TCFD report on page 73
Investment portfolio MSCI rating of
AA
19 Proposed baseline year for emissions cuts is 2021, still to
be verified by SBTi.
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Regular shareholder engagement
Shareholder engagement fosters an
understanding of Admiral Group’s
strategy and investment case.
It allows us to explain the business
and strategic decisions and rationale
whilst providing opportunities for
shareholders to comment and challenge
business priorities.
Admiral’s management team actively
engages with the Group’s shareholders to
promote open and transparent dialogue.
In 2023, we hosted an investor day in our
Ty Admiral Cardiff office which allowed
investors to meet management and
better understand Admiral’s culture
and the key to its success. One-to-
one management meetings, annual
Corporate Governance meetings with our
Board Chair, IFRS 17 updates, and other
meetings continued in 2023.
Read more about shareholder engagement
in the Governance section of the report
on page 136
Sustainable procurement
Admiral Group has embedded
sustainable business practices across
all procurement processes. Our due
diligence questionnaire asks questions
related to the environment, financial
crime, data protection, and modern
slavery, and ensures suppliers are
aligned to our sustainable procurement
standards. Suppliers are risk assessed
throughout the supplier lifecycle process.
Where suppliers’ responses demonstrate
no policies or procedures, Admiral
issues an assessment to the supplier
to capture further information and to
encourage improvements.
Read more about Admiral’s sustainable
procurement processes in the TCFD report
on page 73
Admiral Group’s contract management
system allows our procurement team to
better assess the procurement category
of the supply chain risks. This allows for
increased visibility throughout the supply
chain, ensuring we effectively assess the
business relationships with suppliers.
In the UK in 2023, we have engaged
with our motor supply chain partners
through forums on topics such as electric
vehicles, carbon emissions reduction, and
circular economy.
Read more about Admiral’s stakeholder
engagement with our suppliers and partners
in our Section 172 on page 95
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Sustainability
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Our Society
‘Together For Better’ is our
commitment to transforming
futures outside of our
organisation.
We have always strived to make positive
impact in our communities, and in
2023 we continued to reach this goal
through external partnerships and
philanthropic giving.
25%
increase in people worked with through
the Jesus College access programme.
19%
increase in access specific events from
2022 thanks to the Admiral 2023 donation.
Supporting
PEOPLE INTO
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Our community investment strategy
In line with our business purpose, ‘to help
more people look after their future’, our
strategy includes:
• Employability
• Social mobility and reduced inequalities
• Educational opportunities
• Financial inclusion
• Sports, arts and culture
• Partnerships
As a large employer across several
countries, we want to help improve
our communities in a sustainable and
responsible way. Our approach to affecting
positive change is centred around skills
development and providing more people
with access to employment, helping them
lead more sustainable and inclusive lives.
We have partnered with expert charities
and organisations across the world who
specialise in supporting people into long
lasting and meaningful employment,
reducing skill gaps in local economies.
We are proud that the demographic of
people we’ve supported ranges from
young people to ex-offenders, females in
tech to females in construction, disabled
adults to those individual most distant
from employment opportunities.
Around the world, Generation prepares
individuals facing unemployment to
join or re-enter the workforce through
a career-launching job that provides
economic mobility with positive
intergenerational effects. Thanks to
the generous support from Admiral,
Generation Italy has supported learners
like Gianmarco whose inspiring stories
are shared below.
Before stepping into the transformative
world of Generation Italy’s program,
Gianmarco was navigating
unemployment, with brief stints as
a warehouse worker. Yet, deep inside,
a spark for the realm of IT was always
glowing. He chose the Junior Java
Developer course, his enthusiasm
fuelled by a friend’s success story
in the same field.
Impact hours
Alongside our community investment,
our Impact Hour programme gives each
of our colleagues across the world two
paid volunteering days a year for them
to use to make positive impacts in
their communities.
Globally, from January to December
2023 our colleagues have volunteered
over 14,000 Impact Hours to their
communities reviewing CVs, sharing skills
and mentoring, planting trees, litter
picking, working with care homes and
working at animal shelters to name a few.
In 2023 we have continued our work to
find and build meaningful relationships
with organisations for our colleagues
to volunteer with. We aim to build and
encourage more bespoke opportunities
for our colleagues across Admiral Group.
Throughout 2023, we have encouraged
colleagues to share their skills through
mentoring programmes, teaching
presentations and inspirational talks
to people across our community. As an
example, some of our senior managers
helped facilitate ‘Admiral 5–9 Club’, a
programme for female entrepreneurs that
we funded with Welsh ICE.
“The educators were truly extraordinary.
I found the soft skills lessons especially
invaluable. They’re not just theoretical –
I’ve been applying them daily in my job.
This emphasis on behavioural skills sets
Generation’s programme apart; I’ve never
encountered it in any other Java course.”
When Gianmarco completed the course,
Reactive Almaviva, a Company involved
in guiding the digital transformation
of the finance world, recognised
Gianmarco’s potential and offered him
a position. There, he’s been refining
his expertise and scaling professional
heights, “I’ve recommended this course
to a friend because Generation provided
me with the essential foundation to dive
into this sector. Thanks to Generation,
I joined a prestigious Company like
Reactive Almaviva. This course has been
a turning point in my life.”
Partnerships
Partnerships with philanthropic and
impact organisations help us to increase
the breadth and depth of the impact
we can make with our community
contributions. In 2023 we are proud to
have invested over £1.4 million to support
people outside of our organisation into
sustainable employment. We have done
this by partnering with experts such
as Generation.
In the UK, 2023 was our third year of
partnership with University of Oxford’s
Jesus College on their Welsh access
initiative, which aims to reach more
academically gifted young people
across the country who are currently
underrepresented at Oxford and other
leading universities across the UK.
Through our ongoing support, the access
and outreach teams have been able to
continue their work improving their
access programmes, but also finding new
ways to engage with young people.
Internationally, our partner Generation
is a non-profit organisation striving to
transform the education system into an
employment system. Over 2023 we have
piloted programmes across the world,
supporting programmes in technology
in Italy and programmes in technology,
service, sales, and health sectors in India.
Global emergency fund
In 2022, we set up our global emergency
fund, which is dedicated to making
prompt donations to people and
organisations who need them the
most around the world. During 2023,
we have given over £400,000 to global
organisations such as International Red
Cross and the Disasters Emergency
Committee (DEC), ensuring that funds are
distributed to those most in need as soon
as possible. You can read more on about
our global emergency Fund on page 21.
Environmental engagement
In 2023 we authorised a donation to the
environmental organisation Stump Up For
Trees, part-funding carbon sequestration
via the planting of 2.75 hectares of new
woodland creation. The donation enabled
us to increase tree cover at sites across
the Bannau Brycheiniog, Brecon Beacons
Empowering
FEMALE
FOUNDERS
As part of our ongoing commitment
to help people into jobs, we recently
worked with the Welsh Innovation
Centre for Enterprise (ICE) to launch
the Admiral 5-9 Club for Female
Founders, a programme designed
to empower 30 ambitious female
entrepreneurs who want to turn their
business ideas into reality.
The Admiral 5-9 Club sets out to
provide female entrepreneurs with
the opportunity to strengthen their
business skills without having to
sacrifice their daytime commitments.
A total of 38 entrepreneurs took part
in the programme, with businesses
ranging from doggy daycare centres
to artificial intelligence and medical
robotics. Each week different speakers
from inside and outside of Admiral gave
presentations on key business topics.
Each entrepreneur was also allocated
an ‘Admiral Mentor’, who used their
Impact Hours to dedicate time to help
provide guidance and key advice to
their mentee.
On conclusion of the nine weeks’ course,
the entrepreneurs presented their
business ideas to a ‘Dragons Den’-style
panel. As a result of this partnership,
34 women were inspired to pursue
their business and entrepreneurial
goals. A total of 13 new businesses have
already started trading and growing
thanks to the support and intervention
of the Admiral 5-9 Club.
and South Wales. Along with Stump Up
For Trees, we furthered our donations to
environmental conservation charity Size
of Wales. During the past nine months,
the Size of Wales project has worked with
a community in Boré, Kenya to protect
four of the kayas (sacred forests) in the
local area. Over 29,500 native species
seedlings have also been planted by Kaya
community members. The project has
engaged local unemployed youth in forest
restoration activities, such as building fire
breaks, while supporting them to earn a
living. The project therefore had a double
impact in helping more people look after
their future.
We believe in the importance of
demonstrating responsible business
behaviour with regards to the
environment, not just because our
stakeholders demand it, but because it
is the right thing to do.
Colleague-led donations
Our community and match fund
initiatives continued in 2023, and
from our colleagues’ nominations we
supported over 200 organisations with
grants, spending over £100,000 in total
with the majority going towards sports
and art clubs. As a business, we offer our
match fund for colleagues to request
their fundraising efforts be matched by
the business. In 2023, we have helped a
total of 59 fundraisers totalling around
£64,000 going towards causes close to
our colleagues’ hearts.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
6868
Sustainability
continued
External Engagement
Contributing to the UN Sustainable Development Goals
The Sustainable Development Goals (SDGs) are a set of 17 goals developed by the United Nations. The SDGs define sustainability
priorities and aspirations for the world to achieve by the year 2030. The goals encompass global societal and environmental concerns.
Admiral Group supports these important goals.
SDG 4: Quality Education
Target
4.3: By 2030, ensure equal access for all women and men to
affordable and quality technical, vocational and tertiary education,
including university
4.4: By 2030, substantially increase the number of youth and adults
who have relevant skills, including technical and vocational skills,
for employment, decent jobs and entrepreneurship
4.5: By 2030, eliminate gender disparities in education and ensure
equal access to all levels of education and vocational training for
the vulnerable, including persons with disabilities, indigenous
peoples and children in vulnerable situations.
Contribution
• We help eliminate gender disparities by supporting women
in business through internal programs such as ‘Get Discovered’
• Our Emerging Talent Programme develops vocational skills
and creates opportunity by encouraging internal mobility
• Our community investment helps those with vulnerable
characteristics achieve gainful employment. Examples include
our partnerships with Women Unlimited, Code First Girls, The
Princes Trust, Llamau and The Wallich. We helped >2000 people
into jobs in 2023. For more information please see page 66
‘Our Society’.
SDG 8: Decent Work and Economic Growth
Target
8.2: Achieve higher levels of economic productivity through
diversification, technological upgrading and innovation
8.3: Promote development-oriented policies that support productive
activities, decent job creation, entrepreneurship, creativity and
innovation, and encourage growth of micro, small and medium-sized
enterprises, including through access to financial services
8.4: Improve progressively, through 2030, global resource efficiency
in consumption and production and endeavour to decouple economic
growth from environmental degradation, in accordance with the 10-year
framework of programmes on sustainable consumption and production,
with developed countries taking the lead.
Contribution
• Diversification and innovation are integral to our strategy.
In 2023 we further expanded outside of our UK Motor insurance
operations by growing our Home, Pet and Travel Insurance
businesses, as well as our loans businesses. We supported
technological upgrades and innovation in mobility by becoming
a market-leading underwriter of electric vehicles. We support
decent job creation via our community investment, which
generates gainful employment as discussed under SDG4.
SDG 9: Industry, Innovation and Infrastructure
Target
9.1: Develop quality, reliable, sustainable and resilient infrastructure,
including regional and transborder infrastructure, to support
economic development and human well-being, with a focus on
affordable and equitable access for all
9.2: Promote inclusive and sustainable industrialization and, by 2030,
significantly raise industry’s share of employment and gross domestic
product, in line with national circumstances, and double its share in
least developed countries
9.4: By 2030, upgrade infrastructure and retrofit industries to make
them sustainable, with increased resource-use efficiency and greater
adoption of clean and environmentally sound technologies and
industrial processes, with all countries taking action in accordance
with their respective capabilities.
Contribution
• Our motor insurance product helps make vehicle use and
ownership safer and more financially accessible for more
people, ultimately mobilising them to have better access to
work, school, healthcare, and other essential parts of life which
promote wellbeing
• Our household insurance also helps to make housing financially
accessible for more people by lowering the risk
of home ownership
• With our newfound success as an underwriter of electric
vehicles in the UK, we support our customers as they adopt
more efficient and sustainable forms of transport, lowering the
barriers associated with upgrading to an electrical vehicle.
69
The UN and the World Bank consider insurance itself to be a product that underpins financial inclusion, contributing directly to
SDG 8 of Decent Work and Economic Growth and SDG 9 of Industry, Innovation, and Infrastructure. By protecting against risks,
insurance increases the capacity of individuals, households, and businesses to absorb financial shocks and continue participation in a
healthy, inclusive economy. In line with our purpose and our work to lower our impact on the environment, we contribute to several
other SDGs, as outlined in the table below.
SDG 10: Reduce Inequalities
Target
10.2: By 2030, empower and promote the social, economic and
political inclusion of all, irrespective of age, sex, disability, race,
ethnicity, origin, religion or economic or other status
10.3: Ensure equal opportunity and reduce inequalities of outcome,
including by eliminating discriminatory laws, policies and practices
and promoting appropriate legislation, policies and action in
this regard
10.4: Adopt policies, especially fiscal, wage and social protection
policies, and progressively achieve greater equality.
Contribution
• Our workplace is a safe environment for colleagues to
be themselves, access what they need, and have equal
opportunities across our Group. In 2023, 94% of our colleagues
around the world stated that they believe Admiral Group is
a diverse and inclusive employer
•
Internal programs that promote equality and a safe working
environment for all include our Get Discovered Programme for
women in business, our strong internal social mobility processes,
and our pledge to be a neurodiversity-friendly employer. For more
information on these initiatives see our 2023 Sustainability Report
• Our charity partners help those in economic need into
employment, as well as helping women into gainful employment
in industries which are historically excluded such as construction
and tech. For more information see ‘Our Society’ section on
page 66.
SDG 11: Sustainable Cities and Communities
Target
11.1: By 2030, ensure access for all to adequate, safe and affordable
housing and basic services and upgrade slums
11.5: By 2030, significantly reduce the number of deaths and the
number of people affected and substantially decrease the direct
economic losses relative to global gross domestic product caused
by disasters, including water-related disasters, with a focus on
protecting the poor and people in vulnerable situations
11.6: By 2030, reduce the adverse per capita environmental impact
of cities, including by paying special attention to air quality and
municipal and other waste management.
Contribution
• As mentioned under SDG 9, our home insurance product supports
access to housing through financial inclusion by lowering the
risk associated with home ownership, including ever-increasing
extreme weather events such as flooding and storms
• Our UK electric vehicle insurance product mentioned under
SDG 8 allows greater accessibility to more sustainable methods
of transport, which helps reduce the environmental impact of
transport on global climate and local air quality
• Our Global Emergency Fund has helped communities respond
to natural disasters. In February 2023, we donated £250,000 to
the DEC’s Turkey-Syria earthquake appeal, as well as £30,000
to help the Halifax wildfire response in May of 2023.
SDG 13: Climate Action
Target
13.1: Strengthen resilience and adaptive capacity to climate-related
hazards and natural disasters in all countries
13.3: Improve education, awareness-raising and human and
institutional capacity on climate change mitigation, adaptation,
impact reduction and early warning
13.b: Promote mechanisms for raising capacity for effective
climate change-related planning and management in least
developed countries and small island developing States, including
focusing on women, youth and local and marginalized communities.
Contribution
• Greater adaptive capacity to climate-related hazards is gained
by our customers through our home insurance product lowering
the risk associated with home ownership. This includes initiatives
such as our Storm Hub, which educates and raises awareness of
these hazards by sending weather warnings and information,
so our customers are empowered to better react and take
proactive measures.
• We promote resilience to climate-related hazards through our
community initiatives, such as a Sustainable Land Management
and tree planting project in Boré, Kenya which also employed
women and local unemployed youth.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 7070
Sustainability
continued
Sustainability Ratings and Rankings
We welcome independent
external assessment to a
range of Environmental,
Social, and Governance (ESG)
ratings providers. We do this
as a way to engage with the
wider industry and track
our performance on various
sustainability topics.
Our performance in 2023
In 2023, we maintained our AA ranking
on MSCI.
Our Sustainalytics score decreased
due to changes in ranking for Product
Governance and Data Protection
and Security.
We saw improvement on our
‘Environmental Dimensions’ scoring in the
Dow Jones Sustainability Index. However,
the overall Dow Jones score dropped
slightly compared to 2022. This was due
to stricter evidence requirements than
previous years.
While we have included previous scores
from the Tortoise Responsibility100
index, they have halted their scoring
as of 2023. As such, we will not include
it in future reports.
Restatements
In our 2022 Annual Report, we mistakenly
published our 2021 Sustainalytics rating
of ‘21’ as our 2022 rating, and our
2022 Sustainalytics rating of ‘22.3’ as
our 2021 rating. Also, the Dow Jones
Sustainability Index for 2022 should have
read ‘47/100’. We have amended these
in our 2023 report.
MSCI ESG rating
assessment20
2023: AA
2022: AA
2021: A
DISCLOSURE I NSIGHT ACTION
CDP Climate Score
2023: B
2022: D
2021: C
Sustainalytics
ESG Risk Rating21
2023: 24.3
2022: 22.3
2021: 21.0
31st percentile subindustry
ranking (2022: 21st)
Dow Jones
Sustainability Index
2023: 41/100
2022: 47/100
2021: 37/100
ISS ESG performance
2023: C-
2022: C-
2021: C-
4th industry decile rank
(2022: 3rd)22
Tortoise
Responsibility100 index
2023: HALTED
2022: 63rd out of 100
2021: 21st out of 100
20 The use by Admiral Group of any MSCI ESG research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship,
endorsement, recommendation, or promotion of Admiral Group by MSCI. MSCI services and data re the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty.
MSCI names and logos are trademarks or service marks of MSCI.
21 Copyright ©2022 Sustainalytics. All rights reserved. This report contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of
Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an
investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/
legal-disclaimers
22 A decile rank of 1 indicates high relative performance versus a decile rank of 10 which indicates poor relative performance.
Streamlined Energy and Carbon Reporting (SECR)
71
This statement has been
prepared in accordance with
our regulatory obligation
to report greenhouse gas
(GHG) emissions pursuant
to the Companies (Directors’
Report) and Limited Liability
Partnerships (Energy and
Carbon Report) Regulations
2018 which implement
the government’s policy
on Streamlined Energy
and Carbon Reporting.
Energy and carbon emissions
During the reporting period January
2023 to December 2023, our measured
Scope 1 and 2 emissions (market-based)
totalled 2,092 tCO2e. Reported figures
for 2022 and 2023 comprise of an
additional column omitting the one-off
event activation of a fire suppression
system which has impacted our footprint
and without it, would have resulted in
a market based 33% decrease in Scope
1 and 2 carbon emissions:
FY 2021 (Baseline)1
Emissions (tCO2e)
FY 20221
Emissions (tCO2e)
FY 2023
Emissions (tCO2e)
UK
917
1,750
14
Rest of
world
12
1,175
1,175
Total
929
2,925
1,189
UK
553
1,400
13
Rest of
world
7
1,087
1,087
Total
560
2,487
1,100
UK
1,465
1,312
0
Rest of
world
42
606
585
Total
1,507
1,918
585
FY 20232
Emissions
(tCO2e)
Total
excluding
leak
519
1,918
585
2,667
1,187
3,854
1,953
1,094
3,047
2,777
648
3,425
2,436
932
1,187
2,119
566
1,094
1,660
1,467
627
2,092
1,104
0.13
0.34
0.20
0.07
0.27
0.14
0.18
0.13
0.16
0.37
0.34
0.36
0.26
0.27
0.26
0.33
0.14
0.26
0.12
0.32
0.19
0.07
0.26
0.14
0.17
0.13
0.15
0.35
397
0.32
517
0.34
914
0.25
530
0.26
753
0.25
1,366
0.32
807
0.13
1,170
0.25
1,977
0.08
0.19
0.08
0.18
1,977
Scope 1
Scope 2 – location-based
Scope 2 – market-based
Total Scope 1 & 2
(location-based)
Total Scope 1 & 2
(market-based)
Scope 1 & 2 intensity per FTE
– market-based
Scope 1 & 2 intensity per FTE
– location-based
Scope 1 & 2 intensity per
headcount3 – market-based
Scope 1 & 2 intensity per
headcount – location-based
Scope 3
1
2
3
Restated SECR figures using 12 months data and evidence (previously reported Admiral Group SECR in 2022 annual report was based on 9 months data and evidence and 3 months modelled).
Adjusted to show the emissions without the Scope 1 fugitive gas leak (gas suppression activation).
We will be using headcount for our intensity ratio from 2023 onwards. Headcount refers to the numbers of individual employees. FTE refers to the “full time equivalent” of employees when taking
into consideration part time workers.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 7272
73
Streamlined Energy and Carbon Reporting (SECR)
continued
Task Force on Climate-related
Financial Disclosures (TCFD)
Explanation of movements
Admiral Group PLC report both Scope 2
market-based emissions and
Scope 2 location-based emissions.
A location-based method reflects the
average emissions intensity of grids on
which energy consumption occurs (using
mostly grid-average emission factor
data). A market-based method reflects
emissions from electricity that companies
have purposefully chosen (or their lack
of choice). Admiral report both figures
to demonstrate the variance between
the two reporting methods and to
report against Admiral’s science-based
target, baselined on Scope 2 Market-
based emissions.
Overall, our Scope 1 and 2 (market-based)
emissions have increased by 26% against
last year. Our Scope 1 and 2 (location-
based) emissions have increased by 12%
against last year. This was due to a fire
gas suppression system activation used
to protect data centres from business
impact and is reported under a fugitive
gas leakage during the year. This is the
last location to use this type of refrigerant
gas in the UK and will be replaced in
2024. The fire suppression fugitive gas
leak of 295kg of gas (type HFC-227ea)
and equalled 988.25 tCO2e. Without this
leak, our overall Scope 1 emissions would
have decreased by 7% to 519 tCO2e.
For further context, without the fugitive
gas leak, our Scope 1 & 2 market-based
emissions would have decreased by 33%
to 1104 tCO2e.
The Scope 1 increase was partially offset
by the inactivity of one office in the
USA and two offices in the UK. Due to
the pandemic and subsequent Return
To Office and hybrid working, we have
consolidated offices which were being
used into a more efficient portfolio that
has resulted in a reduction in numbers
of buildings and space. Though we have
maintained a hybrid work model, the
past year has seen an increase in staff
working in the office and subsequently
Energy consumption (kWh)
Electricity
Fuels1
1 Natural gas and transportation fuels (petrol and diesel).
Methodology
We quantify and report our organisational
GHG emissions in alignment with the
World Resources Institute’s Greenhouse
Gas Protocol Corporate Accounting and
Reporting Standard (revised version) and
in alignment with the Scope 2 Guidance.
We consolidate our organisational
boundary according to the operational
control approach, which includes all
our operations and sites. The GHG
sources that constituted our operational
boundary for the year are:
• Scope 1:
– Natural gas combustion
– Diesel vehicle combustion
• Scope 2:
– Purchased electricity - standard
– Purchased electricity - renewable
• Scope 3:
– FERA
– Waste
– Water
– Business Travel
In some cases, where data is missing,
values have been estimated using either
extrapolation of available data or data
from the previous year as a proxy.
The Scope 2 Guidance requires that we
quantify and report Scope 2 emissions
according to two different methodologies
(“dual reporting”): (i) the location-based
method, using average emissions factors
for the country in which the reported
operations take place; and (ii) the market-
based method, which uses the actual
emissions factors of the energy procured.
an increase in utilities consumption.
To mitigate the uplift in consumption,
we made efficiencies on the existing
building management system at
our two largest offices in Cardiff and
Swansea. The Building Management
System upgrade for the two offices
will be completed in H1 2024 and will
further optimise data, monitoring and
performance. In addition to improving the
controls and use of Scope 1 & 2 utilities,
we have been actively disposing of our
property portfolio which has further
contributed to the 33% decrease.
Another increase in Scope 1 is due to
elephant.com and EUI Halifax reporting
on Company cars from January 2023.
In September 2023, we removed leased
vehicles in the UK and intend to the same
in Halifax by the end of 2024.
In 2023 we purchased 77% of our
electricity from renewable sources, an
increase from 69% in 2022. Scope 2
(market-based) emissions for the UK have
reduced to zero due to purchasing 100%
of our electricity from renewable sources.
We have also had three buildings in the
portfolio move over to fully renewable
resources which has contributed to the
33% decrease in Scope 1 & 2 emissions
(excluding fugitive gas leak).
Our Scope 3 emissions are comprised of
business travel, waste, water, and Fuel
and Energy-Related Activities (FERA)
not included in Scope 1 or Scope 2.
Our measured Scope 3 emissions totalled
1,977 tCO2e, an increase of 54% from last
year due to a large increase in business
travel emissions.
During the year, our total fuel and
electricity consumption totalled
11,564,413 kWh, a decrease of 21% from
last year due to reduction in electricity
consumption. 77% of fuel and electricity
consumption was consumed in the UK.
The split between fuel and electricity
consumption is displayed below.
FY 2022
Rest of
world
4,495,000
30,000
UK
7,239,000
2,856,000
Total
11,734,000
2,886,000
UK
6,334,403
2,604,942
FY 2023
Rest of
world
2,433,641
191,428
Total
8,768,044
2,796,370
Introduction
Recognising Admiral’s part
in tackling climate change,
Admiral has reported in line
with the FCA’s listing rule
LR 9.8.6R and included in
its annual financial report
disclosures consistent with
recommendations of the
Task Force on Climate-related
Financial Disclosures (TCFD)
since 2019.
This has provided transparency around
the ways in which climate change impacts
the Group now and will do in the future.
In addition, Admiral also reports on the
Climate-related Financial Disclosure (CFD)
requirements – introduced in 2022 as part
of the UK Government’s Greening Finance
roadmap. The sections below therefore
involve Admiral making disclosures
consistent with all 11 recommendations
and recommended disclosures from
the TCFD framework, and with all eight
CFD requirements (as required under
the Companies (Strategic Report)
(Climate-related Financial Disclosure)
Regulations 2022 sections 414CA and
414CB of the Companies Act 2006).
During 2023 Admiral has made
improvements to comply with
recommendations and recommended
disclosures relating to TCFD Strategy
disclosure b – “describe the impact of
climate-related risks and opportunities
on the organization’s businesses,
strategy, and financial planning”,
and to Metrics and Targets disclosure
c – “describe the targets used by the
organization to manage climate-related
risks and opportunities and performance
against targets”.
• Various activities have been enhanced
to enable Admiral to better evidence
the objectives of TCFD Strategy
disclosure b. To quantify the impact of
climate-related risks and opportunities,
the Company has run climate-related
stress and scenario testing (SST), and
increased the extent to which physical
risks arising from climate-related events
are considered in the financial planning
process – with projected loss ratios for
Admiral’s Household business including
(an increased) allowance for weather
events with a combined target over
a five-year period. Indeed, in order to
meet the increased cost, frequency, and
severity of claims (including weather-
related events arising from climate
change) the Company has proactively
increased average premiums in UK
Car and UK Household business
during 2022 and 2023, and has also
implemented localised rate increases
in the US motor business. Work will
continue to be undertaken during
2024 to consider the potential impact
of additional climate-related metrics
and targets in the Company’s financial
planning and accounting activities.
Finally, the “Diversification” and
“Evolution of Motor” pillars of the Group
strategy, which could mitigate some
of the climate-risk faced by the Group
(and capture upside opportunities),
form a key part of the annual strategic
planning and dynamic business
planning processes.
• The submission of Admiral’s GHG
targets to the Science-based targets
initiative (SBTi) in September 2023
represents a clear development in
climate-related metrics and targets
consistent with cross-industry
standards, as required by the
recommended disclosures within
TCFD Metrics and Targets disclosure
c. This includes scope 1, 2, and 3 GHG
emissions (category 1-14 – supply chain
and category 15 – investments) with
intermediate performance targets
against a 2021 baseline. Such targets
represent the key environmental
performance indicators required to
assess Admiral’s progress against its
net zero ambitions. Other key metrics
already used to assess the performance
of Admiral’s products and services
against climate-related risks include
key inputs into pricing and reserving
decisions, and information on “weather-
related losses following natural
catastrophes” for the UK Household,
UK car, and US motor businesses.
Reinsurance programmes are in place to
mitigate these losses, and the adequacy
of Admiral’s reinsurance programme,
the evolution of losses due to natural
catastrophes, and the performance of
the Company’s pricing, reserving, and
claims management approaches, as well
as the metrics and targets mentioned
above, are all monitored and reported
to the Group Risk Committee (GRC) and
the Group Board in various reports.
Further discussion and information are
included in the relevant sections of the
report and are signposted as such.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 7474
Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Governance
Board and Board Committees
The Admiral Group Board is responsible
for promoting the long-term
sustainable success of the Group and
has ultimate oversight of climate-
related risks and opportunities.
Responsibility for reviewing climate-
related risks is delegated to the GRC and
associated disclosures are reviewed at the
Group Audit Committee.
Climate-related risks are embedded
within the business as usual (BAU)
risk management approach, and any
developments are reported within
regular committee reports including the
Consolidated Risk Report (CRR) and the
CRO Report, as well as regularly scheduled
dedicated climate updates. In addition,
Boards and committees receive numerous
additional updates as part of other
presentations (e.g., ORSA Report) or
discussions on environmental, social and
governance (ESG) topics.
Admiral’s climate and sustainability
governance structure as well as roles and
responsibilities are summarised in the Table
1. Such arrangements are proportionate
to the nature, scale and complexity of the
Company’s operations and business.
Table 1. Board and Board Committees covering climate-related risks and opportunities.
Committees
Roles and responsibilities
Activity during 2023
Group Board
• The Group Board is ultimately responsible for
• During 2023, there were seven scheduled Group Board
Group Risk
Committee
understanding the Group’s impact on the environment,
as well as the impact of a changing climate on the
Group, and for agreeing how this is considered in the
context of the Group’s governance structure, strategy,
risk management, and business outcomes, including
performance against business objectives
• The Group Board approves the Group ORSA Report,
which includes consideration of climate-related risks
and opportunities alongside SST.
• The GRC has delegated authority from the Group
Board for overseeing risk management activities, and is
therefore responsible for reviewing climate-related risks
and opportunities
• Developments in relation to climate-related risks and
opportunities are included in the CRR and the CRO Report
where appropriate, which are both presented at each of
the five scheduled GRC meetings annually (as well as at
some ad hoc meetings)
• Dedicated agenda items allow a full update of climate-
related activities to be considered, including progress
towards goals and targets
• Climate change considerations are also reported within
the ORSA Report, which is reviewed by the GRC before
being recommended for approval by the Group Board.
meetings and some ad hoc meetings. Specific focus was
given to climate-related change during four meetings.
For example, in April 2023, the Group Board received a
formal update on climate change including progress made
across several climate-related areas
•
In 2023 the Board requested and oversaw the submission
of GHG targets to the SBTi for official approval
• The annual strategy review included a review of the
Company’s approach to sustainability including climate issues.
• During 2023, the GRC met nine times (five scheduled and
four ad hoc meetings) to review, manage and monitor
all aspects of risk management. Specific focus was given
to climate-related risks and opportunities during three
meetings. For example, in June 2023, the Committee
reviewed the development of Admiral’s EV offering to
support the transition to a low carbon economy, and
of Admiral’s carbon offsetting strategy. In addition, the
Committee reviewed and challenged progress towards
Admiral’s GHG targets
• Throughout the year the Committee considered the impact
from named storms and other weather events (e.g., storms
Babet and Ciaran), as well as actions taken by Admiral to
mitigate and manage the impact.
Group Audit
Committee
• The Group Audit Committee is responsible for overseeing
climate-related financial disclosures under TCFD, and CFD,
as well as any climate-related audits (of which there was
one in 2023).
•
In April 2023, the Committee reviewed the ‘Climate Risk’
audit report produced by the Internal Audit Team providing
an independent opinion on key processes and controls in
place to manage and report climate risk
Investment
Committee
• The Investment Committee is responsible for the
responsible investment strategy and support the
Company’s effort to achieve net zero by 2040.
• The Committee reviews and approves several climate
related disclosures, including this report, the Streamlined
Energy and Carbon Reporting Regulation (SECR) report and
the annual Sustainability Report.
• During 2023, the Investment Committee reviewed and
challenged several reports covering climate change
(e.g., four reports monitoring the performance of the
responsible investment strategy, one report proposing
to update the integration of ESG considerations into the
responsible investment strategy and one report on climate
solutions and natural capital).
75
Management and
management committees
During 2023 the governance surrounding
sustainability (and therefore climate
change) was further enhanced and
embedded, not least by the appointment
of a Group Head of Sustainability in
charge of ESG approach, building up
the Sustainability Team, and setting
up the new sustainability governance
framework with the establishment of the
Sustainability Steering Committee (SSC),
superseding the existing Climate Steering
Group and Sustainability Working Group
(see Table 2). Discussions/outcomes from
the SSC are escalated to the Executive
Committee and to the Board and Board
Committees mentioned in Table 1 above.
The Group Head of Sustainability reports
ultimately to the Group CEO.
Senior management from across the
Group have various responsibilities
relating to climate-related issues, and
most sit on appropriate fora, such as
the SSC or its five Working Groups.
The reporting at each forum allows
management to be informed of
climate-related issues and to monitor
them closely.
The Group CEO is the accountable
sustainability representative for the
Group, with a remit that includes climate-
related risks and opportunities. The SSC
reports directly to the Group CEO.
The Group CRO has designated Senior
Manager and Certification Regime
(SMCR) responsibilities in relation to
climate change, chairs the SSC, and
is the day-to-day executive sponsor
of sustainability activities across the
Group. They are tasked with developing
Admiral’s Sustainability Team and ensuring
effective coverage of sustainability topics
across all lines of defence.
The Group CFO is responsible for
investments, including responsible
investment and climate change
considerations. They are also responsible
for the reinsurance programme which
increasingly considers excess of loss cover
for extreme weather events.
Climate-related risks and opportunities
are typically articulated at Group level,
although the materiality and potential
exposure of individual lines of business
are considered and actions relating to
operations, investments and products
are actually implemented at entity level.
The Group Enterprise Risk Management
(ERM) Team monitors emerging risks
and Principal Risks and Uncertainties
(PR&Us) and identifies and assesses
climate-related risks and opportunities.
The output is included in regular and
ad hoc Board and committee reporting.
The Group ERM Team, in conjunction
with the Sustainability Team, also
coordinates climate risk-related
work across the Group, including the
identification of climate-related risks,
their potential impact, and any resulting
opportunities. Management teams across
Admiral are responsible for managing
areas of the business which may affect
or be affected by climate change, and
for reporting progress to the SSC’s five
Working Groups and other committees.
They have a key role in identifying climate-
related risks in their respective areas.
Table 2. Management Committees covering climate-related risks and opportunities.
Committees
Roles and responsibilities
Activity during 2023
Group
Executive
Committee
Sustainability
Steering
Committee
• This Committee is comprised of the Group CEO, CRO, and
CFO, along with the EUI CEO and other senior managers
•
• The Committee is appraised of, and provides guidance on,
climate-related initiatives across the three focus areas of
operations and supply chain, investments, and products
and services.
In 2023, this Committee continued to operate as the
executive-level forum covering climate-related initiatives
and propositions. For example, Admiral’s approach to
embedding sustainability, material weather events, and
the development of Admiral’s EV offering, were discussed
during the year.
• The SSC, which replaced the Climate Steering Group
and the Sustainability Working Group in 2023, provides
oversight, challenge, and guidance on the overall
programme of sustainability-related work (including
climate change) and ensures a joined-up approach across
all Group functions and Group entities
•
It meets quarterly and covers discussions/outcomes
(including climate-related risks and opportunities) from
five Working Groups (covering operations, investments and
procurement, risk and compliance, customer and product,
people and communication) and developments from the
Sustainability Team.
• The establishment of the SSC was approved by the Group
Board in October 2023 and the first meeting was held in
Q1 2024
• Prior to establishing the SSC, guidance on the overall
programme of climate-related work, including discussion
of risks and opportunities, was provided by the Climate
Steering Group, which met quarterly, with oversight from
the Sustainability Working Group
• The SSC reports directly to the Group CEO, to whom any
key decisions are escalated and who provides updates to
the Group Board
• The SSC is chaired by the Group CRO and is supported by
five Working Groups which are attended by representatives
from businesses and functions from around the Group.
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Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Figure 1. Climate-related governance
Admiral Group Board
Group Audit Committee
Group Risk Committee
Investment Committee
Group
Executive Committee
Sustainability
Steering Committee
Five working groups
Board and Board
committees
Management and
management committee
Green Team
The Green Team is an internal staff-led working group in operation since 2018. It looks at green initiatives, such as increasing
recycling rates and engaging Admiral’s staff on all aspects of climate-change and environmental matters including the Cycle
Solution scheme. The group is responsible for organising green events within the Company, in association with partners such as
Stump Up for Trees and Size of Wales. In 2023, the group organised Admiral Green Week with film writer Paul Goodenough as a
guest speaker to present his book and the Rewriting Extinction project (a global collaboration to save species from extinction).
For further information see:
Sustainability Steering Committee
Board leadership and company purpose
The Group Risk Committee
Page
57
125
168
Strategy
When considering the
impacts of climate change,
Admiral recognises that
there are two components
(double materiality):
(i)
its impact on the environment;
and
(ii) the impact of climate change
on the Group and all its lines of
business, on its revenues, costs
and via other non-financial risks.
77
Consideration of the company’s impact on
the environment and on people’s futures
is integral to Admiral’s purpose to help
more people to look after their future.
Always striving for better, together.”
Admiral has therefore committed to
achieve net zero emission across all its
carbon footprint by 2040 and to achieve
net zero in operation emissions by 2030.
To consider the impact of climate change
on the Group, Admiral’s climate-related
efforts are aligned to three focus areas –
operations and supply chain, investments,
and products and services – each of
which are potentially exposed to the
three components of climate-related
risks (transition, physical, and liability)
and opportunities, as defined by the TCFD
framework. During 2023, as agreed by
the Group Board, Admiral’s sustainability
approach has been formally embedded
into the Group strategy. To guide efforts
towards achieving the company’s net zero
commitment, the plan to transition to
a low carbon economy includes:
• Operations and supply chain:
Investment has been made to increase
Admiral’s capacity and capability to
manage sustainability topics (e.g.,
building out the Sustainability Team),
improve Admiral’s governance of
climate- and sustainability-related
topics (e.g., implementing the SSC
and its five Working Groups), and align
business decisions to the company’s
net zero commitment. GHG targets
against a 2021 baseline were submitted
in Q3 2023 for validation by SBTi,
which will allow Admiral to track the
performance of its GHG emissions
reductions on an ongoing basis and
take tailored action as needed to
achieve these targets and, later, the
company’s net zero commitment.
Initiatives for further reducing the
Group’s operational footprint have
been identified (e.g., mechanical
and electrical (M&E) changes to
plant and building management
systems). The introduction of supply
chain risk controls in Admiral’s
contract management system has
allowed the company to better
assess the procurement category
of environmental risk, and will allow
Admiral to engage with key suppliers
to encourage them to reduce their
GHG emissions.
• Investments: ESG considerations
are embedded into the investment
approach, and since 2020 Admiral has
followed the Institutional Investors
Group on Climate Change (IIGCC) Net
Zero Framework to help guide the
decarbonisation of its investment
portfolio, set carbon reduction targets,
and monitor the performance of
Admiral’s investment metrics.
• Products and services: To manage the
transition to a low carbon economy,
the annual strategic planning and
business planning processes include
increased allowance for weather
events in projected loss ratios, as well
as the continued development of
the electric vehicle (EV) offering. The
“Diversification” pillar of the Group’s
strategy further supports the transition
to a low carbon economy by developing
and launching new products and
services. Pricing and reserving discipline
are key metrics used to mitigate
physical risks impacting Admiral’s
products and are considered in the SST
run by the company in 2023.
Outcomes from the analysis done on
climate-related risks and opportunities,
as well as from climate-related SST,
discussed in detail later, and additional
analysis from the strategic planning,
business planning and ORSA processes
confirm that the company’s business
model and strategy remain resilient
to potential climate-related impacts
over the periods considered (2023 to
2025): no climate-related risks (including
operational impacts) are assessed as
being catastrophic, the solvency position
remains robust, and some opportunities
offer significant upside. The potential
impact from climate-related litigations
(liability risk) is not presented in the
risk assessment below, as it is currently
assessed as not material.
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Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Time horizons and
assessment ratings
Admiral has defined the following time
horizons for climate-related risks and
opportunities: short-term (0-5 years);
medium-term (5-10 years); and long-term
(10+ years). This is shown graphically in
Figure 2. The short-term time horizon
corresponds with the business planning
horizon, and the medium-term horizon
coincides with the expected useful life of
buildings and infrastructure (depending
on the nature of the infrastructure).
Both transition risks and physical risks are
beginning to crystallise in the short-term,
however the worst physical effects from
changing weather and climatic patterns
may materialise in the medium- and
long-term if a smooth transition to a
low carbon economy is not achieved.
Liability risks are highly uncertain, in
scope and in outcome – the first cases are
currently being brought against oil, gas
and energy companies – therefore any
emergence and timing is less certain.
The potential impact is assessed
qualitatively using subject-matter
expert (SME) input and is cross-checked
against the scenario outputs. At present,
given the large uncertainty around
the likelihood and severity of climate-
related issues, only assumptions related
to changes to claims frequencies and
claims costs, and the associated impact
on loss ratios are incorporated into the
financial planning process, and when
monitoring financial performance and
financial position. Work will be undertaken
during 2024 to consider how Admiral
Group can add additional climate-
related assumptions and their potential
impacts in its financial planning and
accounting activities.
Figure 2. Time horizons for climate-related risks and opportunities
Short-term (ST): 0-5 years
Detailed five-year financial
projections are produced as part
of the business planning process,
using robust assumptions based
on current group structure and
business mix.
Medium-term (MT): 5-10 years
Strategic investments are being
made now in order to provide a
material contribution to Group
results in the medium-term.
Results are inherently subject to
more uncertainty, as customer
demands, consumer behaviour,
and the external operating
environment are all subject to
change, not least from the impact
from climate change.
Risk ratings are defined as follows:
• Moderate/minor impact: relates to
a non-significant impact on revenue
or profit.
• Significant impact: relates to a
potential impact on revenue or profit
which exceeds normal month-to-
month variance.
• Severe impact: relates to a potential
impact on revenue or profits in excess
of typical annual variance.
Opportunity ratings are
defined as follows:
• Moderate: relates to a non-significant
impact on revenue or profit.
• Major: relates to a potential impact on
revenue or profit which exceeds normal
month-to-month variance.
• Transformative: relates to a potential
impact on revenue or profits in excess
of typical annual variance.
Long-term (LT): 10+ years
Beyond ten years it is possible that
the Group will look considerably
different to today and will
potentially be operating within
a much-changed environment.
There is significant uncertainty
over long-term projections.
Operations and supply chain
Transition risks
Admiral may be exposed to increased
capital and operating expenditures,
should legal or regulatory requirements
designed to reduce GHG emissions,
and/or increasing climate-related
expectations from shareholders,
customers, staff, or other stakeholders
require environmentally-friendly
changes to business operations,
products or focus.
Admiral has taken steps over a number
of years to reduce its environmental
impact, and any remaining operational
carbon footprint is offset via the
purchase of Gold Standard carbon
credits. Admiral’s purpose-built
Tŷ Admiral building complies with
BREEAM excellent standards and has
photovoltaics/solar panels fitted which
provide energy directly back into the
grid. Moreover, since 2021, Admiral has
been working with an external party,
Arup Group, to baseline its property
and facilities infrastructure in order
to consider possible carbon footprint
improvements. The identified strategic
initiatives are generally medium-term
commitments, such as M&E changes
to plant and building management
systems, which focus on more
economical use of utilities, water, and
waste, improving controls of the main
M&E plant and associated systems, and
end-of-life replacement of M&E plant
and machinery where a significant
carbon reduction can be achieved.
All such initiatives should be further
supported by on-going improvements
in the accuracy of data produced
throughout the property portfolio.
Business Impacted
Impact
Metrics
All
ST Moderate/Minor
Scope 1, 2 and 3 (categories 1-14)
MT Significant
LT Severe
Key management actions
• The Company has set granular GHG emissions targets and submitted its
GHG targets to SBTi for approval.
Physical risks
Both acute and chronic physical
risks could have a significant impact
on Admiral’s business continuity, by
restricting staff’s ability to commute to
the workplace, making Admiral offices
inaccessible or unsafe, or damaging
critical infrastructure such as data
centres, roads and buildings, or causing
damage to interconnected digital
technologies (e.g., cloud-based services
failing due to elevated temperatures
or floods). While the Group is better
prepared for such an eventuality
following the experience of responding
to Covid and subsequent hybrid-
working model, future climate-related
events may impact staff working from
home and/or critical IT infrastructure
or disrupt key suppliers in a way not
encountered during the pandemic.
To mitigate this risk, an improvement of
the company’s operational resilience is
ongoing. For example, migrating to the
latest, cloud-based claims management
software has included testing for
the capacity to rollback to an earlier
version that uses traditional in-house
data servers.
Admiral’s supply chain partners will
also, to a greater or lesser extent, be
exposed to the same risks from climate
change as the Group. Therefore, Admiral
is working with its largest suppliers on
assessing their exposure to physical risk
and reducing their carbon footprints.
During 2023 Admiral has begun to
account for sustainability factors in
its procurement process, such as by
including 16 questions related to the
environment23 into the due diligence
questionnaire (48 questions in total).
The change to the questionnaire allows
Admiral to tailor questions dynamically
based on a supplier’s response, allowing
the response to be risk-assessed.
The introduction of supply chain
risk controls in Admiral’s contract
management system has allowed it to
better assess the procurement category
of environmental risk.
Business Impacted
Impact
Metrics
Key management actions
All
ST Moderate/Minor
Operational resilience; ESG score from key suppliers
MT Significant
LT Severe
• An improvement of the company’s operational resilience is ongoing to better
manage and mitigate physical risks which could impact Admiral’s business
continuity, and ensure it is tailored to specific geographic conditions/exposures
of the company
• Admiral’s procurement framework was improved in 2022 to include ESG
performance of partners and suppliers
• Additional supply chain controls were introduced in 2023 in Admiral’s contract
management system to allow better assessment of environmental risks from
third parties. This work is still ongoing.
23 E.g., “Does your business hold ISO:14001 accreditation (Environmental Management Systems)?”, “Does your business have an Environmental Policy?”.
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Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Operations and supply chain continued
Opportunities24
There are opportunities based around
city centre heating proposals and
geothermal technology in some
major cities, although these are
medium- to long-term in nature.
Tactical opportunities for carbon
footprint reduction are already in force,
including property downsizing and a
hybrid working model reflecting office
attendance habits in a post-Covid
business environment. There may also be
opportunities to lower costs and to seek
more favourable terms from suppliers
seeking climate-friendly partnerships.
Business Impacted
Impact
Investments
All
ST Moderate
MT Major
LT Major
Transition risks
Admiral’s investments will be exposed
to transition risks, as the move to a low
carbon future may lead to some assets
becoming less attractive. To mitigate
these risks, Admiral has set targets to
reduce the average carbon intensity
of its portfolio by 25% by 2025 from
a year-end 2020 baseline, in line with
the Group’s overall net zero target for
2040. In 2023, Admiral has re-baselined
its GHG emissions using a 2021 baseline
to be consistent with competitors
and submitted its GHG targets to SBTi
for verification (as part of the overall
Group submission). To date, climate
considerations have only had a limited
impact on the Group’s approach to
acquisitions and divestments, although
any potential mergers and acquisitions
(M&A) activity needs to align with the
Group’s overall strategy including climate
change. The acquisition of the UK direct
Home and Pet personal lines insurance
operations of RSA due in 2024, is in line
with Admiral’s overall strategy and will be
incorporated into the company’s net zero
commitment. Climate-related issues have
not had any adverse impact on access to
capital, and indeed the company’s strong
ESG ratings may actually be positive
for the availability and costs of funding.
Similarly, climate-related issues have not
adversely impacted Admiral’s investment
in research and development (R&D) but
have instead shaped areas of priority and
strategy such as the development of EVs.
Business Impacted
Impact
Metrics
Key management actions
All
MT Significant
ST Moderate/Minor
Scope 3 cat.15, SST and capital and liquidity forecast, Weighted average carbon
intensity (WACI), investment in green bonds or in firms with SBTs
• Climate-related considerations are incorporated into investment decisions,
LT Significant
and the decision-making process is clearly documented to support investments
in renewable energy infrastructure, green bonds, and other corporate bonds
• The Company has set climate-related metrics for its investments with granular
targets regularly monitored.
Physical risks
Some of Admiral’s investments will be
exposed to physical risks, as changing
climatic conditions may negatively
impact the performance of investee
companies and cause assets to lose
value prematurely.
Effects may be company-specific
(e.g., capital and liquidity issues),
sector-specific, or may have an impact
on the broader economy and macro
environment, such as reduced economic
growth, higher unemployment or
changes in inflation.
Business Impacted
Impact
Metrics
Key management actions
All
MT Significant
ST Moderate/Minor
Scope 3 cat.15, SST and capital and liquidity forecast, WACI, investment in green
bonds or in firms with SBTs
• Investments in new businesses and opportunities, (e.g., through the “Diversification”
pillar of the Group’s strategy) to help the company in its effort to move away from
less attractive type of assets or obsolete investments.
LT Significant
24 Businesses impacted and metrics used for opportunities are the same as the ones used for climate-related risks (transition and physical) for each focus area (operations and supply chain,
investments and products and services).
81
Opportunities
While climate change poses a risk to the
Group’s investments, the transition to a
low carbon economy should also present
investment opportunities – Admiral has
already invested in renewable energy
infrastructure, green bonds, and other
corporate bonds with credible transition
plans, and is considering approving other
investible asset classes. The company is
also seeking to secure a sustainability-
linked loan, which will be based on
hitting environmental and other
sustainability targets.
The company has targets to grow the
number of third parties which have a
credible plan to align emissions with a
2°C pathway, for example via SBTs. Also,
Admiral does not allow investments in
companies generating more than 10%
of their revenues from coal or tar sands
and restricts investment in companies
not aligned to a maximum of 2°C of
warming, or not subject to engagement
or stewardship actions. By 2025 the aim
is for portfolios to also have 5% green
bonds, with 35% of the portfolio with
Paris-aligned commitments.
Business Impacted
Impact
All
ST Moderate
MT Moderate
LT Moderate
Products and services
Transition risks
The move away from personal petrol
and diesel vehicles is the most obvious
transition risk faced by the Group and is
one which presents a strategic challenge
to Admiral as the company may
experience an erosion of its traditional
competitive advantages in pricing and
claims handling. Initiatives to reduce
aggregate GHG emissions could see a
move from petrol and diesel vehicles
to EVs, and/or a concerted move away
from traditional models of transport
to a model of integrated and active
transport, based on EVs and alternatively
fuelled vehicles (AFVs). The pace of
transition towards such vehicles is
unclear, being driven by a number of
factors including customer preferences
Business Impacted
Impact
Metrics
and behaviour, the supply and cost of
EVs and associated infrastructure, and
crucially the stance of Government.
The UK Government’s 2030 ban on sales
of new petrol and diesel vehicles has
been postponed for five years to 2035,
the plug-in car grant scheme was ended
in June 2022, and the allocated funding
has been refocused towards extending
plug-in grants to boost sales of plug-in
taxis, motorcycles, vans and trucks and
wheelchair accessible vehicles.
Admiral monitors company-specific
and market-wide metrics which
are incorporated into the business
planning process, reported in monthly
management packs, and discussed at
relevant fora. Key data includes new
UK car; Europe car
ST Significant
Risk selection; EVs offering
MT Severe
vehicle registrations, the proportion
of which are EVs, as well as internal
metrics capturing the attractiveness
and competitiveness of the EV
proposition, the claims experience,
and the broader customer experience
(e.g., times top, market share, loss
ratio – all of which would be considered
commercially sensitive). Such data helps
the Group continually assess whether
it is developing adequate capabilities
in these innovative technologies.
LT Severe
Key management actions
• To further support climate-related risks and opportunities being considered in
key business decisions, work is being undertaken to further embed all aspects of
sustainability into the Group strategy and activities. This ensures that climate-
related risks and opportunities are consistently considered in the decision-making
process (e.g., use Admiral’s traditional competitive advantages to develop an EV
offering in line with the company’s net zero ambition and customers’ expectations)
• The development of an EV offering has become an explicit target in the Group’s
strategy and Admiral is already one of the leading insurers for EVs in the UK market.
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Strategic Report
Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Products and services continued
Physical risks
Admiral is exposed to both acute and
chronic physical risks mainly impacting
its Household lines of business.
Climate change is causing sea levels to
rise and is also causing more frequent
and heavier rainfall, increasing the risk of
flooding. Changes in weather patterns
may also increase the incidence and
severity of storm and freeze events,
as well as hailstorms and subsidence.
Together these indicate that an
increase in the volume and value of
Household claims is likely. The Group
had experienced a surge in claims in
early 2023 due to the prolonged freeze
experienced in early December 2022 in
the UK. In addition, Admiral was exposed
to several storm events during 2023 –
although their impact was relatively low.
Business Impacted
Impact
Metrics
Key management actions
To mitigate and manage these risks,
Admiral takes a flexible, proactive, and
dynamic approach to risk selection and
pricing, ensuring that written business is
within risk appetite, and that projected
loss ratios and combined ratios lead to
profitability over the cycle.
Admiral also uses reinsurance
arrangements extensively, including
quota share and catastrophe cover
for Household lines. These are in place
to provide protection against an
accumulation of claims associated with a
weather catastrophe event.
Since launching the UK Household
business in 2012, Admiral has sought
to control its exposure to flood risk by
developing an understanding of the risk
at a granular geographical level, which
has been coupled with a conservative
UK household
appetite for underwriting such risk.
In order to support this, Admiral is
continually updating and improving
its risk modelling, including adopting
perils-based pricing which allows for
interrogation of specific concentrations
of risks. In the UK, Admiral takes part in
the Flood Re scheme, which is designed
to allow insurers to offer more affordable
insurance for homes built before
2009 in areas most at risk of flooding.
The volume and value of policies ceded
to Flood Re is monitored on an ongoing
basis. By participating in the Flood
Re scheme Admiral can underwrite
properties which are outside of its
acceptable flood criteria by ceding the
flood risk to Flood Re, while still offering
customers protection via underwriting
all other perils.
MT Severe
ST Significant
Risk selection; Reinsurance arrangements; Loss ratios (Probable Maximum Loss (PML)
of insured products from weather related natural catastrophes).
• The resilience of Admiral’s business model and strategy is assessed as part of SST,
which are considered within the annual Business Plan process and included in the
annual ORSA Report (including climate-related scenarios and their financial impacts)
LT Severe
• Pricing and reserving discipline is applied and regularly re-calibrated to ensure that
changes in claims frequency, severity, location and cost are appropriately reflected in
proposed rates, most notably in Motor and Household lines of business
• Reinsurance is used to mitigate large losses from natural catastrophes.
Opportunities
There are two types of opportunities
related to Admiral’s products
and services:
• The first relates to the development
of new climate-related products and
services. For example, aligned to the
third of the Group’s strategic pillars,
“Evolution of motor”, Admiral already
has a strong and competitive EV
offering, which will help counteract
the expected long-term decline in the
number of petrol and diesel vehicles
on the road. The offering, which is
continuously being developed and
expanded, is discussed further on
page 26. Related to the Household
offering, and due to the physical risk
impacting Admiral’s Household line
of business, in 2023 the company
released a Storm Hub website to
send timely weather warnings to
customers ensuring they are aware of
any extreme weather events that may
affect them.
• The second is aligned with the
second pillar of the Group’s strategy
– “Diversification” – and seeks to
develop and launch new products
and services in line with emerging
customer needs outside its core
business, and which may be less
emissions-intensive. These initiatives
may help counteract any long-term
move away from private vehicle
ownership to more integrated
transport solutions.
Taken together, these areas will help
support Admiral in the transition to a
low-carbon economy, by exploring new
opportunities as well as by shielding
Admiral from any contraction in its core
business. The loans business may also be
affected in the longer-term as increasing
demand of loans for Household
improvements could create additional
opportunities for the Company.
Business Impacted
Impact
UK car; Europe car; UK household
ST Moderate
MT Major
LT Major
Admiral Group plc Annual Report and Accounts 2023
83
Stress and Scenario Testing (SST)
While qualitative assessments of the impact from climate
change are useful, it is also important to quantify the
impact where possible to better understand the financial
cost of climate change. Stress and Scenario Testing (SST) is
conducted as part of the annual ORSA process to understand
the robustness of the Group’s business model and strategy
to the impact of various risks. In addition to the standard ORSA
scenarios, two climate change scenarios from the Network
for Greening the Financial System (NGFS)25 2022 phase III were
performed this year.
The two scenarios examined were “disorderly – delayed
transition” and “hot house world – current policies”, both of
which were modified and recalibrated to be relevant and
applicable for Admiral’s climate risk exposure. The period
modelled is 2023-2025 as the current focus is on short-
term impact, as inherent uncertainty as well as developing
approaches to assessment mean there is less confidence in
medium-term and long-term impacts. As modelling capabilities
are further developed, Admiral will increasingly also focus on
medium- and long-term assessments.
The NGFS “disorderly – delayed transition” scenario assumes
that the implementation of policies needed to drive the
transition to net zero is delayed until 2030, and is then sudden
and disorderly, resulting in material short-term macroeconomic
disruption. Under this scenario, global warming is limited to
an increase of 1.6°C by 2050. This scenario has been applied to
Admiral by exploring the transition risks from climate change
relating to the transition of the UK motor book from petrol/
diesel vehicles to EVs, affecting the profitability of the business.
This scenario impacts Group, AIGL and AICL, and key
assumptions, linked to the erosion of Admiral’s traditional
competitive advantages in pricing and claims handling, are:
• Mispricing of EV risks by 15% each year.
• Two large losses per year through ordinary driving totalling
£30m.
• Fire catastrophe events caused by an EV in a multistorey car
park with £25m total losses.
The NGFS “hot house world – current policies” scenario assumes
that no action is taken on climate change so that global
temperature levels continue to increase, reaching 3°C above
pre-industrial levels by 2080. This scenario has been interpreted
as resulting in increased incidents of extreme weather events,
impacting the UK Household, Car, and Van books, impacting
Group, AIGL and AICL. Specifically, it has been assumed that a
catastrophic windstorm event (i.e., PRA General Insurance Stress
Test (GIST) 2022 – Scenario A3: UK windstorm and UK flood)
occurs each year in the UK.
For both scenarios, it is assumed that excess of loss reinsurance
would be in place, and the outputs are modelled for Group with
dividends set to the base capital plan at 90% of profits.
The scenarios performed give comfort that the Group’s business
model and strategy should remain resilient to potential climate-
related impacts over the period modelled. Under both scenarios,
the Group solvency ratio is projected to remain above the lower
trigger (150% on a dynamic capital add-on basis) throughout
the projection period. Both scenarios were also used to identify
possible management actions that the business could take
should similar events to the scenarios actually occur.
The risks presented by a transition to a low-carbon economy
are not currently considered substantial in the short term.
However, as Admiral’s strategy focuses on initiatives which
should mitigate these risks, Admiral’s activities are considered
to be aligned to a well-below 2°C world. In such a transition
scenario, the strategic focus will be to accelerate the Evolution
of Motor and Diversification pillars of the Group’s strategy.
For the transition risk scenario, the estimated financial impact
is a reduction in own funds each year, reducing by over £90m
in 2025 under the no management actions assumptions, due
to reduced profits from increased claims and reduced profit
commissions. Physical risks may have the greatest potential
impact on the Group’s Household insurance business in the
long-term – in such a hot house world, the focus will be on
ensuring robustness of the core business via pricing discipline
and appropriate reserving. For the physical risk scenario,
with no management actions, the overall financial impact
at YE25 is ~£150m for Group Solvency II own funds. In the
short term, the impact on the company’s financial positions
(own funds, SCR) is limited and management actions available
(e.g., dividend retention) further mitigates the financial impact
on the company.
The financial impact assessment of the scenarios does not
allow for Government/scientific responses or management
and mitigating actions (e.g., annual repricing of insurance
policies, greater or different use of reinsurance, changes
to asset allocation in the investment portfolio), except for
changes to dividends. However, potential mitigating actions
are discussed qualitatively.
The output of this scenario analysis has been used in discussions
at GRC, Group Audit Committee, and Group Board about future
strategic direction.
For further information see:
Our purpose-led approach
Our strategy
Evolution of Motor
Our environment
Responsible investment
Page
8
22
26
56
65
25 NGFS Scenarios Portal, Data & Resources, NGFS.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 8484
Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Risk management
The four-step risk management process
for climate-related risks is the same
process as that employed for other
risks and is therefore embedded into
Admiral’s Enterprise Risk Management
Framework (ERMF). Climate-related
risks are captured in the emerging risk
horizon scanning process, are subject
to the same materiality assessments
as emerging risks, are represented on
the emerging risk radar, and have their
expected magnitudes assessed annually.
They are discussed at and reported in
the management and Board committees
described in the “Governance” section of
this disclosure.
Identification
The identification of potential climate-
related risks, as well as any opportunities,
is embedded into Admiral’s existing
three Lines of Defence model. It follows
a multi-stage process which incorporates
internal viewpoints and forecasts (e.g.,
from departmental expertise, insight
from working groups, committees, and
Boards) with those from external sources,
both insurance-specific and more broadly.
Management teams across Admiral,
whose business areas may affect or be
affected by climate change are a source
in identifying climate-related risks in their
respective areas, and act as an input to
work coordinated by the Sustainability
Team and the Group ERM Team, who
articulate risks and opportunities at
the Group level. Existing and emerging
regulatory requirements related to
climate change and sustainability are
also considered.
Materiality assessment
The nature, magnitude and timing
of climate-related risks are all highly
uncertain. As a result, such risks do not fit
naturally into standard risk assessment
approaches, and so a hybrid approach,
which comprises both qualitative and
quantitative components, is utilised.
The assessment is performed at Group
level considering transition, physical, and
liability risks, as well as microeconomic
and macroeconomic transmission
channels26 applicable to each business
line. This allows the Group to identify
any potential impacts and opportunities
from climate change on all current and
potential future products and services,
as well as on operations and investments.
The impact of existing and emerging
regulatory requirements related to
climate change are also assessed.
Climate-related risks, and any resulting
opportunities, are initially evaluated
qualitatively. A risk matrix approach is
employed, whereby the potential impact
of the risk (scored between minor and
catastrophic) is considered alongside the
likelihood of impact (scored between
rare and almost certain), assessed across
short-, medium- and long-term horizons.
The “expected magnitude” is defined as
the product of magnitude of impact on
Admiral and the likelihood/plausibility
of impact.
Where appropriate, a quantitative
approach to assess climate-related risks
can also be taken, and two scenarios from
the NGFS were included as part of the SST
section of the 2023 Group’s ORSA report
(as shown in the box above).
Management and mitigation
The primary approach to risk mitigation
is the ongoing successful execution
of the Group strategy, which seeks to
diversify the Group’s revenue and profit
streams, thus reducing the Group’s
reliance on UK Car, which is exposed
to transition risk. Considerable efforts
have been made to mitigate the risk
of a transition to EVs, both via new and
existing businesses, which have invested
in developing and testing new products
and product features to meet developing
customer requirements. Regulatory and/
or reputation risks from climate change
is managed through efforts made to
reduce the Company’s GHG emissions and
by submitting GHG targets to SBTi for
official approval.
The Group’s approach to managing
the risk that climate change poses to
insurance book is similar to its approach
to managing other insurance risks:
disciplined pricing and assessment
of impact by peril, clear underwriting
criteria, regular assessment of the
reserving approach, and risk transfer
via reinsurance. Admiral uses industry-
standard flood and catastrophe models
to understand its underlying physical
underwriting risk, and hence what amount
of risk is accepted, what amount of risk is
mitigated, and the reinsurance protection
deemed appropriate for risk transfer.
Admiral’s approach to pricing is the key
tool for managing climate-related risks
but given its commercial sensitivity, the
approach is not disclosed.
Monitoring and reporting
Climate-related risks and opportunities
are monitored by the Group ERM Team
and are reported to the GRC via the
CRR and CRO Report, and annually
as part of the Group’s ORSA Report.
They are also reported to the Group
Board, management committees, and
to subsidiary Boards and committees as
required. This monitoring and reporting
ensures that the highest level of Company
Management is aware of the risks and
opportunities, can account for them in
future business planning and strategy
setting, and can devise management
actions to mitigate their effects or to
capture any resulting opportunities.
The Regulatory Compliance Team, part of
Group Compliance, monitors and reviews
publications and pronouncements from
various regulators, supervisors, and
transnational bodies, including but not
limited to the FCA, the PRA, the Bank
of England, and EIOPA. Summaries are
distributed to relevant stakeholders
as and when material is published, a
monthly round-up is distributed more
broadly across the Group, and regulatory
developments are discussed in the
SSC’s Risk, Compliance, and Reporting
Working Group.
26 The causal chains linking climate risks to the financial risks
faced (as per the PRA Climate Change Adaptation Report
for banks and insurers – Climate-related financial risk
management and the role of capital requirements.
For further information see:
Principal risks and uncertainties
Emerging risks
Page
98
107
Metrics and targets
Substantial progress has been made in
2023 regarding the collection, verification,
and reporting of climate-related data.
Most notably, Admiral’s GHG targets for
Scope 1, 2 and Scope 3 emissions, which
support the achievement of Admiral’s
net zero ambitions across all of its
carbon footprint by 2040, were approved
by the Board and submitted to SBTi
for verification.
Metrics relevant to operations and supply
chain, investments, and products and
services disclosed in this section are
aligned to the risks and opportunities
presented above. However other
numerical values that may be considered
commercially sensitive are not included.
Other cross-industry climate-related
metrics are not disclosed in this report as
they are not considered to be materially
relevant to the Company’s performance –
given the nature, scale and the complexity
of its operations and business.
Operations and supply chain
As a global financial services Company,
Admiral has a low operational footprint
when compared to its complete carbon
footprint, including the supply chain
and investment portfolio. This has been
aided by the efforts made over the past
decade to mitigate the physical risk on its
operations and supply chain. Efforts have
led to improvements in the efficiency of
buildings, critical IT infrastructure, the
procurement process, and has helped
the strengthening of the evaluation and
monitoring of its energy consumption
with support from Accenture.
Since 2019 Admiral has offset its
remaining Scope 1 and 2 emissions, as
well as some Scope 3 emissions. However,
Admiral recognises that offsetting
emissions is not enough, and Admiral
should seek to further reduce its GHG
emissions. Therefore, Admiral is working
hard to reduce the absolute level of its
operational GHG emissions.
85
GHG emissions are quantified in
alignment with the World Resources
Institute’s Greenhouse Gas Protocol
Corporate Accounting and Reporting
Standard and are discussed further in the
SECR section of the annual report on page
71. Unverified emissions data, including
for 2023, as well as a description of the
methodology used to estimate metrics
if data is missing, is also included in that
section, as are further operational metrics.
Investments
As a financial services company, a
significant part of Admiral’s emissions are
category 15 emissions (part of Scope 3),
from the investment portfolio. Admiral has
therefore committed to achieving a
reduction in investment-related GHG
emissions of 25% by 2025, and of 50% by
2030, reaching net zero GHG emissions
by 2040 at the latest – aligned to the
overall target.
To mitigate the transition risk of having
an obsolete investment approach and/or
holding unattractive assets, and to ensure
that above targets are met, Admiral has
developed an investment proposal to
align its corporate bond mandates to the
Paris Agreement, following the Net zero
Investment Framework. This is a practical
blueprint for achieving net zero emissions
by 2050 which has been endorsed by the
UN’s Race to Zero campaign. The proposal
has several features, including reducing
emissions over time and increasing
investment in sustainable assets and
funds (green bonds and holdings with
confirmed SBTs, as per Admiral’s climate-
related investment metrics). There will not
be blanket divestment rules, but instead
Admiral’s investment managers are
expected to be engaging with companies
which could, as a last resort, possibly lead
to divestment and reinvestment in less
carbon-intensive names over time.
Several challenges should be noted:
sourcing reliable and consistent data;
avoiding unintentional consequences
such as under-diversification; and reliably
determining the expected risk and return
impact of such a strategy. However,
in order to guide and review progress
towards overall targets, a number of
metrics are tracked, shown in Table 3.
Investment metrics are calculated by
identifying in-scope non-cash assets and
applying MSCI ESG data on a per security
basis. Various metrics are subsequently
calculated at a whole portfolio level.
Weighted average carbon intensity (WACI)
is calculated by taking the most recently
available carbon emissions (Scope 1 and 2)
per million USD of revenue for all in-scope
securities, and weighting that by the
individual security’s market value relative
to the in-scope portfolio (in scope refers
to public corporate bonds as defined by
EIOPA’s Complementary Identification
Code (CIC)). The WACI shows how carbon
intense (how much carbon per million
USD of revenue) the average company
in which Admiral holds investments is
(of the in-scope investments); it is a
measure of Admiral’s exposure to carbon
intense companies.
Figure 3. Weighted average carbon intensity (WACI) formula
n
∑
i
Position Weighti x
Position Scope 1 & 2 Emissionsi
Position Revenuei
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 8686
Task Force on Climate-related
Financial Disclosures (TCFD)
continued
Table 3. Climate-related investment metrics
Metric
Weighted average carbon intensity (new methodology1)
Investment in holdings with confirmed SBTs
% Allocated to coal and oil sands
Investment in Green bonds
2023
58 tCO2e/$m revenue
N/A4
0%
£146m
2022
71 tCO2e/$m revenue2
£485m
0%
£98m
2021
77 tCO2e/$m revenue3
£422m
0%
£73m
1 Prior year figures have changed as a result of changes to the calculation methodology following work done with Accenture as part of the SBT targets submission
2 55% portfolio coverage. 61 tCO2e/$m revenue for benchmark
3 67% portfolio coverage. 83 tCO2e/$m revenue for benchmark
4 The calculation methodology of Admiral’s investment in holdings with confirmed SBTs is currently being reviewed and updated with the support of Accenture. To avoid disclosing a number from a
non-finalised/non-approved calculation methodology, for 2023, Admiral will not disclose SBT numbers.
Products and services
As discussed above, the effects of
climate change may impact all of
Admiral’s business lines. Physical risks,
which may be managed via risk selection
and reinsurance protection, might be
more prominent in Admiral’s Household
businesses, while transition risks may be
felt more keenly in the Motor businesses.
The “Diversification” pillar of the Group’s
strategy should mitigate such impacts
from physical and transition risks.
Admiral tracks a number of climate- and
diversification-related metrics in order
to assess its exposure to climate-related
risks, such as modelled burn cost per peril,
the number and value of weather-event-
related claims, or times top27 and loss
ratios for the EV offering. However, in the
main, these are considered commercially
sensitive. Admiral is able to disclose the
metrics shown in table 4 opposite, as per
the Sustainability Accounting Standards
Board Standard.
For further information see:
Our Society – Environment
SECR disclosure
Evolution of Motor
Page
66
71-72
26
Table 4. Physical risk metrics
Description
Metrics
Probable Maximum
Loss (PML) of
insured products
from weather
related natural
catastrophes
• Admiral utilises various methods and evaluations to make
underwriting and reinsurance decisions that manage the
Group’s exposure to catastrophic events. Across the Group’s
insurance book, the main weather-related risks pertain to
Admiral’s UK Household book, as well as the US Motor book
• Admiral’s Household excess of loss reinsurance provides
catastrophe cover with a limit above the estimated 1-in-200 loss.
As of January 2024, this was estimated to be £560-580 million
from floods and storms, etc. for the UK Household insurance
business. Admiral’s excess of loss deductible is £65 million, and
the 70% quota share leads to a net event loss of £19.5 million
•
•
In relation to Admiral’s UK Car insurance business, the 1-in-200
estimated possible loss as of December 2022 was £90-115 million.
Admiral currently has up to £80 million of cover from the motor
excess of loss reinsurance and a further £6 million from the
property excess of loss reinsurance. Therefore, after the £12 million
deductible, Admiral is covered up to a £98 million single event
In relation to the US Motor insurance business, the 1-in-200
estimated possible loss as of June 2023 was $22-26 million.
The US business has $21.5 million of cover from the motor excess
of loss reinsurance. Therefore, after the $3.5 million deductible,
the US business is covered up to a $25 million single event.
Admiral Group does not separately identify losses by modelled
and non-modelled catastrophes. However, the table below
provides some details on the weather-related losses following
natural catastrophes in relation to the UK Household book,
which represents the main weather-related risk from across
the Group’s operations. The table covers property catastrophe
losses above £5.0m across 2018-2023. The most notable change
compared to data disclosed in the 2022 TCFD report is for Storm
Eunice and the freeze event from 2022, which now have an
incurred cost of >£50m.
Period
2018
2019
2020
2021
2022
2023
Perils
Freeze, flood, and storm
Flood and storm
Flood and storm
Flood and storm
Freeze, flood, and storm
Flood and storm
Paid (£m)
10.7
0.0
0.0
5.6
37.6
0.0
Incurred (£m)
10.5
0.0
0.0
5.9
51.6
5.8
Total amount of
monetary losses
attributable to
insurance payouts
from
(1) modelled natural
catastrophes and
(2) non-modelled
natural catastrophes,
by type of event and
geographic segment
(net and gross
of reinsurance)
27 Times top represent times when Admiral’s quote comes
out as the best price on a price comparison website.
Section 172 Statement
87
Fulfilling
THE BOARD’S s172 DUTIES
TO ITS SHAREHOLDERS
AND STAKEHOLDERS
The Board balances the
occasionally conflicting
needs and priorities of
Admiral’s key stakeholders,
whilst ensuring all decisions
taken promote the long-term
success of the Group.
In accordance with their duties under
s172(1) of the Companies Act 2006,
the Board of Directors individually
and collectively confirm that, during
the year under review, they have acted
in a way that they consider, in good
faith, is most likely to promote the
long-term success of the Company
for the benefit of its members as a
whole, whilst having due regard to the
matters set out in section 172(1)(a) to
(f) of the Companies Act 2006, being:
• a) the likely consequences of any
decision in the long-term;
• b) the interests of the
Company’s employees;
• c) the need to foster the Company’s
business relationships with
suppliers, customers and others;
• d) the impact of the Company’s
operations on the community
and environment;
• e) the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
• f) the need to act fairly between
members of the Company.
Pages 87 and 128 set out how the
Admiral Board has met its obligations
under s172.
How the Board fulfils its
duties under s172
Our Directors and the Board collectively
are bound by the duties set out under
section 172(1) Companies Act 2006 and
are required to confirm in a statement
how these obligations have been fulfilled
during the year. Our s172 statement
detailed on page 87 explains how, during
the year, the Board has acted in a way
that it considers, in good faith, would
be most likely to promote the success
of the Company for the benefit of our
shareholders, whilst having due regard to
those stakeholders identified under s172.
The principal decisions taken by the Board
during the year, which take into account
s172 considerations, can be found on
page 128.
Understanding the requirements,
concerns and ambitions of Admiral’s
stakeholders is important to inform
the Board’s creation of an effective and
sustainable business strategy. The Board
takes into consideration the views of all
stakeholders both when formulating,
and also when implementing this strategy.
In doing this, in conjunction with our
values and our culture, the Board is
confident that it will ultimately fulfil
our purpose and drive the long-term
sustainable success of the Admiral Group.
The Board understands that relevant
stakeholder considerations should be
integral to Board discussions and its
decision-making process. It is mindful
in all its deliberations of the long-term
consequences of its decisions, as well
as the importance of the Admiral
Group maintaining its reputation for
high standards of business conduct.
Engagement with our stakeholders
is key to this process, allowing the
Board to obtain comfort that relevant
stakeholders have been identified, their
positions considered and understood,
and that different stakeholder groups
have been treated fairly. The feedback
we receive through our engagement
with stakeholders is detailed in our Board
reports and forms a key part of Board
discussions, ensuring the Board can focus
on running the business for the benefit
of all our stakeholders for the long-term.
During 2023, the Board reviewed its
key stakeholder profiles and confirmed
that of the six groups identified within
s172; people, shareholders, customers,
suppliers and partners, community,
and the environment, all remained
material stakeholders for the Admiral
Group and continued to be strategically
important to the long-term success of
Admiral’s operations. As part of its 2023
review, the Board considered the current
approach to engagement with, and
governance around, each stakeholder
group. In addition, the internal stakeholder
relationship owners within the Admiral
Group provided detail to the Board
on existing engagement methods,
feedback processes and the activities
and plans for stakeholder engagement
for the year ahead.
Further information on wider stakeholder
engagement across the Admiral Group can
be found within the Sustainability Report
on page 56, and the Corporate Governance
Report on page 113. A description of the
principal decisions taken by the Board
during the year, taking into account s172
considerations, are set out on page 128.
Key stakeholder engagement channels
along with Board considerations and
decision-making outcomes in accordance
with s172 are set out overleaf.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 8888
Section 172 Statement
continued
The Board promotes the long-term success of the Admiral Group by ensuring the highest standards
of business conduct, understanding the long-term implications of its decisions, and ensuring all
stakeholders are treated fairly. It does this through:
Defining Admiral group’s purpose, culture, values and strategy:
The Board has defined Admiral’s purpose and sets and monitors
the culture and values of the Group. Our purpose, culture and
values alongside engagement with, and an understanding of, the
requirements of our stakeholders, assist in guiding the strategic
direction and long-term interests of the Group, informing Board
discussion, and ensuring decisions are taken in line with the
agreed strategy, giving equal regard to all our stakeholders.
See pages 14 and 132 for further information.
Understanding the required Board skills, knowledge and
experience: Directors have wide ranging, relevant expertise
and experience that they are able to use to inform and guide
decision-making to ensure this is of the highest quality, whilst also
incorporating a balanced consideration of the expectations of
all relevant stakeholders. Significant time is spent inducting new
Board members along with annually assessing and implementing
educational programmes. This allows for educated and informed
decisions being made to promote the long-term sustainable
success of the Group in the best interests of all stakeholders.
See page 146 for further information.
Ensuring high quality Board meetings: Board and Board
Committee agenda planners set out matters to be considered
by the Board and Board Committees during the year. These are
regularly reviewed and updated during the year to ensure that
the Board continues to meet the evolving demands of the Group.
Standardised Board reporting templates are in place and training
has been provided to those producing Board papers to ensure
consistency, clarity and conciseness in approach. See pages 144
and 145 for further information.
Considering stakeholder interests and impact: Board papers
are accompanied by a covering document outlining; i) which
stakeholders could potentially be impacted by a Board decision,
ii) an explanation of how stakeholder interests have been
considered, iii) the likely consequences for those stakeholders,
and iv) how the impact on stakeholders could be monitored.
This process ensures the Board is aware of and gives due regard
to its s172 obligations during the Board discussion and decision-
making process. See pages 144 and 145 for further information.
Open Board discussion and decision-making process: Our
Board environment encourages an open, honest and accountable
decision-making culture, which is subject to rigorous risk
management and challenge to ensure any decision taken is of the
highest standard and supports the long-term sustainable success of
the Group. The Board is aware that in some situations stakeholder
interests may be conflicted and it may have to prioritise interests,
however the Board ensures that, as part of those considerations
evaluated through its decision-making process, all stakeholders are
taken into account and are treated fairly.
Effective Board review process: The Board is regularly updated
on the implementation and results of key decisions through the
Board and Committee reporting framework. This is carried out
through regular management reports and shareholder and wider
stakeholder feedback submitted to the Board as part of the
engagement process. The Board’s performance in its decision-
making processes are monitored and appraised through its
annual Board and Committee performance evaluation to ensure
it maintains the highest standard of conduct. Further details on
this process can be found on page 158.
The principal decisions taken by the Board during the year and how the requirements set out under s172 were taken into account
are set out in the Governance Report on page 128.
89
People
Through our culture and
values, we are committed to
providing a diverse, inclusive
and supportive working
environment. During the year
Admiral has been recognised
as being one of the best places
to work in the UK, and in
the other countries in which
we operate.
Why engaging with our
employees is important
We believe that people who like what
they do, do it better. Our c.13,000
colleagues’ well-being and positive
engagement in their roles is essential
to the long-term success of Admiral.
Our team has always been a powerful
source of competitive advantage and,
as such, Admiral takes great pride in
looking after its employees and helping
them look after their future. The Board’s
engagement with the Admiral team
fosters a happier and more productive
workforce, supports operational
excellence, and ultimately shapes
better outcomes for our customers
and other stakeholders. In 2023, 95% of
our colleagues around the world stated
their belief that the Admiral Group
was a diverse and inclusive employer.
How the business engages
with our employees
Admiral employees are encouraged to
engage across multiple channels, virtually
and face-to-face. Examples of this include:
• Regular communication through a
variety of internal channels and social
communication tools
• UK and International employee
consultation groups providing an
employee voice and input into how
the business operates
• Employee surveys capturing feedback
and engagement across the business
• A wide variety of employee forums
and working groups around diversity
and inclusion – see page 56 for
further information
• One to ones with managers and regular
development meetings
• Feedback schemes such as ‘Ask Milena’
and ‘Have your say’
• Regular employee education and
compliance courses
• Whistleblowing channels.
Further examples of how we engage with
our colleagues can be found on page 132.
How the Board engages
with employees
The Board recognises the importance
of engaging with its workforce and does
so through a combination of formal
and informal channels. The Board has
established a UK Employee Consultation
Group (ECG) and an International
Employee Consultation Group (IECG).
Board Directors are invited to participate
in these meetings. The Chairs of the
employee forums report directly to
the Board on key areas discussed to
give an ‘employee voice’ at the Board
table, and subsequently report back to
the employee forums with updates on
Board discussions. The Board also regularly
meets employees through visits to office
sites, presentations at Board meetings,
and is regularly updated by management
on people matters, employee
engagement, survey results and culture.
For further information see:
Employee consultation
Diversity and inclusion
Principal decisions
Culture
Awards
Outcomes and impact of
Board decision-making
The Board discussed the output received
from several ECG and IECG engagement
sessions during the year for the purposes
of understanding those issues that were
of interest or concern to employees.
Significant topics addressed included the
impact of the increased cost of living,
working practices and sustainability/
ESG issues. The Board also received and
considered reports and updates from the
Head of People Services and subsidiary
boards. The Board discussed financial
measures to support employees and,
as a result, were supportive of a five
percent pay increase to all UK based
employees, approved by the EUI Board, to
help mitigate the impact of inflationary
costs. In addition, the Board confirmed
a share award to employees to ensure
a sense of shared ownership in the
success of the business. As a result of the
Board’s approval of the acquisition of
the More Than home and pet personal
lines insurance operations from RSA,
Admiral is delighted to welcome c.300
new colleagues to the Admiral Group.
The Board was pleased that the significant
work ongoing around the building of
a diverse and inclusive culture was
recognised through the results of the
Great Place To Work Survey with 87%
of employees believing Admiral was a
great place to work. This was further
demonstrated through several awards
received during the year including the
best big company to work for at the Best
Company Awards. The Board ensured that
the significant activity streams already in
place would continue and evolve, and that
the Group would continue to focus on
building its unique culture through these
multiple channels.
Page
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128
132
13
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Section 172 Statement
continued
91
Shareholders
We aim to protect and manage
our shareholder capital in a
responsible and accountable
manner, whilst generating
long-term sustainable value
for the Group.
Why engaging with our
shareholders is important
Shareholder engagement fosters an
alignment of interests between the
owners of the business and the Board.
It allows the Board to explain the rationale
behind business and strategic decisions
whilst providing opportunities for
shareholders to comment and challenge
business priorities.
How the business engages
with shareholders
Admiral aims to have regular and
constructive engagement with our
shareholders through a varied number
of channels, examples of which include:
• Investor site visits, conference calls
and meetings
• Market disclosures, including interim
and full year results announcements
and presentations
• The Annual Report and
Sustainability Report
• Investor and analyst presentations,
roadshows (in person and remotely)
and corporate governance meetings,
for example, to discuss the Directors’
Remuneration Policy
• Regular analyst engagement, including
ad hoc sessions on topical issues, for
example the implementation of the
IFRS 17 accounting standard
• The 2023 Annual General Meeting
• Admiral’s corporate website, which
is regularly updated and contains all
relevant shareholder information.
How the Board engages
with shareholders
The Board enjoys long-standing
relationships with Admiral’s largest
shareholders, including the founders of
the Group, and receives regular updates
on the activities of the Investor Relations
team as well as meetings with investors
held with the Board and management
team. The Board also receives investor
feedback (post roadshows results/
conferences) and uses this to help shape
its approach to corporate governance
and strategy, ensuring that any issues or
concerns raised are considered during
Board discussions. During 2023, there
were over 80 separate engagements held
with institutional shareholders, including
significant engagement with shareholders
regarding the Remuneration Policy to
be voted on by shareholders at the 2024
AGM. The Board also receives regular
updates on market dynamics, share price
performance and share register changes.
The Board engages with Admiral’s retail
shareholders through the AGM process.
Outcomes and impact of
Board decision-making
As part of the new Chair’s induction
process, Mike Rogers met with significant
shareholders to understand their views
on various aspects of the business,
including Admiral’s strategy and corporate
governance. This engagement assisted
the new Chair in shaping the direction
of Board discussion and decision-
making processes. The Remuneration
Committee incorporated feedback
received through direct engagement
with significant shareholders to assist
in formulating a revised Remuneration
Policy, ensuring there was an alignment
of interests. The Board considered the
views received through its shareholder
engagement programme, which fed into
its Board strategy sessions and assisted
in formulating the framework for Group
strategy. The Board’s engagement
with stakeholders regarding Admiral’s
£250 million Tier 2 bond issue along with
a tender for the existing £200 million
5.5% subordinated Tier 2 notes ensured
this process was concluded without issue.
The Board also considered feedback
from shareholders as part of its process
when considering interim and final
dividend approval.
For further information see:
Governance Report
Stakeholder engagement
Business model
Remuneration Policy
Page
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87, 136, 137
8
176
Customers
We aim to provide a great
customer experience.
Why engaging with our
customers is important
Our customers are at the heart of
our business and the focus of our
purpose to ‘help more people to look
after their future. Always striving for
better together’. As a customer-centric
organisation, we seek to provide more
people with the opportunity to access
good financial services products.
The needs of our customers shape the
products we deliver, and their feedback
and expectations inform the design
of our customer distribution channels
and platforms.
In 2023, we implemented the new
Consumer Duty regulation with the
goal of monitoring and evidencing
good customer outcomes and making
enhancements, where required, to drive
even better outcomes. We continue to
use data and insights to inform these
processes thinking seriously about the
outcomes we deliver for our customers
and continually making improvements to
our products and services where needed.
For more information see pages 60, 111
and 130.
How the business engages
with our customers
There are opportunities for the business
to communicate and engage with our
customers, and vice versa, throughout the
different points in the customer life cycle.
Some of these mechanisms include:
• Discussions with our customer
service teams, new business and
renewals teams, claims teams, and
complaints teams
• Online customer portals: During 2023,
we built more functionality into the UK
customer portal to make services easier
for customers to access
• Live chats with agents and ‘Admiral App’
messages
• Social media: In 2023, we increased
engagement through simplified
wording and website updates
• Customer feedback through comment
forms, surveys, SMS, along with
customer focus groups and panels
• Perception studies: Frequently
reviewing the engagement
mechanisms across our customer base,
particularly throughout digital journeys,
allows us to understand what is most
important to our customers and helps
us to continually refine and improve our
service to customers.
How the Board engages
with our customers
Whilst not having significant direct
exposure to customers, the Board
continues to receive updates from
management on the treatment of its
existing customers and the various
processes that are designed to ensure
fair outcomes throughout the customer
journey. Customer satisfaction levels
are fed into Board discussions which
ultimately helps shape strategic decision
making, including plans related to
digital investment and future product
For further information see:
Strategic Report
Principal decisions
Consumer duty
Business model
diversification. The Board receives annual
feedback on the conduct risk framework
through the Group Risk Committee.
Board members also took part in call
listening in the customer claims area as
part of this year’s Board strategy meeting.
Outcomes and impact of Board
decision-making
During the year the Board, through
its reporting framework, oversaw the
implementation of the new Consumer
Duty regulations within the Group’s
relevant regulated subsidiary entities,
and received detailed updates as to
the progression against agreed plans.
The FCA were invited to the April 2023
Board meeting, where constructive
discussions were held around the
FCA’s expectations in terms of the
implementation of the new Consumer
Duty regime and how Admiral’s plans
met with these expectations. The Board
ensured that mechanisms were in place
to monitor the treatment of, along with
the outcomes for, our customers, and
oversee that appropriate changes in
products and services would be made
where required. The Board was able to
oversee the further alignment of Admiral’s
processes as a result of its engagement
with the FCA and feedback through
customer surveys. The Board oversaw the
successful migration of over 6.5 million
customer policies to a new policy and
billing centre on Guidewire during the
year, which will integrate technological
improvements with enhanced security
measures, providing an improved
customer experience. The Board approved
the acquisition of the More Than direct
Home and Pet personal lines insurance
business from RSA in December 2023.
Once completed this will both support the
Board’s objective of diversification, whilst
offering existing and new customers a
strong multi product proposition.
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93
Communities
We aim to ensure that
Admiral’s impact on society
is positive.
Why engaging with our
communities is important
Giving back to our communities is an
integral part of Admiral’s culture. As a
large employer across several countries,
we believe it is our responsibility to
provide employment opportunities for
those in the local areas whilst at the same
time, training and developing our people.
We are committed to recognising and
promoting diversity both within Admiral
and within the communities in which
we operate. Issues identified through
engagement with our communities
include employability, social mobility,
educational opportunities, financial
inclusion, and support for sports, arts,
and culture. By addressing these, we
demonstrate a genuine commitment
to the well-being of our community
stakeholders. This strategic engagement
not only reflects our values, but also
positions us as a responsible corporate
citizen, who contributes to long-term
positive change both within and beyond
the Group.
How the business engages
with our communities
Our engagement with communities
is driven by our people, who actively
participate in nominating and selecting
initiatives that align with local community
needs. This culture of giving and shared
responsibility is embedded across our
entire Group. Our approach to community
engagement includes:
• Colleague volunteering:
Through initiatives like our ‘Impact
Hours’ scheme, where our colleagues
contribute their time and skills to
support various community projects
• Charity initiatives: We are involved
in a range of charity initiatives,
demonstrating our commitment
to financial and resource-
based contributions
• Partnerships: We foster partnerships
with organisations across the
world, recognising the importance
of collaboration in addressing key
community issues
• Sponsorship and fundraising:
We support community events
through sponsorships, fundraising
efforts, and the funding of projects
via our Community Fund and Match
Fund processes.
To manage risks and capitalise on
opportunities as they evolve, our
Community Strategy is continuously
reviewed and adapted. Monitoring the
impact of our actions is integral to our
approach, with feedback mechanisms
from our partners, our people, our
communities, and external entities
such as the Welsh Government.
This comprehensive system of monitoring
ensures that our community engagement
remains effective, responsive, and
aligned with our strategic goals.
This objective will be further enhanced
going forward by moves to combine our
programmes to support community and
environmental issues.
For further information see:
Strategic Report
Business Model
Sustainability
How the Board engages with
our communities
The Board believes Admiral should be seen
as a force for good within its communities
and has oversight over the implementation
of initiatives in line with this ambition
and receives updates as to their progress.
Locally, through our UK charitable giving,
the Board oversaw Admiral volunteering
14,000+ impact hours during 2023 and has
set the ambitious target of volunteering
25,000 impact hours in 2024 – see
page 66. Alongside this are numerous
community and sponsorship initiatives,
further details of which can be found
at www.admiral.com/community-and-
sponsorship. Further afield, internationally
our Global Emergency Fund, supported
by the Board, has enabled Admiral to
make fast donations when people and
organisations need it most, for example,
significant donations were made to assist
charities involved in the Turkey-Syria
earthquake appeal, the Canadian wildfires
and flooding in Italy. In 2023, Admiral
donated over £400,000 to a number
of urgent appeals through our Global
Emergency Fund – see pages 21 and 66
for further information.
Outcomes and impact of Board
decision-making
The Board received updates on key
community initiatives across the Group,
providing strategic direction and
approving innovative programs such as
our Community Investment Strategy
discussed on page 66. The Board reviewed
progress on the ‘Together for Better’
programme, Admiral’s commitment
to transforming futures in the local
community. This programme pledged,
over a five-year period, a percentage of
Group profit as a financial commitment
to enable our Community Investment
Strategy to focus on helping local people
obtain employment, filling gaps in the
labour market, and an ambitious target
to cumulatively complete 100,000
volunteering hours in our communities.
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Environment
We are committed to
achieving net zero greenhouse
gas emissions by 2040,
across all three scopes of
emissions, and to cut these
emissions in half by 203028.
Why engaging with environmental
issues is important
Engaging with environmental issues is
strategically important to Admiral and
reflects our commitment to responsible
business behaviour and our recognition
of the importance of addressing climate
challenges. It also aligns with our purpose
of ‘helping more people to look after
their futures; always striving for better,
together’. This commitment is driven by
several key stakeholder considerations:
• Our people seek assurance that
they are part of a Company
that actively contributes to the
protection of the natural world and
addresses the climate emergency.
Demonstrating responsibility
towards the environment is integral
to maintaining a motivated and
engaged workforce
• Our customers not only expect
protection for their property but
also want assurance that we are
safeguarding their future by adopting
environmentally responsible practices.
This builds trust and enhances
our reputation
• Our shareholders and regulators
are increasingly concerned with how
businesses respond to environmental
challenges – both how the environment
impacts the business and how the
business impacts the environment.
Demonstrating resilience to
climate-related events and seizing
opportunities aligns with their
expectations and contributes to the
Group’s overall robustness
• Our commitment is to minimise our
• Green Team initiatives: Our internal
direct environmental impact, including
reducing our carbon footprint, and
also support our customers with the
transition to a greener society. This not
only aligns with regulatory and societal
expectations but positions us well
for changes in markets and customer
expectations and also highlights
Admiral as a conscientious and forward-
thinking organisation.
How the business engages with
environmental issues
Our engagement with environmental
issues is multifaceted and reflects
a proactive approach to increasing
awareness and taking concrete actions.
Key initiatives include:
• Sustainability Steering Committee:
To support a more holistic and co-
ordinated approach to sustainability
issues, the former Sustainability
Working Group and Climate Change
Steering Committee were replaced
in 2023 by the Sustainability Steering
Committee (SSC) in Q4 2023.
Supported by five working groups,
the SSC is a management committee
that provides guidance on the overall
programme of sustainability-related
work and ensures a joined-up approach
across all Group functions and Group
entities. This includes environmental
issues such as climate change
• Operational sustainability: Admiral is
a carbon neutral entity. Key initiatives
to achieve this milestone included
investments in solar panels on our
headquarters in Cardiff, purchasing of
energy from 100% renewable sources
(in the UK), and purchasing of Gold
Standard carbon credits since 2019
to offset its operational emissions.
This covers Scope 1 and 2 emissions,
and partially covers Scope 3
• Net zero ambition: We have formally
committed to achieving net zero
greenhouse gas emissions by 2040
at the latest, across all three scopes
of emissions, and to cut these emissions
in half by 2030.28 We are currently in
the process of securing verified
science-based targets that will enable
us to hit both targets.
Green Team is a working group
dedicated to green initiatives.
Regular internal updates from this
team drive awareness and action to
lessen the impact of climate change
– both within the business and within
employees’ own lifestyle choices
• Internal promotion: Special events
such as Green Week and Earth Day,
promoted internally, serve to raise
awareness and engage employees in
environmentally responsible practices
• Employee engagement: We actively
engage with employees through
forums, CEO updates, and various
recycling initiatives across our offices.
This ensures that our commitment
to environmental responsibility is
embedded within our Group culture
• Monitoring and reporting: We
recognise that environmental
disclosures are increasingly requested
by investors, shareholders, customers,
regulators and other stakeholders.
For 2023, Admiral made disclosures
consistent with the Task Force on
Climate-related Financial Disclosures
(TCFD), against the Streamlined
Energy and Carbon Reporting
Framework (SECR) and against the
Sustainability Accounting Standards
Board (SASB) Standards. In addition,
Admiral also reports on the Climate-
related Financial Disclosure (CFD)
requirements introduced in 2022 as
part of the UK Government’s Greening
Finance roadmap.
To read more on how the business
engages with environment issues see
our Sustainability Report on page 56, our
SECR disclosures on page 71, and
our TCFD disclosures on page 73.
28 Proposed baseline year for emissions cuts is 2021,
still to be verified by SBTi.
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Section 172 Statement
continued
How the Board engages with
environmental issues
The Board is the principal governing body
overseeing sustainability-related issues
and takes ownership of sustainability and
climate-related topics and associated
stakeholder engagement. The Board
approves the Group’s sustainability
approach and our Environmental, Social
and Governance (ESG) ambitions which
can have a material impact on Admiral.
Milena Mondini, Group CEO, is the
accountable sustainability representative
on the Group Board. The Board receives
regular updates on climate and wider ESG-
related topics, providing feedback, and
ensuring alignment with our Responsible
Investment Policy.
Outcomes and impact of
Board decision-making
The Board reaffirmed the Group’s
sustainability agenda as part of a
2023 strategy refresh, overseeing the
appointment of a new Group Head of
Sustainability and enhancements to
the sustainability governance structure.
The Board also confirmed Admiral’s
commitment to achieving net zero
greenhouse gas emissions by 2040, across all
three scopes of emissions, and to cut these
emissions in half by 2030, and reviewed
progress in relation to these ambitions.
Updates were received on requirements
from regulators and government initiatives
with regards to sustainability and climate
change. This included a review of the
PRA’s position on climate change and
the financial system. The PRA notified
businesses that climate change presented
an increasing, material risk to firms and
the financial system and confirmed that it
was taking a more active role in supervising
firms in relation to its expectations on
climate change. To address the increasing
sustainability agenda, the Board oversaw
the introduction of the Sustainability
Steering Committee in October 2023
to provide a joined-up approach across
all Group functions. More information
on how the Board assesses climate
related risks and opportunities along
with the implementation of climate and
sustainability initiatives is included in our
climate-related disclosure section on
page 71.
For further information see:
Business model
Sustainability
SECR and TCFD disclosures
Risk management
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98, 168
95
Partners and Suppliers
We aim to build strong,
mutually beneficial working
relationships with our
partners and suppliers.
Why engaging with our partners
and suppliers is important
Our partners and suppliers comprise a
mix of financial partners, reinsurance
partners, IT hosting, distribution, claims
management and services partners, and
many others. It is crucial that the Group
manages these relationships effectively
to mitigate the associated third-party
risks across the supply chain. Our partners
and suppliers are considered strategically
important to us either because (i) the
supplier is a material outsourcer, (ii) the
supplier or partner is integral to achieving
future strategic goals, (iii) there are
particularly preferential rates or terms in
place, or (iv) another factor which makes
the relationship hard to replicate or
replace. Admiral’s supply chain supports
our global operations in delivering services
to our customers and involves over 1,100
contracted suppliers.
We act responsibly when dealing with
our suppliers, choosing to support local
and regional providers where possible.
We also choose and encourage an ethical
and environmentally friendly supply chain
and also making sure we pay in a timely
manner to support the financial resilience
of our suppliers.
How the business engages with
our partners and suppliers
To ensure strong third-party supplier
management there are dedicated
processes across the Group to govern
end-to-end relationships. Key business
units have internal relationship managers
responsible for ongoing performance
management, which would include
ensuring active contract renewals,
negotiations, business reviews and service
improvement. Business continuity and
exit plans are in place and are actively
managed. Admiral uses a dedicated
contract management system to
monitor and support the governance
of procurement, provide tender
management, contract management,
supplier management and due diligence
under a single platform. The Group’s
dedicated regulatory relationship teams
maintain channels of communication
with the FCA and PRA in the UK, and
the Group’s international regulated
intermediaries and insurers have similar
teams in place.
How the Board engages with
our partners and suppliers
Whilst not having direct engagement with
partners and suppliers, the Board receives
updates from management on:
• All proportional risk-sharing
agreements, including co-insurance
and reinsurance contracts
• Relationships with key partners and
procurement, including Admiral’s
payment policies and practices
• Matters relating to partnerships
and opportunities
• Customer-facing suppliers
• Third-party risk management
regulatory, technological and
consumer trends
• Modern slavery risks in the supply chain.
For further information see:
Business model
Sustainability
Principal decisions
SECR and TCFD disclosures
The Board takes all updates into account
when considering the long-term
consequences of its strategies and
business plan. The CFO provides updates
on the activities related to the renewal
of the Group’s co-insurance, reinsurance
and quota share contracts, including
maintaining Admiral’s ongoing strategic
relationship with Munich Re.
Outcomes and impact of
Board decision-making
The Board received updates on the
performance of our business partners
and suppliers through reporting from
management and the risk function, it also
reviewed supplier payment metrics in line
with the Prompt Payment Code of which
Admiral is a signatory. The Board had
oversight of the monitoring of Modern
Slavery provisions with key suppliers.
The Board also oversaw training rolled out
for relevant employees on conduct with
suppliers/partners including anti-bribery
and corruption and modern slavery.
The Board approved Admiral’s Modern
Slavery Statement for 2023 which sets
out the business’ zero tolerance approach
to modern slavery in all its forms. This is
enacted through our policies, training
and risk management – for more details
around how we do this, our Modern
Slavery Statement is set out in full on
our website.
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97
Non-Financial and Sustainability Information Statement
The non-financial and sustainability reporting requirements contained in sections 414CA and
414CB of the Companies Act 2006 are addressed within this section by means of cross reference,
to indicate where they are located within the strategic narrative and to avoid duplication.
Our business
Business model
Strategy
Financial stability
Key Performance Indicators
Sustainability
Our approach to sustainability
Culture and values
Employees Diversity and Inclusion
Community engagement
Responsible investments
Climate disclosure
Task Force on Climate-related Financial Disclosures
Streamlined Energy and Carbon Reporting
Governance
Risk
Governance
Page
See page 8
See page 22
See page 11
See page 31
Page
See page 56
See page 11
See page 62
See page 66
See page 64
Page
See page 73
See page 71
Page
See page 98
See page 113
Group policies
The policies in the table below can be located on our website www.admiralgroup.co.uk
Policy
Code of Conduct
Health and Safety
Equality, Diversity and
Dignity at Work
Modern Slavery
Procurement and Outsourcing
Whistleblowing
Financial Crime
Anti-Bribery and Corruption
Gifts and Gratuities
Tax
Description
Our Code of Conduct outlines the standards of behaviour that all colleagues must adhere
to regardless of their role. Colleagues are expected to abide by these policies and act with
integrity, due skill, care and diligence.
Our Health and Safety policy outlines our commitment to ensuring the health and safety of
staff and anyone affected by our business activities, and our commitment to providing a safe
environment for those attending our premises.
Our Equality, Diversity and Dignity at Work policy outlines that Admiral is committed to
ensuring that any type of discrimination is not accepted. This policy outlines the standards of
behaviour that are expected from all employees to ensure that everyone at Admiral is treated
with dignity and respect. This policy explains that all managers should be alert to potential
discrimination and harassment and actively prevent this from occurring, communicate this
policy to all employees, and be responsive and supportive to anyone who makes a complaint.
Our Anti-Slavery, Exploitation and Human Trafficking policy confirms Admiral’s zero tolerance
approach to modern slavery, outlines our ongoing commitment to eliminating unethical
working practices, and provides guidance to employees on reporting any problems identified
at work or in the community. We release an annual Modern Slavery Statement in line with the
Modern Slavery Act 2015.
Our Group Procurement and Outsourcing policy states that all employees who engage in
procurement activity must enhance and protect the standing of the business, maintain the
highest standard of integrity in all business relationships, promote the eradication of unethical
business practices including modern slavery, and ensure full compliance with laws and
regulations whilst continuing to drive the de-carbonisation agenda across Admiral’s critical,
strategic and key suppliers. This is enforced through strict controls and monitoring.
Our Whistleblowing policy encourages and enables employees to raise any concerns they
have about serious malpractice or wrongdoing. The policy is designed to ensure that an
employee can raise their concerns without fear of victimisation, subsequent discrimination,
disadvantage, or dismissal. This policy details internal and external reporting lines for any
employee concerns.
Our Financial Crime policy ensures that robust systems and controls are in place to detect,
prevent and deter financial crime across the Group and ensures we remain compliant with
applicable laws and regulations in our operational jurisdictions. All areas of financial crime
are captured by this policy, including money laundering, market abuse and insider trading,
sanctions regime, modern slavery, tax evasion and bribery and corruption.
Our Anti-Bribery policy strictly prohibits the solicitation or acceptance of any bribe, to or from
any person or company, by an individual employee, Board member, agent or other person or
body on Admiral’s behalf, in order to gain any commercial, contractual, or regulatory advantage
for Admiral in an unethical way or to gain any personal advantage for the individual or anyone
connected with the individual.
Our Gifts and Gratuities policy recognises that sometimes customers, suppliers or business
associates offer gifts or gratuities to staff and confirms that all such gifts must be made and
received openly and fairly, must not include cash, must be reported and be in line with the policy.
Our Tax Strategy policy documents our approach to taxation. The policy confirms that the
Group’s primary objective is to be compliant with all tax legislation requirements in all the
territories in which we operate.
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Principal Risks and Uncertainties
99
The Board, with support from
the Group Risk Committee
and the Group Risk Function,
undertakes a regular and
robust assessment of the
principal and emerging
risks facing the Group
alongside engaging with the
management team on the
Group Strategy. These risks
have been summarised as
those which would threaten
its business model, future
performance, solvency or
liquidity, and reputation.
Identification of risks
Principal risks (A–L)
Insurance Risk:
A Reserving risk
B Premium risk and catastrophe risk
C Reduced availability of co-insurance
and reinsurance arrangements
D Potential diminution of
other revenue
The table below sets out the principal
risks and uncertainties (PR&U) which
Admiral has identified through its
Enterprise Risk Management Framework
(ERMF). The impact of those risks,
development of the risks during 2023,
and actions taken to mitigate them
are explained below. This section also
includes a description of Admiral’s
approach to identify, manage, and govern
emerging risks.
Risk appetite: The Admiral Group
risk strategy contains strategic risk
statements for the relevant risks which
help deliver the Group’s business
objectives. The Group risk appetite is
owned and approved by the Admiral
Group Board. The responsibility for the
Group risk appetite is delegated to the
Group Risk Committee which reviews all
components prior to Board approval and
monitors the performance of the business
against the approved Group risk appetite
through the consolidated risk report and
other risk reporting.
Group Risk:
E Erosion of competitive advantage
in UK Car insurance
F Failure of geographic and/or
product expansion
G Reliance on price comparison
distribution channel
Credit Risk:
H Credit risk
Market Risk:
I Market risk
Non-Financial Risk:
J Legal and regulatory risk
K Operational risk
L Reputation risk
Principal risks and uncertainties reflect
the main risks faced by the Company
in achieving its strategic objectives.
The strategic objectives have been
listed with the links to the strategy
noted against each principal risk and
uncertainty (for more information on
the strategy refer to page 22).
Strategic objectives:
1 Admiral 2.0: Continuing to build on historical strengths whilst becoming
even more agile, digital and technology-focused. Admiral 2.0 puts the
customer first and leverages data and advanced analytics to constantly
be more efficient to improve their overall experience
2 Diversification: Building a sustainable and resilient business.
Admiral’s approach is to leverage the capabilities and knowledge from
the established businesses to build future successful propositions
3 Motor Evolution: Evolving the proposition for changes in mobility.
Insurance Risk
A Reserving risk
Possible impact
on the strategic
initiatives
1 2
Risk
Admiral is exposed to reserving risk through its underwriting
of Motor, Household and other insurance policies.
Claims reserves in the financial statements may prove
inadequate to cover the ultimate cost of claims which are by
nature uncertain.
This is a particular risk for motor insurance liabilities, where
the estimated amount payable for bodily injury claims
(particularly large claims) can change significantly during
lifetime of the claim as a result of various factors including
external risks such as changes in Ogden rates (expected in
2024), impacts of increased levels of Periodical Payment
Orders (PPOs) and claims inflation.
During this period, increased uncertainty in forecasting both
the level and duration of the impact of higher inflation rates
on claims reserves may lead to adverse development and
higher claims costs than projected.
PPO claims are capital intensive owing to increased
uncertainty of the cost of these claims over a longer term.
There is therefore a risk of higher claims costs and loss ratios,
resulting in reduced profits or underwriting losses.
Risk development in 2023
The risk has reduced during the year as the uncertainty
caused by the inflationary environment has fallen, in
particular during the second half of the year, and more
favourable expectations with respect to the future Ogden
rate have emerged.
Mitigating factors
The Group continues to reserve conservatively, setting
its IFRS 17 risk adjustment in the financial statements
between the 85th and 95th percentiles which is aligned
to Group risk appetite.
Best estimate reserves are estimated both internally
and externally by independent actuaries.
For very large claims Admiral purchases excess of loss
reinsurance, which mitigates a portion of the loss.
Regular reviews of both settled and potential PPO cases
are undertaken by the Claims and Actuarial teams, with
independent actuarial analysis provided as part of the
external reserving process.
Admiral’s investment strategy is the result of a structured,
disciplined and transparent investment process. Long-
dated inflation linked assets are held to partly hedge the
risks associated with PPO claims.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 100100
Principal Risks and Uncertainties
continued
Insurance Risk continued
B Premium risk and catastrophe risk
Possible impact
on the strategic
initiatives
1 2 3
Risk
The Group is exposed to the risk that inappropriate
premiums are charged for its insurance products leading
to either insufficient premiums to cover claims costs or
uncompetitive rates leading to reduced business volumes.
This risk is increased during periods of high inflation
leading to greater market uncertainty.
The risk of increased claims costs and/or reduced
business volumes could be driven by potential economic,
social, environmental, regulatory or political change
such as the slowdown in China or the Russia-Ukraine and
Israel-Hamas conflicts, impacting supply chains and inflation,
or new entrants to the market.
Admiral is exposed to the risk of higher losses
than anticipated due to the occurrence of
manmade catastrophes or natural weather events,
potentially increased in frequency and severity due
to climate change.
Acute physical climate risks include changes in the
frequency of both large catastrophe events and severe
weather events, where trends are difficult to identify,
and which have large claims costs associated with them.
Impact
Higher claims costs, reduced business volumes and/
or higher loss ratios, resulting in reduced profits or
underwriting losses.
A large flood or windstorm, causing extensive property
damage (both Motor and Household) to a significant
proportion of the portfolio, could lead to a larger than
anticipated total claims cost.
Risk development in 2023
The risk has trended broadly stable in 2023 as Admiral has
continued to manage the challenging external environment
with a disciplined, long-term approach to pricing and
growth, with a focus on building the business for the long
term. The risk remains subject to increased volatility in
weather patterns, as demonstrated by the ten named
UK storms experienced between September 2023 and
January 2024.
Mitigating factors
There are a number of aspects which contribute to
Admiral’s strong UK underwriting results, including:
• Experienced and focused senior management and
teams in key business areas including pricing and
claims management.
• Highly data-driven and analytical approach
to the regular monitoring of claims and
underwriting performance.
• Capability to identify and resolve underperformance
promptly through rapid and dynamic changes to key
performance drivers, particularly pricing.
• Continuous appraisal of and investment in employees,
systems and processes.
• Monitoring the impact arising from climate change
risks, covering both physical and transitional risks,
as well as other Emerging Risks which may impact
premium or catastrophe drivers.
Admiral purchases excess of loss reinsurance, which is
designed to mitigate the impact of very large individual
or catastrophe event claims.
101
Insurance Risk continued
C Reduced availability of co-insurance and reinsurance arrangements
Mitigating factors
Admiral mitigates the risk to its reinsurance arrangements
by ensuring that it has a diverse range of financially secure
partners, and that contract maturities are staggered to
prevent a cliff-edge ending of a large reinsurance cover.
Admiral continues to enjoy a long-term relationship with
several different co- and reinsurers, some of which are
amongst the world’s largest.
Quota share and co-insurance arrangements are contracted
over a number of underwriting years. These long-term
arrangements are in place throughout the UK and
international businesses.
Possible impact
on the strategic
initiatives
1 2 3
Risk
Admiral uses proportional co-insurance and reinsurance
across its insurance businesses to optimise the use of
capital, to increase the return on the capital it does hold,
and to mitigate the cost and risk of establishing new
operations. There is a risk that co- and/or reinsurance
cover will not be available or that it will be available at
an uneconomical price in the future if the results and/
or prospects of either the UK businesses or other less-
established operations are not satisfactory to the co-
and/or reinsurers.
Inflationary uncertainty and other factors could result
in a change in reinsurer appetite and an increased cost
of reinsurance protection for insurers. Climate change
and the increased frequency and severity of extreme
weather events, as well as increased chronic physical
risks, could adversely impact the availability and cost
of reinsurance protection for insurers.
Impact
A potential need to raise additional capital to support
an increased underwriting share. Return on capital
might reduce compared to current levels.
Unavailability of co- and/or reinsurance or at an
uneconomical price may mean that Admiral does not
co- and/or reinsure all the desired risks, leading to
increased costs should an adverse event arise.
Risk development in 2023
The risk has increased during the year with reduced
appetite of reinsurers in some areas leading to a
hardening market. The recent January UK motor
reinsurance renewal was positive, however, but pressure
is likely to remain on other product lines in 2024.
D Potential diminution of other revenue
Possible impact
on the strategic
initiatives
1 2 3
Risk
Admiral earns other revenue from a portfolio of products
and services in addition to the core insurance products.
The level of this revenue could diminish due to political,
regulatory, legal, social/customer behaviour, strategic,
market or economic changes.
Impact
Lower profits from business operations and lower return
on capital.
Risk development in 2023
The risk has trended broadly stable and within appetite
for the year. The risk has the potential to increase going
into 2024 due to a heightening market-wide regulatory
focus on ancillary and premium finance products.
Mitigating factors
Admiral continuously assesses the value to its customer
of the products it offers and makes changes to ensure
the products continue to meet customer needs and offer
good value.
Admiral seeks to minimise reliance on any single source
by earning revenue from a range of products. This would
mitigate the impact of regulatory or market changes,
or changes in consumer behaviour, which might affect
a particular product or income stream.
Admiral works closely with its regulators and other key
industry bodies to understand potential developments.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 102102
Principal Risks and Uncertainties
continued
103
Group Risk
Group Risk continued
E
Erosion of competitive advantage in UK Car insurance
G Reliance on price comparison distribution channel
Possible impact
on the strategic
initiatives
1 2 3
Risk
Admiral typically maintains a significant combined ratio
advantage over the UK Car market. This advantage and/
or the level of underwriting profit (and associated profit
commission) could be eroded by unfavourable loss or
expense ratio results, irrational competitor pricing, new
competitors or technologies used within the insurance
market and/or regulatory intervention.
Impact
A worse insurance result and lower return on
capital employed.
A sustained and uncorrected erosion of competitive
advantage could affect the ability of Admiral to
maintain its customer base, profitability and reinsurance
arrangements, which might in turn require Admiral to
hold more capital.
Risk development in 2023
The risk has reduced during the year as Admiral’s
competitiveness has increased despite making
significant price increases.
Mitigating factors
Admiral’s focus remains on the wide range of factors that
contribute to Admiral’s combined ratio outperformance of
the UK Car market. Some are set out earlier in the Strategic
Report, but other factors include:
• A track record of innovation and ability to react quickly to
market conditions and developments.
• A focus on maintaining a low-cost infrastructure, efficient
acquisition costs, and strong expense controls.
• An experienced and focused management team.
• A robust and agile pricing discipline to ensure
prudent behaviour to try and protect Admiral’s
competitive advantage.
• A strong Admiral brand and customer orientated culture
to attract and retain customers.
F
Failure of geographic and/or product expansion
Possible impact
on the strategic
initiatives
1 2 3
Risk
In line with the Group’s diversification strategy, Admiral
continues to develop its UK insurance businesses, UK
non-insurance businesses such as Admiral Money, and its
international businesses. Admiral Pioneer is the vehicle
for the development and launching of new products and
services, other than those already covered by existing
established Group businesses.
Mitigating factors
Admiral’s approach to expansion and product development
remains conservative, applying the test-and-learn philosophy
that has proven successful for previous operations.
International insurance businesses have generally executed
cautious launch strategies and are usually backed by
proportional reinsurance support which provides substantial
mitigation against start-up losses in the early years.
One or more of the operations could fail to become
a sustainable, profitable long-term business, with the
result that the businesses do not collectively deliver the
profit diversification required.
The Group has developed a capital allocation framework
which seeks to allocate funding to those businesses most
likely to add to the diversification of profits or contribute to
the strategic objectives of the Group.
The Directors are mindful of management stretch and any
other key interdependencies that may strain the business,
regularly assessing the suitability of the infrastructure
in place for Admiral’s UK and international operations,
alongside oversight and challenge from appropriate boards
and committees.
The Group has established a sufficiently large and diverse
portfolio to mitigate the risk of failure of individual
new operations.
Product expansion into new areas or expansion through
M&A activity could lead to unprofitable business, could
increase regulatory risk, and may introduce new risks
into the Group.
Growth in developing businesses could exceed the scale
of infrastructure of the operation.
Impact
Higher than planned losses and potentially closure costs,
and distraction of key management.
A collective failure of these businesses could threaten
Admiral’s objective to diversify its earnings by expanding
into new markets and products, though the failure of a
single product or geography is expected to be tolerable.
Risk development in 2023
The risk has reduced during the year, noting the strong
results from Admiral Money and improved performances
in most overseas markets. In addition, the acquisition
of the UK direct Home and Pet personal lines insurance
operations of RSA due in 2024 is expected to accelerate
diversification going forward.
Possible impact
on the strategic
initiatives
1 2 3
Risk
Admiral utilises comparison websites as an important
source of new business and growth. Growth in this
distribution channel could slow, cease or reverse, or
Admiral could lose one or more of the websites as a
source of customers.
Impact
A potentially material reduction in UK insurance new
business volumes, in particular for UK Motor.
Mitigating factors
Admiral contributes materially to the revenues of all four
major UK comparison businesses, and has a strong brand
presence, and therefore it is not considered probable that
a material source of new business would be lost.
Admiral continues to grow its MultiCover and MultiCar
products which promotes retention. It also has a direct
offering to new and existing customers, with continuing
investment made to improve its online/digital offering.
Less profitable new business or slower growth in Europe.
However, a more competitive market might benefit the
insurance businesses through lower acquisition costs.
Risk development in 2023
The risk has trended broadly stable during the year
with no material movement in the share of new business
coming from aggregators.
Admiral continually looks to improve its customer experience
and business optimisation by sharing comparison distribution
learnings throughout the Group, leveraging applicable
experiences with brokers, and implementing additional
controls to enhance selection and underwriting criteria.
Distribution channels other than price comparison are
explored and used as and when deemed necessary.
Credit Risk
H Credit risk
Possible impact
on the strategic
initiatives
1 2
Risk
Admiral is primarily exposed to institutional credit risk in
the form of: (a) reinsurance counterparty credit risk; (b)
banking counterparty credit risk and/or (c) the credit risk
of the investment portfolios.
One or more counterparties could suffer significant
losses leading to a credit default and the loss of
reinsurance cover or banking deposits, while a
downgrade or default of investments could erode
their value.
In addition, Admiral Money’s loan portfolio exposes
the Group to retail credit risk in relation to customer
defaults on its unsecured personal loan and secured car
finance business.
Impact
The impact of a major credit event could be realised
losses and reduced capital, dependent on its nature
and severity.
Admiral would also need to ensure that it continues to
have sufficient liquid assets to meet its claims and other
liabilities as they fell due.
Increased defaults could impact future profitably and
lending capabilities.
Risk development in 2023
The risk has trended broadly stable during the year
with no material movement in the credit quality of
significant counterparties.
Mitigating factors
Admiral monitors the credit quality of its reinsurance and
banking counterparties within Board approved limits.
The Group reinsurance policy is to contract with reinsurers
that are rated ‘A-‘ or above (taking the highest rating from
any applicable external rating agency such as S&P, AM Best
or Fitch), though there are circumstances where a lower
rating could be tolerated. In addition, major reinsurance
contracts are operated on a funds withheld basis, which
substantially reduces credit risk, as Admiral holds the cash
received from policyholders as collateral.
The credit risk in Admiral’s investment portfolio is managed
through diversification and appointing high-quality third-
party asset managers. Limits on counterparties and certain
credit ratings ensure that credit risk is managed within
risk appetite, and produces a high quality credit portfolio.
The Group invests in a range of liquidity funds which hold
a wide range of short duration, high quality securities, and
in fixed income funds holding primarily investment grade
assets. Cash balances and deposits are placed only with
highly rated counterparties. Most long-term investments are
held in Government bonds to further mitigate the exposure
to credit risk.
Admiral considers counterparty exposure frequently
and in significant detail, and has in place appropriate
triggers and limits to mitigate exposure to individual
investment counterparties.
Admiral Money’s credit risk appetite is set to ensure that
the risk taken is commensurate to the expected returns
whilst also considering customer affordability. Admiral Money
continuously monitors its criteria for new business pricing
and the performance of its portfolio.
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Principal Risks and Uncertainties
continued
Market Risk
I Market risk
Possible impact
on the strategic
initiatives
1
Risk
Market risk arises due to developments in economic
and financial market conditions that result in
movements in interest rates, credit spreads and foreign
exchange rates, or regulatory/legislative changes to the
basis of internal assumptions or methodologies.
Impact
Market volatility (notably significant changes in risk free
interest rates or material increases in credit spreads)
can adversely impact the value of the Group’s assets.
The Group’s solvency can also be adversely impacted
due to an increased regulatory valuation of claims
liabilities, in particular in relation to longer-dated
potential PPO claims.
Continued growth of the Group’s businesses outside the
UK has altered the exposure to net assets and liabilities
in currencies other than pounds sterling, increasing the
Group’s exposure to Euros and Dollars in particular.
Risk development in 2023
The risk has trended broadly stable over the course
of the year, despite the market volatility seen early
on, following the collapse of SVB and the takeover of
Credit Suisse. As observed with these banking failures
and increased geopolitical instability, event risk remains
heightened, however.
Mitigating factors
A dedicated Investment Committee, a Group Management
Committee, advises each Subsidiary Board and oversees
the investment management of funds as well as advising
on effective treasury and foreign currency exposure
management of the Group and each entity’s non-
invested funds.
The Group policy relating to the managing of cash and
invested assets supports the Group’s compliance with the
Solvency II Prudent Person Principle and PRA expectations.
The investment strategy focuses on preservation of
the amount invested, low volatility of returns, matching
duration and currency of liabilities, and strong liquidity.
The majority of the portfolio is invested in high quality fixed
income and other debt securities, and money market funds
and other similar funds in order to achieve these objectives.
The Group’s mitigation for interest rate risk resulting from
long duration PPO liabilities includes reinsurance cover and
a continuing focus on appropriate investment strategies,
such as asset/liability matching, hedging options for
these liabilities, including of certain risks associated with
PPO claims.
105
Mitigating factors
Ongoing line one, two and three monitoring of the Group’s
compliance with current and proposed requirements.
Interaction with regulators and consultation with internal
and external subject matter experts by Executive
Management and the Board.
Assurance gained through external reviews and
benchmarking exercises ensuring compliance with legal and
regulatory requirements.
Strong change governance is a key control in managing
regulatory change.
Non-Financial Risk
J
Legal and regulatory risk
Possible impact
on the strategic
initiatives
1 2 3
Risk
As Admiral operates globally, across various business lines
and products, it is exposed to differing political regimes,
legal jurisdictions, regulatory expectations and tax systems.
Legal and regulatory risk may arise where Admiral fails
to identify, interpret, or fully comply with legal, tax
and/or regulatory requirements, in a timely manner.
Current examples include interpretation and compliance
with General Insurance Pricing Practices, the FCA’s
Consumer Duty regulations, updates to the Corporate
Governance Code by the Financial Reporting Council,
mandatory climate-related financial disclosures, and the
EU Whistleblowing Directive. This risk may also arise where
previous industry, tax, regulatory and/or legal compliance
standards are revisited with negative consequences and
applied retrospectively, for the industry and/or the Group.
Failing to meet increasing expectations from regulators,
legislators, and shareholders around climate change and
broader environmental, social and governance matters
could potentially lead to exposure to legal and regulatory
risk and potentially adversely impact other stakeholders’
perceptions.
A legal and regulatory risk could arise through incorrect
or delayed regulatory reporting.
Impact
Exposure to regulatory intervention, censure and/or
enforcement action through fines and other sanctions.
Potential criminal and/or civil enforcement action.
Possible customer detriment, as well as negative
reputational and brand impacts.
Risk development in 2023
The risk has increased during the year due to the
heightened regulatory environment, for example via the
implementation of the FCA Consumer Duty regulation.
K Operational risk
Possible impact
on the strategic
initiatives
1 2 3
Risk
Operational risk arises within all areas of the business.
The principal categories of operational risk for Admiral
are conduct risk, change risk, people risk, technology
risk, business continuity and operational resilience, data
governance risk, information security/cyber risk, process
risk, and outsourcing and procurement risk.
Impact
The following are a limited number of examples of the
potential impacts of operational risks:
Customer detriment, customer dissatisfaction, regulatory
censure/enforcement, and/or reputational damage as
a result of Admiral’s action or inaction.
Being unable to service customers with the level of
distinction associated with the Admiral brand.
Mitigating factors
Admiral operates a three lines of defence model, and
internal controls are in place and are monitored to mitigate
risks. The control framework is regularly reviewed, and the
Internal Audit function has an agreed cycle of testing of
the adequacy and effectiveness of controls. The following
are a limited number of examples of how operational risks
are mitigated:
• Conduct: Monitoring, managing and reporting on
customer outcomes, including the ongoing enhancement
of Admiral Group Customer Outcomes MI; robust project
governance around legislative and regulatory change
such as Consumer Duty implementation and monitoring;
attracting, retaining and motivating quality employees
to deliver superior customer service and to achieve
business objectives.
• Change: Employing change governance and oversight at
a Group and Entity level; with external specialist support,
review and assurance utilised where required.
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Principal Risks and Uncertainties
continued
107
Non-Financial Risk
K Operational risk continued
Possible impact
on the strategic
initiatives
1 2 3
Impact continued
The move to a hybrid working world poses risks to
the culture that has underpinned Admiral’s historical
successes, both by increasing labour mobility and
reducing the office-based activity that has been a
cornerstone of Admiral’s historic ways of working.
Making poor business decisions due to lack of system
availability and data integrity and/or data confidentiality.
Cyber events leading to loss of service, loss of data and
potential ransom demands.
Reductions in earnings and/or value, through financial
or reputational loss, from inadequate or failed internal/
outsourced projects, processes and systems, or from
people related, hybrid working or external events.
Risk development in 2023
The risk has reduced during the year as hybrid working
has been further embedded and large change projects
have been navigated successfully.
Mitigating factors continued
• People: Employing targeted recruitment and identifying
potential leaders through internal development, talent
management and retention processes for the purposes
of succession planning; an ongoing commitment to
diversity and inclusion.
• Culture: Admiral has embraced more flexible ways of
working to hire, motivate and retain employees and is
evolving hybrid working practices in ways that support
and maintain the unique culture.
• Technology: Continuous investment in the Group’s
IT infrastructure, coupled with regular Executive
Management and Board review of effectiveness given
the strategic importance of technology in improving
the customer journey and enhancing business
decision making.
• Information security/cyber: Ongoing enhancement
of the control environment to protect the Group from
the continuously evolving cyber threat landscape.
Significant investment continues to be made in ensuring
that people, processes, and technologies are resilient
to the wide-ranging tactics, techniques and procedures
employed by threat actors. Focus is also given to ensuring
there are robust mitigation plans in place to effectively
handle any incident, with simulations completed to
ensure prompt and effective response, containment,
and recovery.
• Business continuity and operational resilience: Staffing
a Line-1 major incident team within IT which is tasked
with maintaining system availability; business continuity
and disaster recovery plans are in place and are regularly
tested, alongside completion of an operational resilience
work stream; data is regularly backed-up to allow for its
recovery in the event of corruption.
• Data Governance: The Group is enhancing and further
embedding its approach to data ownership, the ongoing
review of data quality including responding to issues
when they are identified, as well as having a consistent
approach to the recording of data definitions and lineage
so that the data is better understood.
• Process: Admiral’s internal control framework is regularly
monitored and reviewed within the three lines of
defence model.
• Outsourcing and Procurement: Strategic reviews
are periodically undertaken to align procurement and
outsourcing arrangements with the wider business
strategy and also in response to ongoing macroeconomic
challenges; monitoring outsourced activities through
ongoing supplier relationship and performance
management and regular due diligence reviews.
Admiral also purchases a range of insurance covers to
mitigate the impact of a number of operational risks;
including Cyber Liability insurance subject to market
capacity, Civil Liability insurance, and Employers’
Liability insurance.
Non-Financial Risk continued
L Reputation risk
Possible impact
on the strategic
initiatives
1 2 3
Risk
Admiral could be exposed to an erosion in trust as a result
of decisions, associations, actions or inactions, such that
Admiral does not meet stakeholder expectations.
A negative reputation could have a significant impact
on customer trust, the share price and brand value,
which can be difficult to recover from.
Reputational risk can be a secondary impact caused
by failures in any part of the Group such as operational
events. However it can also be a primary risk should the
firm’s perceived behaviours or communications not meet
stakeholder expectations. In either case, a reputation
event could impact Admiral’s standing with customers,
regulators, employees, suppliers and other stakeholders
and could reduce profitability and investor support.
Impact
The impact can be wide ranging and reputational risk can
impact customers, employees, shareholders, suppliers,
regulatory bodies and/or the community and media.
Depending on the type of reputational risk event, the
impact could include reduced sales, reduced profitability,
a decline in share price, difficulty in recruiting and
retaining talent, and increased regulatory focus.
Risk development in 2023
The risk has trended broadly stable during the year with
no notable issues having a discernible impact.
Mitigating factors
Admiral has in place risk appetite statements that set out
the level of risk the Group is willing to accept for each key
risk, and the Group monitors associated metrics that inform
reputational risk analysis for different stakeholder groups.
This analysis includes social media metrics, staff surveys,
and investor relation reports.
The Executive Management team is experienced, and
reputational impact is considered across key decisions and
major external events.
Given the breadth of events that could impact on Admiral’s
reputation, a number of the mitigating factors captured
in the other principal risks and uncertainties would also
mitigate reputational risk.
Admiral has a crisis response and communications plan that
seeks to minimise the reputational and other impacts of an
event once it has materialised.
Emerging Risks
The management of emerging risks is
a key element of Admiral’s strategic risk
management, and emerging risks and
opportunities continued to be reviewed
throughout 2023.
Admiral Group identifies and monitors
emerging risks, issues which may be
potentially significant, but may not be
fully foreseen, assessed or allowed for in
insurance terms and conditions, pricing,
reserving or capital setting, or strategic
and business decisions. By their very
nature, emerging risks are many and
varied, with a high degree of uncertainty
around the likelihood of occurrence,
severity and/or timing. The broad analysis
of a wide range of emerging risks and
opportunities may lead to a change in
strategy, management behaviour, ways
of working or risk management and
in turn, to a stronger and more robust
business which better delivers on its
commitments to customers, employees,
and other stakeholders.
Emerging risks are identified via horizon
scanning. This involves an extensive
literature review, consultations with
internal working groups, and interviews
with internal stakeholders, subject
matter experts, and external specialists.
Emerging risks are assessed using an
internally-developed framework, which
includes qualitative and quantitative
analysis to grade each emerging risk
on a scale designed to be comparable
across entities and compatible with
management of operationalised risks.
Evaluation of the potential impact to
Admiral includes consideration of how
the risk may interact with existing
principal risks and uncertainties (PR&Us),
as well as any new risks that could
arise. It also covers the precautionary
deployment of management actions and
mitigating controls.
Admiral’s Emerging Risk Radar captures
an assessment of potential impact and
time to crystallisation for emerging risks.
It categorises each risk into four broad risk
segments: (a) social, political & economic,
(b) legal & regulatory, (c) technology and
(d) environmental. Plotting emerging risks
in this way can shed light on the macro
trends with common drivers and effects.
Reporting on emerging risks and
opportunities is provided to the GRC and
relevant Boards, is incorporated into the
Group ORSA Report, and is discussed
with the senior management and entity
risk teams.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 108108
109
Reflecting
ON INTERNAL
MOBILITY AT ADMIRAL
Hola! I’ve been in the Admiral
Group for 12 years and spent the
last 8 of those years as CEO of
our Spanish insurance business –
Admiral Seguros.
As CEO of Admiral Seguros, I oversee a
fantastic team of people, based mostly
in Seville. We serve our 440k Spanish
customers through the Qualitas Auto,
Qualitas Classic and Balumba brands.
I originally joined Admiral as a Business
Development Manager, reporting into
Henry Engelhardt. Previous to Admiral
I had been a senior manager in PwC
Madrid, also completing an MBA at
INSEAD. In my first day on the job Henry
asked me if I would mind delaying my
training and flying to the US, to support
a team investigating what would later
become Compare.com. Thus started an
intense but fun-packed three years during
which I worked closely with both Henry
and David Stevens, running group projects
and launching the UK telematics product.
In 2014 I had the chance to move to Paris
and support the in-sourcing of our French
operation, L´olivier. From there I moved to
Seville and transitioned into leadership
of the Admiral Seguros team at the time
Cristina Nestares moved to the UK.
What struck me about Admiral when I
first joined was its open culture, combined
with a strong willingness to do things
differently and to trust in people as a
driver of results. I’m pleased to say that 12
years on, the Admiral culture is still very
much prevalent across the Group.
It’s been great to reflect during 2023 on
everything the Group has achieved in the
last 30 years. I look forward to continuing
to build together on this success.
“What struck me
about Admiral when
I first joined was its open
culture, combined
with a strong willingness
to do things differently
and to trust in people as
a driver of results.
I’m pleased to say that
12 years on, the Admiral
culture is still very
much prevalent across
the Group.”
Sarah Harris
CEO, Admiral Seguros
USA
Cardiff
Paris
Seville
Viability Statement
In accordance with
provision 31 of the 2018
UK Corporate Governance
Code, the Directors have
assessed the prospects of the
Company over a three-year
period, having referenced
the Group’s Own Risk and
Solvency Assessment (ORSA),
the Capital Plan, risk strategy,
risk appetite, principal risks
and uncertainties, key risk
drivers, and ongoing risk
management activities.
As per provision 31, Admiral considers
three years to be a period of assessment
over which it has a reasonable degree of
confidence. Although the Group reviews
financial projections that extend beyond
the three-year time horizon covering the
years up to 2028, Admiral considers that
there is an inherent risk and uncertainty
in projecting beyond this three-year
period, as the degree of certainty in
the impact of internal and external
developments reduces greatly due to
the nature of Admiral’s primary business
(one-year insurance policies). However,
these financial projections contain no
information which would cause different
conclusions to be reached over the long-
term viability of the Group.
At least annually, the Group produces an
ORSA report, which is one of the sources
of evidence used by the Board to assess
viability. The ORSA report sets out a
detailed consideration of the principal
risks and uncertainties facing the Group
and considers current and projected levels
of solvency and liquidity over the short to
medium term.
In addition to the ORSA, the Board utilises
other relevant reporting, some of which
is longer term in nature. Notably these
include five-year financial projections
reviewed twice a year, three-year solvency
projections reviewed at least twice a year,
and a one-year financial budget for the
forthcoming 12 months approved on an
annual basis.
Another source of evidence is the
alignment of the financial and business
planning process and the solvency
assessment, referred to within Admiral
as the capital plan. This makes sure that
Admiral is appropriately capitalised at
a fixed point in time as well as over the
future planning time horizon, given
Admiral’s principal risks and uncertainties
and a plausible range of potential stressed
conditions. The capital plan is a key
consideration for Group and Subsidiary
Boards in assessing and approving the
business strategy, business/financial
plan, capacity to pay dividends, and
key business decisions.
The quantitative assessment considers
how the regulatory capital requirements,
economic capital needs, own funds
and solvency position of the Group are
projected to change over the three-year
horizon, with a requirement to maintain
a solvency ratio above the approved
capital risk appetite buffer throughout
the projection.
As part of the ORSA process, a series
of sensitivity, stress and scenario tests
(S&STs) and reverse stress tests (RSTs)
are examined and quantified based
on the regulatory capital basis (which
is the standard formula method with
adjustments tailored to reflect Admiral’s
risk profile) to understand the potential
impact on the Group’s solvency, liquidity
and profitability over a three-year period.
In addition to these Group tests, there are
also entity-specific scenarios, considered
of lower materiality to the Group, that are
performed by each subsidiary insurance
entity as part of their ORSA processes.
The results of the stress tests form part
of the process to set the Group’s capital
risk appetite, which seeks to hold a buffer
on top of the Group’s regulatory capital
requirement that is sufficient to protect
its regulatory capital position against a
range of significant but plausible potential
shocks and stresses.
Key strategic decisions, including the
setting of dividend payments, consider
the solvency impact against the Board-
approved capital risk appetite of 150%,
which is a key criterion for the Board in
assessing viability. Refer to the Strategic
Report (page 54) for information on
sensitivities to the reported 2023 solvency
ratio position.
To assess the robustness of the Group
to the impact of various risks, 13 S&STs
and two RSTs have been quantified to
understand the potential impact on the
Group’s solvency ratio. In 2023 a range of
scenarios have been performed, capturing
insurance risk, market/credit risk, strategic
risk, natural catastrophe, climate change
and cyber/operational risk.
The results provide comfort that Admiral
has sufficient capital to withstand the
extreme scenarios. Whilst the 150% lower
trigger is breached in five instances –
three severe inflation-based scenarios, a
US banking crisis scenario and a liquidity
stress, should such scenarios actually
occur there are a number of management
actions, including adjustments to
shareholder dividends, that would be
called on to alleviate capital pressures and
improve the solvency ratio to bring it back
above the 150% buffer. Another exception
is an extreme RST, combining severe
and extreme insurance and market
risk scenario combinations with credit
and liquidity risk. In the absence of
management actions, this would result
in a breach of the 100% solvency ratio
but, as is the intention of the RST, it is
considered to be an extremely remote
outcome, being well in excess of a
1-in-200-year event. Overall, the Group
is likely to remain adequately capitalised
and liquid in future, given the results of
the S&STs.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 110110
Viability Statement
continued
Risk management is an essential part of
Admiral’s operations, and successful risk
taking is key to the Group achieving its
business objectives. Risk management
is therefore a key consideration when
setting the Group’s strategy, managing
performance, and rewarding success.
The current risks that are faced by the
Group are captured in the Risk Universe,
with the most notable risks captured
in the Group’s principal risks and
uncertainties (page 98)29. In addition to
these principal risks and uncertainties,
the Group also considers a range of
emerging risks that could impact the
Group to varying degrees in the future,
but which are not yet fully understood,
including those related to climate change
(page 107).
The Admiral Group Risk Strategy is
considered and approved by the Board.
The strategy is directly linked to the
business plan and seeks to ensure that
all risks are managed effectively to
allow the Group to meet its strategic
aims (page 22). Supporting this is the
Admiral Group Risk Management Policy,
which sets out Admiral’s approach to risk
management, as well as the governance
of risk management across the Group.
This approach ensures that there is
appropriate oversight of the Group’s risk
profile, and that the Group remains within
risk appetite in all its operations.
While each of Admiral’s principal risks
and uncertainties could have potentially
impacted the Group’s performance,
during 2023 the following key risk drivers
were seen to be of notable importance:
changing economic outlook, geopolitical
instability, technology, cyber and
operational resilience, Consumer Duty,
and climate change.
Changing economic outlook:
Admiral has reviewed and continues
to monitor the Group’s solvency and
liquidity positions in response to market
volatility and wider economic uncertainty,
considering factors such as sustained high
inflation, banking uncertainties resulting
from the collapse of regional US banks
and the UBS rescue of Credit Suisse,
the wider impact of continued supply
chain disruption, high energy prices,
high interest rates, and the pressures
on individual Household finances which
have led to a cost of living crisis in many
countries. Some of the current trends
in risks most impacted by the changing
economic outlook are highlighted below:
Premium Risk and Catastrophe
Risk: Global uncertainties, supply
chain pressures and increasing vehicle
repair and replacement costs have
all contributed to claims inflation.
While labour shortages have generally
eased, wages have also grown quickly
to keep up with inflation, impacting large
bodily injury claims. In most insurance
markets, motor claims frequency has
increased but is still noticeably below
pre-pandemic levels. Admiral continues
to manage these challenges with a
disciplined, long-term approach to
pricing and growth, with a focus on
building the business for the long term.
Credit Risk: Cost of living pressure has
seen growing demand for the “essentials”
insurance product and a modest increase
in the number of loan customers
falling into arrears. Controls are in place
to identify and support vulnerable
customers on a case-by-case basis.
Within Admiral Money, the screening
process has been adjusted to include
stricter creditworthiness and affordability
checks to ensure that customers are
resilient to ongoing inflation. The loan
portfolio is subject to regular stress tests
and the risk adjusted returns achieved
indicate a resilient portfolio.
Reserve Risk: The Group has a prudent
approach to reserving, which helps to
minimise the impact of inflation and helps
build strong, resilient businesses for the
long term. Provision has been made for
the impact of inflation on unsettled bodily
injury (BI) claims, for which cost of care is
the primary driver, ensuring that reserves
capture excess inflation for all large BI
heads of damage exposed to inflation,
but particularly for wage inflation over
the average time it takes for BI claims to
settle. This continues to be reviewed, with
best-estimates of these impacts being
reflected in the reserves recognised as at
the balance sheet date.
Operational Risk: While 2023 has seen
the relative normalisation of working
conditions following the pandemic-era,
the business has continued to review
the impacts and level of operational
risk in the context of a modern, hybrid
workforce. Admiral received real living
wage accreditation in the UK in July which
helped to support colleagues through
cost of living concerns.
Geopolitical instability:
The escalation of geopolitical risk
following the Russian invasion of Ukraine
led to a review of potential exposure
across the Group’s PR&Us. At that time,
both market risk and insurance risk were
flagged as key areas to monitor.
Market Risk: The initial investment
spread shock was of brief duration
and there was very limited indirect
exposure across the investment portfolio.
Market risks are reviewed by the
investments team and asset managers
to ensure Admiral is adequately positioned
in this rapidly changing environment.
Insurance Risk: The risk of reduced
availability of co-insurance/reinsurance
arrangements remains heightened due
to tensions between Russia-Ukraine and
an anticipated Ogden rate change in 2024,
however monitoring is being undertaken
to adequately react to any scenario.
More recently, Admiral reviewed its
exposure to geopolitical conflict in
response to the outbreak of the 2023
Israel-Hamas war. Initial analysis suggests
there is no reason to believe Admiral will
be materially impacted as a result of the
conflict. The position is being monitored.
29 Please also see note 6 to the financial statements which sets out the Group’s objectives, policies and procedures for managing financial assets and liabilities.
111
Strategic Report Approval
The Strategic Report is approved for issue
by the Board of Directors, and signed on
behalf of the Board:
Milena Mondini de Focatiis
Group Chief Executive Officer
6 March 2024
Cyber and operational resilience:
Admiral’s strategy to drive continuous
delivery of good customer outcomes
includes effective and safe usage of
technology and data. In support of this
the Group Risk function has specialist
staff which:
• Complete oversight, challenge
and escalation of Technology and
Information Security risks through
regular engagement with each of the
businesses within the Admiral Group;
• Monitor the risk position through
setting and review of specific KRIs,
with reporting and, where appropriate,
escalation through to Committees;
• Ensure that there is an embedded
Group Cyber Crisis management
plan which includes all necessary
stakeholders to ensure the effective
response to a cyber crisis; and
• Work with the businesses to undertake
deep-dive reviews of specific topics
highlighted through threat intelligence
and the key cyber risks facing
the Group.
Consumer Duty:
The FCA’s Consumer Duty came into
effect on 31 July 2023. The Duty
introduces higher and clearer standards
of consumer protection across financial
services and requires firms to focus on
customer outcomes. This aligns with
the Group purpose and commitment to
delivering good customer outcomes for
all customers. Admiral has worked hard to
review critical customer communications
and interactions, products and services,
and customer journeys to align with the
requirements of the Consumer Duty.
Admiral has also had close engagement
with external third parties and the FCA
throughout the year on the Consumer
Duty implementation and requirements.
There is an ongoing focus to ensure that
the Consumer Duty is fully embedded
within the business and Admiral
continue to monitor this to ensure that
good outcomes are being delivered
to customers.
Climate change:
Admiral remains committed to
recognising and understanding the
risks and opportunities posed by
climate change to the Group, as
well as to mitigate its impact on the
environment. Climate-related risks can
impact on all of Admiral’s business lines,
operations, investments, and reinsurance
arrangements. Admiral Group recognises
that while there are risks from delayed
action, there are also opportunities from
considering the challenges, including
the potential to accelerate the Group’s
transformation, to build resilience, and to
gain competitive advantage in new and
existing markets.
As part of this work there is an ongoing
Group focus on:
• Ensuring full compliance with
existing and emerging regulatory and
disclosure requirements
• Researching climate-change trends and
assessing the risks and opportunities
arising from climate change
• Incorporating climate-related risks into
business-as-usual risk management
and financial planning, such as
enhancing Admiral’s climate scenario
testing capabilities, linking climate-
related targets and achievements
against the directors’ remuneration,
and better reflecting climate change
considerations in projections from the
Business Plan and
• Continuing efforts to further reduce the
Group’s carbon footprint.
Admiral Group’s strategy linked to climate
change is discussed in more detail in the
Task Force on Climate-related Financial
Disclosures disclosure (page 73).
Based on the results of this analysis, the
Directors have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they
fall due, for the period up to and including
December 2026.
Strategic ReportStrategic ReportAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
112112
Celebrating
ADMIRAL’S CUSTOMER
CHAMPIONS
We love to celebrate when our
colleagues go the extra mile for
a customer, to ensure we recognise
and reward exceptional service.
Every month our UK CEO Cristina
selects a customer champion, a
colleague that has gone above and
beyond for a customer.
Nancy from our Canadian operation
was awarded this title for her amazing
service to a customer who had been in
an accident. The customer was still on the
roadside with a car that couldn’t be driven
and feeling very shaken up. The initial
contact with our customers is usually
a brief call to get them and their car
home safely.
However, in this instance the customer
had no one else to call for comfort so
Nancy called the customer back after
their initial call. She stayed on the line
with the customer for 30 minutes
supporting them until the recovery
vehicle arrived.
We understand that customers can be
in a state of anxiety or shock when they
initially contact us, we accompany them
on some of their worst days, which is why
we always try to help make the process
easier with a friendly voice at the end of
the phone.
Strategic ReportAdmiral Group plc Annual Report and Accounts 2023 113
CORPORATE
GOVERNANCE
In this section
114 Chair’s Introduction to Governance
116 Q&A with the Chair
118 Board of Directors
125 Board Leadership and Company Purpose
140 Division of Responsibilities
146 Nomination and Governance Committee Report
161 Audit Committee Report
168 Group Risk Committee Report
172 Remuneration Committee Report
174 Remuneration at a Glance
176 Director’s Remuneration Policy
185 Annual Report on Remuneration
198 Directors’ Report
Corporate GovernanceAdmiral Group plc Annual Report and Accounts 2023 114114
Chair’s Introduction to Governance
115
Building
A DIVERSIFIED BUSINESS
WITHIN AN EFFECTIVE
GOVERNANCE FRAMEWORK
Dear Shareholder,
On behalf of the Board, I am pleased
to present Admiral’s Governance Report
for the financial year ended 31 December
2023, my first as Chair of the Board.
Through the course of my first year,
I have been impressed with the focus
that Admiral places on ensuring that
an effective governance framework
complements its unique culture and
that both are embedded throughout
the Group. This report describes the
framework in place to ensure our Board
and its Committees are operating
effectively by supporting and challenging
management to maintain high standards
of governance across the Group as we
continue to drive long-term value for
all our stakeholders.
Board changes
2023 has been a year of considerable
change for the Board of Admiral. I was
honoured to take over the responsibility
of Chair of the Board following Annette
Court stepping down as Chair at the 2023
Annual General Meeting. You can find a full
description of my appointment process
in last year’s Annual Report. Following the
announcement of my appointment in
January 2023, I went through a bespoke
and comprehensive induction, details
of this process are set out on page 151.
Again, I would like to express my gratitude
to Annette for her exemplary leadership
of the Board. I can confirm that my fellow
Board members and the wider Admiral
Team are equally grateful for Annette’s
dedication and thoughtful guidance.
Jean Park retired from the Board and all
her Admiral commitments with effect
from 20 January 2023, having spent nine
years on the Board. As I have previously
mentioned, it was with great sadness
we learnt that Jean had passed away
change across the Group. Following his
resignation from the Board, Keith chaired
and served on a number of subsidiary
boards until he retired as a director in
2019. Keith then continued to undertake
mentoring roles to many of the Admiral
management team until shortly before
his untimely death. Keith was universally
liked, respected and admired by so
many across South Wales and beyond
and will be deeply missed by the whole
Admiral community.
We were delighted to welcome Fiona
Muldoon who joined the Board on
2 October 2023. Fiona was appointed
as a new independent Non-Executive
Director and member of the Audit
Committee. Fiona’s biography can be
found on page 123. A description of the
appointment process undertaken to find
and recruit Fiona is set out on page 149.
People and culture
One of the most significant and enduring
observations from my first year as Chair
is the sheer quality of people we have
at Admiral and the passion they show
for the business, this is demonstrated
every day in the work they do. There is a
special culture embedded throughout
the Group, which I believe is unique to
Admiral. We build our culture through
our purpose and our values, these are not
just words on paper, they are lived daily
by our teams and integrated through
everything we do as a business. On behalf
of the Board, I would like to thank all our
employees for the hard work, dedication
and enthusiasm they have shown
throughout the year. Our people and our
culture are what sets us apart from other
companies and are the reason why in
2023, Admiral was acknowledged as the
best large Company to work for in the UK,
and our Chief Executive Officer, Milena
“The Board is focused on
delivering Admiral’s
purpose and building its
culture through a
framework of good
governance and established
values which, in turn,
will deliver long-term,
sustainable returns
to our shareholders.”
Mike Rogers
Group Chair
in May 2023. Whilst Jean left prior to
my joining the Board, I am well aware
of the invaluable contribution she made
to Admiral and the Board throughout her
nine years’ service, as well as the esteem
within which she was held by her fellow
Board Directors and our colleagues across
the business.
Sadly, we also learned that our former
Board colleague Keith James passed
away in May 2023 after a short illness.
Keith joined the Board in 2002 and served
until 2012 overseeing huge growth and
Governance at a glance
Board Director skills
Board independence
Board gender
Finance
Risk
Insurance
Executive Strategic Leadership
Marketing/Retail
M&A
City
International
Tech/Digital/Data
Operations
Entrepreneurial
Lending
Small /Medium Enterprise
Remuneration/People
ESG/Sustainability
8 Independent
2 Non-Independent
1 Chair*
6 Men
5 Women
Board ethnicity
Board tenure
0
2
4
6
8
10
12
*
Independent on appointment
10 White British or other White
(including white minority groups)
1 Asian /Asian British
2 0–2 years
4 2–4 years
3 4–6 years
2 6+ years
Mondini de Focatiis, was recognised as
the best leader of a big Company at the
Best Companies to work for awards, see
more at www.b.co.uk. You can find out
more about our culture and why Admiral is
considered a great employer throughout
this report.
ESG and sustainability
ESG and sustainability considerations form
part of the narrative to every decision
we take as a Board and are integral
to the formation of our wider Group
Strategy. During the year, the Board
considered the effects of the cost of living
situation and, amongst other financial
and non-financial measures taken to
keep employees healthy, motivated
and productive, declared a 5% salary
increase for all our UK based employees.
Further information on this can be found
on page 129.
With regards to diversity, I am pleased to
report that the Admiral Board exceeds
the FTSE Women Leaders Review targets,
with a range of 45% to 55% female Board
representation during the year. We have
a female CEO and Senior Independent
Director and have met The Parker Review
target for Director ethnicity at Group
Board level. Whilst this is positive, we
cannot rest on our laurels, there is still
much work we can do to ensure a fully
inclusive environment sits alongside
a diverse pipeline of talent to drive
the business forwards. You can read
more about our diversity and inclusion
initiatives on pages 62 and 154.
Climate change and the wider
environment are important considerations
we take into account as a Board. You can
read about how Admiral has taken steps
to meet its environmental obligations
through its TCFD and SECR reporting
disclosures set out on pages 71 and 73.
As Chair, I am conscious that the Board
is accountable to all our shareholders
and wider stakeholders such as our
employees, customers, partners,
suppliers, communities and the
environment. We maintain an active
dialogue with our shareholders and have
regular interaction with all our wider
stakeholders. How we do this is set out
in our section 172 statement on page 87
along with further details on page 136.
Effectiveness
The Board conducted an evaluation
of its own performance and those of
its committees in December 2023.
In line with its three-year cycle, this
review was conducted internally by
the Company Secretary in conjunction
with myself. The findings from the
2023 evaluation along with an update
on the progress made against those
recommendations from the previous
year’s external review process can be
found on page 158. This process gives
a clear focus on what we can do as a
Board to improve during the forthcoming
year, however it did confirm that the
Board and its committees are working
effectively in ensuring the business
is managed for the long-term benefit
of all our stakeholders.
I would like to thank my fellow Board
members for their insight and support
during my first year as Chair. I look
forward to our 2024 AGM, which will
once again be held in person on 25 April
2024. Further details will be published
in the Notice of Annual General Meeting,
which will be sent or made available to
shareholders on the Company’s website.
Mike Rogers
Chair
6 March 2024
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 116116
Q&A with the Chair
117
How important is diversity
and inclusion to the success
of the business?
Embracing people from all areas of society
and walks of life brings with it different
experiences, skills and perspectives. This in
turn delivers a stronger, more creative
and capable workforce. Inclusive and
diverse workplaces foster a keen sense
of belonging and create an environment
where employees feel their contributions
are valued and respected, this enhances
the culture of the Company. High quality
candidates are attracted to diverse and
inclusive companies and employees feel
more comfortable and satisfied within
inclusive environments, creating loyalty
and reducing attrition. Equality is one of
the four pillars of Admiral’s culture and
I’ve been impressed with the seriousness
and focus the Group gives to ensuring
diversity and inclusion, from the Board
through to all levels within the Company.
We have many forums throughout
Admiral which focus on all aspects of
diversity and inclusion, this is key to
enhancing our culture and ultimately the
success of our business. The team is proud
of its diverse working culture – it’s what
makes us Admiral.
See page 154 for further information
Why is stakeholder engagement
important to Admiral?
Stakeholder engagement is a key
responsibility for the Board, we value
all our stakeholders and through
understanding their individual needs
the Board is able to create a balanced
and fair approach to their varying,
sometimes conflicting, interests.
Engagement through effective
communication builds trust, credibility
and confidence, and we take into account
our various stakeholder views and
opinions to build a shared vision for the
future. Engagement also brings clarity
and alignment as to what the business
wants to achieve and consensus as to how
it should do this. Our stakeholders have
a huge wealth of relevant knowledge
and experience which we are able to tap
into to help Admiral be more impactful,
sustainable and successful, whilst at the
same time assist in mitigating potential
risks, conflicts and resistance to change.
The Board understands the importance
of these relationships and Admiral has
an in depth understanding of who our
stakeholders are and how best to engage
with them for the benefit of the Company
in the long-term.
See pages 56, 87 and 136 for
further information
What does being a sustainable
business mean to the Admiral Board?
As a Board we understand that having
an understandable, transparent and
sustainable approach to business has
environmental, economic and social
benefits, not just for our stakeholders but
for society as a whole. We have a duty to
promote sustainable working practices
and, where possible, to mitigate the
negative aspects of any impact we have
on our environment. Everyone benefits
from working in a more sustainable
environment and by doing our best to
reduce emissions and promote equality,
as a couple of examples amongst
many, we can do our small part to help
secure and build a society for future
generations. As a Board, we understand
that the perception from our stakeholders
around Admiral’s commitment to being
a sustainable business has a bearing on
our reputation, our customer loyalty,
employee engagement and investment
decisions. By continuing to integrate and
embed sustainability and ESG practices
throughout our business we are ensuring
Admiral’s success and resilience over the
longer-term.
See page 56 for further information
Helping
PEOPLE LOOK AFTER
THEIR FUTURE
We asked Mike Rogers
to share some of his
initial impressions and
observations from his first
year as Chair of Admiral.
How valuable did you find your
induction process in preparing
you for your role as Chair?
My induction process was incredibly
helpful and insightful. One of my
overwhelming impressions of Admiral is
how knowledgeable and collaborative
colleagues are across the UK and beyond.
Admiral staff generally have a very long
tenure and therefore the knowledge
that they build up and are able to share
is incredibly valuable. I believe that the
way that Admiral colleagues collaborate
so closely really adds to the overall
competitive advantage that Admiral has
been able to maintain for so many years.
Meeting with management during my
induction process has really reinforced
this in my mind. On top of meeting
management, I have also spent time
listening to customer calls as well as
spending time in a number of call centres
with our front-line staff. Everyone I have
met has been generous with their time
and it is clear that people at Admiral love
working here.
See page 151 for further information
What does effective governance
mean to you and how is this
demonstrated at Admiral?
Throughout my career I have seen how
embracing effective governance, initiated
at the most senior levels of a Company
and cascaded down through the business,
builds a culture where integrity and
values are put at the very heart of how
that business operates. This in turn allows
trust to be built through accountability
and transparency, which encourages
investment and the building of
stakeholder relationships with confidence
and mutual respect. At Admiral, I have
seen this integrity demonstrated through
a strong sense of purpose and values, led
by an effective Board who understand
and espouse the benefits that effective
governance can have on building a positive
workplace culture and, ultimately, on the
performance of the business. Whilst this in
itself cannot guarantee Admiral’s success,
it certainly can create a strong base from
which the Company is given the best
opportunity to flourish.
See page 113 for further information
What have been your initial
impressions of Admiral’s culture
during your first year?
Before I joined as Chair, I was aware of
Admiral’s reputation for its unique culture,
this was a factor in guiding my decision
to join the Company. Having spent my
first year visiting all areas of the business
and meeting a large cross-section of our
colleagues, I can honestly say that I have
not been disappointed. I believe I can sum
up Admiral’s culture with the following
words: engaging, innovative, collaborative,
inclusive, focused, conscientious and
fun. The Board and senior management
team view our culture as the heart of
what Admiral is, and what it stands for as
a business. Admiral’s culture is key to why
the Company has been so successful in
growing over the past 30 years to where
we are today and, for this reason, should be
protected at all costs. Amongst the many
awards received which reflect our culture,
we were delighted to be named Best Large
Company to work for in 2023 and our CEO,
Milena, was awarded Best Leader of a Big
Company at the Best Companies Awards.
See page 132 for further information
How much consideration should
the Board give to Admiral’s
purpose and values during its
decision-making process?
On joining the business, Admiral’s
philosophy was explained to me in simple
terms, we want to help people to look
after their future, always striving for
better together. This is our purpose,
and in my relatively short time with the
business I’ve been impressed in seeing
how our colleagues embody this purpose
every day through our values. With every
discussion and decision we take as a
Board, our purpose and values are at
the forefront of our minds. Simply put,
if the Board believes something does
not measure up to the high bar we have
set ourselves then it will be rejected.
Our values are embraced through an open
and inclusive workplace, where people can
have fun, work hard, and be rewarded for
their achievements. The Board and our
senior management team lead from the
front, truly believing that people who like
what they do, do it better, and it is our
customers and wider stakeholders who
benefit as a result.
See page 132 for further information
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Board of Directors
Our aim is to accelerate
the evolution of our
core businesses toward
what we call Admiral
2.0, an organisation that
leverages on Admiral’s
historical strengths whilst
being even more agile
and technology focused.
Key
Board skills matrix
Finance
Insurance
Marketing/Retail
City
Technology/Digital/Data
Entrepreneurial
Remuneration/People
Risk
Executive/Strategic Leadership
M&A
International
Operations
Lending
ESG/Sustainability
Small/Medium Enterprise
Committee Membership
Audit Committee member
Remuneration Committee member
Group Risk Committee member
Nomination and Governance
Committee member
C Committee Chair
Senior Independent Director
119
Mike Rogers C
Chair
Appointed
Appointed as Chair of the Board on 27 April 2023.
Current appointments
• Chair of Experian plc
Background and experience
Mike was Group Chief Executive Officer of LV= Group from
2006 until 2016, during which time he grew the organisation
into a significant player in the life and general insurance
market. Before that, Mike was with Barclays plc for more
than 20 years, holding a number of senior roles, most recently
as Managing Director, UK Retail Banking. Mike was previously
a Non-Executive Director of NatWest Group plc (where he
Chaired its Group Sustainable Banking Committee and sat
on the Group Performance and Remuneration Committee).
He was also previously a Non-Executive Director of the
Association of British Insurers.
Contributions and reasons for appointment
Mike was appointed as Chair of the Board based on his wide
business, insurance and financial services knowledge and
on him being someone who would make a strong strategic
impact on the future of Admiral. Mike has over 30 years
of international financial services experience holding the
senior positions described above. Mike also has a wealth
of Board experience, he is currently Chair of Experian plc,
and stepped down as Non-Executive Director of NatWest
Group plc immediately prior to joining Admiral and as Chair
of Aegon UK on 22 January 2024. Mike’s recent and relevant
background and experience, and the skills he has developed
over his significant and distinguished career made him the
ideal choice as Chair to lead the Admiral Board and business
through the next stage of its evolution.
Skills
Milena Mondini de Focatiis
Chief Executive Officer (CEO)
Appointed
Appointed to the Board in August 2020 and became
CEO on 1 January 2021.
Current appointments
• Admiral Insurance Company Limited member
(an Admiral Group subsidiary)
Geraint Jones
Chief Financial Officer (CFO)
Appointed
Appointed in August 2014.
Current appointments
• Admiral Financial Services Limited Board member
(an Admiral Group subsidiary)
• Admiral Insurance (Gibraltar) Limited Board member
• Able Insurance Services Limited Board member
(an Admiral Group subsidiary)
(an Admiral Group subsidiary)
• Mentor for A-Road, Growth Capital
Background and experience
Milena joined Admiral in 2007 and was appointed CEO
in January 2021. She has been a member of the leadership
team throughout her time at Admiral, has extensive
experience of the Group’s operations and has attended
and actively contributed at Board meetings as an observer
since 2011. Her previous roles included being Head of UK
and European Insurance and CEO of ConTe, Admiral’s Italian
insurance business which she founded in 2008. Before joining
Admiral, Milena worked as a consultant for Bain & Co and
Accenture. She holds an MBA from INSEAD and a degree
in Telecommunication Engineering from Università degli
Studi di Napoli Federico II.
Contributions and reasons for appointment
Milena leads a very strong and experienced management
team and is an effective CEO who continues to build an
even stronger Admiral for the future. In 2023 Milena was
awarded the Best Leader of a Big Company at the 2023
Best Companies Awards.
Skills
• Admiral Insurance Company Limited Board member
(an Admiral Group subsidiary)
• Trustee and Chair of the Finance and Audit Committee
of the Wales Millennium Centre
• Finance, Audit and Risk Committee member at the
Football Association of Wales
Background and experience
Geraint joined Admiral in 2002 and held several senior finance
positions including Head of Finance, before being promoted
to Deputy CFO in January 2012 and CFO in August 2014.
Geraint is responsible for finance, investments and investor
relations. A Fellow of the Institute of Chartered Accountants
in England and Wales, Geraint spent the early part of his
career as an external auditor at Ernst & Young and KPMG.
Contributions and reasons for appointment
Geraint has worked for Admiral for over 20 years and
has been Group CFO for nearly 10 years. He has a deep
understanding of the Group’s businesses and strategy,
which, together with his significant financial and accounting
experience and broad range of skills and commercial
expertise, makes him a valuable contributor both to the
Board and the wider Group. Geraint is also able to use his
financial and accounting experience to provide insight
into the Group’s financial reporting and risk management
reporting processes.
Skills
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Board of Directors
continued
121
Michael Brierley
Non-Executive Director
Appointed
Appointed in October 2018.
Current appointments
• Chair of Admiral Financial Services Limited (Admiral Money)
(an Admiral Group subsidiary)
• Director, Trustee and Chair of Finance and Risk Committee
of the Rose Theatre Trust
• Non-Executive Director and Chair of Audit Committee
and Risk and Compliance Committee at Alpha Bank
London Limited
Background and experience
Michael was CFO of Metro Bank Plc between 2009 and 2018,
helping lead the business from start-up to profitability and
listing on the FTSE. He spent seven years at Capital One
Europe in various roles including CFO Europe, CFO UK and
Chief Risk Officer Europe. He has also served as CFO for
Royal Trust Bank, Financial Controller at Industrial Bank of
Japan (London Branch), Director Business Risk at Barclaycard
and was co-founder, Deputy Managing Director and CFO
of Gentra Limited. Michael is a Fellow of the Institute of
Chartered Accountants in England and Wales.
Contributions and reasons for appointment
Michael brings a depth of knowledge from working at
senior levels across multiple financial services sectors,
jurisdictions and markets. As a result of his extensive financial
and commercial experience, Michael is able to contribute
effectively as a Non-Executive Director, and in his role as
a member of the Audit and Remuneration Committees.
Through his recent and relevant financial experience, he is
able to effectively challenge management on the financial
reporting and internal control matters that come before the
Audit Committee. Michael demonstrates full commitment
to the responsibilities that go with his Board and Committee
roles and offers appropriate challenge and guidance in
respect of the matters considered in these forums.
Skills
Karen Green C
Non-Executive Director
Appointed
Appointed in December 2018.
Current appointments
• Non-Executive Director, Senior Independent Director
and Chair of the Sustainability Committee, member
of the Nominations and Remuneration Committees,
Phoenix Group Holdings plc
• Non-Executive Director, member of the Audit, Nomination
and Remuneration Committees, Great Portland
Estates PLC
• Non-Executive Director, and Risk and Audit Committee
Chair and member of the Remuneration Committee of
Miller Insurance Services LLP
• Non-Executive Director, Chair of the Risk Committee
and member of the Remuneration Committee, Asta
Managing Agency Ltd
• Advisor role for Insurtech, Cytora Limited
• Supervisory Board member and Audit Chair for the
TMF Group
• Charity Trusteeship, Wellbeing of Women
Background and experience
Karen Green is the former CEO of Aspen UK. Other senior
Aspen positions included Group Head of Strategy, Corporate
Development, Office of the Group CEO and she was a
member of the Group Executive Committee for 12 years.
Prior to that, she held various corporate finance, M&A and
private equity roles at GE Capital Europe and Stone Point
Capital having started her career in investment banking
at Baring Brothers and Schroders.
Contributions and reasons for appointment
Karen has substantial financial services experience and
has a deep understanding of insurance and reinsurance.
Karen also has a strong background in strategic planning
and corporate development and the relevant financial and
industry expertise to be Chair of the Audit Committee.
She demonstrates the commitment required to discharge
effectively the responsibilities attached to this role and to
challenge management on the Group’s financial reporting
and risk management processes.
Skills
Justine Roberts, CBE
Non-Executive Director
Appointed
Appointed in June 2016.
Andy Crossley C
Non-Executive Director
Appointed
Appointed in February 2018.
Current appointments
• CEO and Founder, Mumsnet.com and Gransnet.com
Current appointments
• Chair of EUI Limited (an Admiral Group subsidiary)
• Non-Executive Director of The Open Data Institute
• Non-Executive Director, member of Remuneration
• Non-Executive Director of Boring Money
• Non-Executive Director and Chair of Remuneration
Committee of the English Football League
Background and experience
Justine founded Mumsnet in 2000 and is responsible for
creation, strategic direction and overall leadership. In May
2011, Justine founded Gransnet, a sister site to Mumsnet,
for the over-50s. Before that Justine was a freelance football
and cricket journalist for the Times and Daily Telegraph, after
working for Warburgs and Deutsche Bank as an economist,
strategist and head of South African Equities in New York.
Contributions and reasons for appointment
As CEO of the successful Mumsnet and Gransnet brands,
Justine has strong digital and customer experience insights
that she is able to bring to the Board decision-making
process. Justine also has a strong background in driving
change through digital capabilities and brings a fresh and
insightful perspective to the matters for consideration
by the Board. Justine is also an effective member of the
Nomination and Governance Committee and demonstrates
full commitment to the role as well as performing the role
of Senior Independent Director.
Skills
Committee, Risk Committee and Chair of Audit Committee
at Vitality Health Ltd (Vitality Health Ltd, Vitality Life Ltd,
Vitality Corporate Services Ltd) and Senior Independent
Director of Vitality Life Ltd.
Background and experience
Andy was CFO at Domestic & General Group from 2014
to 2017. He spent 14 years at Prudential Plc from 2000 as
Director, Group Finance; Group Chief Risk Officer, and CFO and
Deputy Chief Executive of Prudential UK. He previously held
senior manager roles at Legal & General Group Plc, where he
was Group Financial Controller, and Lloyds Bank Plc. Andy is a
Fellow of the Institute of Chartered Accountants in England
and Wales.
Contributions and reasons for appointment
Andy has held a variety of senior roles relating to financial
planning, strategy and risk across UK financial services.
He has a wealth of accounting and financial experience
and provides progressive insights to the matters that come
before the Board. Andy is a valuable contributor to the Board
and as a member of the Audit Committee and Chair of the
Group Risk Committee. Through his recent and relevant
financial experience, he is able to effectively challenge
management on the financial reporting matters that come
before the Audit Committee.
Skills
* Ceased to be a member of the Audit Committee on 7 March 2024.
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Board of Directors
continued
123
Evelyn Bourke C
Non-Executive Director
Appointed
Appointed in April 2021.
Current appointments
• Non-Executive Director, Chair of the Audit and Risk
Committee and member of the Nomination Committee
at Marks and Spencer Group Plc
• Non-Executive Director, member of the Nominations
Committee, Sustainability Committee, Remuneration
Committee and Workforce engagement NED at Bank of
Ireland Group plc.
• Non-Executive Director, Senior Independent Director,
member of Audit Committee, Risk and Compliance
Committee and Nominations Committee at AJ Bell Plc
Background and experience
Evelyn was Bupa Group’s CFO between 2012 and 2016,
before becoming Bupa’s Group Chief Executive Officer from
2016 to 2020. Evelyn has held several senior leadership roles
during her career including Chief Commercial Officer at
Friends Life UK (2011 - 2012), CFO at Friends Provident
(2009 – 2010), CFO at Standard Life Assurance (2006 -2008),
and CEO at Chase de Vere (2004). Evelyn is a qualified actuary
and holds an MBA from London Business School.
Contributions and reasons for appointment
Evelyn brings valuable general management, finance
and strategy experience from life and health insurance,
internationally. She complements and enhances the range
of skills currently on the Board. Evelyn has held several
leadership positions in financial services organisations
and has the appropriate skills, knowledge and experience
to perform her roles as Non-Executive Director and Chair
of the Remuneration Committee.
Skills
Jayaprakasa Rangaswami
Non-Executive Director
Appointed
Appointed in April 2020.
Current appointments
• Non-Executive Director and member of Remuneration
Committee (joint with both Allfunds entities) of Allfunds
Bank SA and Allfunds Group Plc
• Non-Executive Director and member of Remuneration and
Nominations, Audit and Risk Committees at Daily Mail and
General Trust Plc (DMGT)
• Board Member and Chair Quarterly Security Forum of
Harmsworth Media
• Non-Executive Director and member of Audit Committee,
Human Resources and Remuneration Committee and
Chair, Sustainability, and Innovation Committee of National
Bank of Greece S.A.
• Member and Chair, Business Development Committee,
Board of Trustees, Cumberland Lodge
• Member, Board of Trustees, Web Science Trust
Background and experience
Jayaprakasa Rangaswami (JP) has a wealth of large-scale IT
operational experience gained through his roles as Chief
Information Officer (CIO) with Dresdner Kleinwort (2001 to
2006) and Managing Director/Chief Scientist at BT Group
(2006 to 2010). JP has also been Chief Scientist with Salesforce
(a US cloud-based software Company) (2010 to 2014) and was
Chief Data Officer (CDO) and Group Head of Innovation with
Deutsche Bank (2015 to 2018).
JP is also a former global CIO of the Year as well as European
Innovator of the Year.
Contributions and reasons for appointment
JP brings a wide range of technology and digital experience
which helps to complement and enhance the existing
skills around the Board table. He has operated in financial
services for over ten years and understands the challenges
of working in a regulated environment. He is also able to
effectively contribute to the Board debate and demonstrates
full commitment to the role. JP is also a member of the
Group Risk Committee, a role for which he has the relevant
experience and capability.
Skills
Bill Roberts
Non-Executive Director
Appointed
Appointed in June 2021.
Current appointments
• Advisor at Hi Marley
• Independent Non-Executive Director Elephant Insurance
Fiona Muldoon
Non-Executive Director
Appointed
Appointed in October 2023.
Current appointments
• Non-Executive Director, Chair of the Risk Committee
and member of the Audit Committee at Beazley plc
Company (EIC) (an Admiral Group subsidiary)
• Chair of Sretaw PE DAC
Background and experience
Bill Roberts has a wealth of insurance, underwriting and
marketing experience gained during his time at US insurer,
GEICO, which he joined in 1984. Whilst at GEICO, Bill held
several Executive appointments, including COO and President
and CEO for all GEICO Insurance Companies, a position he
held from 2018 until he was promoted to Vice Chairman,
GEICO Insurance Companies in 2020. Bill held this role until
he retired from GEICO in December 2020.
Contributions and reasons for appointment
Bill brings valuable insurance experience and insight on the
US insurance market having held several senior executive
positions with US insurer, GEICO. Bill contributes and
challenges effectively on the matters that come before the
Board. His extensive US insurance experience and insight
is of specific value to the Group’s US business as it seeks to
continue to develop and grow. Bill does not currently have
any other Executive or Non-Executive Director commitments
that would impact the time commitment requirements for
his Admiral Non-Executive Director role and member of the
Nomination and Governance Committee and has capacity
to fulfil the duties and responsibilities for these roles.
Skills
Background and experience
Fiona has thirty years’ experience in the insurance industry.
Fiona was the CEO of FBD Holdings plc, a listed general
insurer in Ireland, from 2015 to 2020. Prior to that Fiona was
Director of Credit Institutions and Insurance Supervision at
the Central Bank of Ireland, the Irish regulator. Fiona spent
17 years of her career with XL Group in various progressively
senior finance and general management positions, in Dublin,
London, and Bermuda. She is a Fellow of the Institute of
Chartered Accountants in Ireland.
Contributions and reasons for appointment
Fiona has acquired extensive experience of the insurance
sector during her 30+ years’ career in financial services.
Fiona has built a compelling portfolio in the financial services
sector, demonstrating an ability to leverage her financial
and commercial skills to make a useful contribution to board
discussions. Fiona was a Non-Executive Director of Bank of
Ireland Group for eight years, also sitting on the board of
New Ireland Assurance Company, the bank’s wholly owned life
insurance, pension and investment business. She additionally
serves on the board of Beazley; a FTSE 100 specialist insurer
and she chairs the board of Sretaw DAC a private equity
Company based in Ireland.
Skills
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Board of Directors
continued
Dan Caunt
Group Company Secretary
and General Counsel
Appointed
Appointed in May 2022.
Background and experience
Dan trained at Field Fisher where he qualified into the IP
disputes team in 2005. Dan relocated to Cardiff in 2008.
He spent two years in the IP/commercial litigation team at
Osborne Clarke before joining Admiral’s in-house legal team
in September 2010. Dan became Group Company Secretary
and General Counsel at Admiral in May 2022 and leads
the in-house Group Legal and Company Secretarial teams
within the business. Dan is secretary to the Admiral Group
Board and all Group Board Committees.
“As Company Secretary
of Admiral Group PLC, my role
is focused on ensuring
that the Group conforms to
the highest standards of
corporate governance practice
as well as ensuring compliance
with all of its legal and
regulatory requirements.”
Dan Caunt
Group Company Secretary
and General Counsel
Our Culture
Engagement
#1
Best Big Company to Work for in the UK
Voted the best big Company to work for in the UK in 2023
by the Best Companies to Work For awards.
www.b.co.uk
Diversity
95%
of our employees believe Admiral is
a diverse and inclusive employer.
GPTW Survey
Our Culture
87%
of our colleagues are proud to tell others
that they work for Admiral.
GPTW Survey
Community
88%
of employees feel good about how Admiral
contributes to the community.
GPTW Survey
Equality
#3
Admiral was recognised as the 3rd best workplace
for women in the UK by Great Places to Work.
www.greatplacetowork.co.uk
Board Leadership and Company Purpose
125
UK Corporate Governance Code
The UK Corporate Governance Code
(‘the Code’) available at www.frc.org.uk,
applied to Admiral throughout the year
ended 31 December 2023. At the heart
of the Code is a set of principles which
emphasise the value that good corporate
governance can have on the long-
term sustainable success of a business.
By applying the principles, and following
the more detailed provisions of the Code,
the Board can demonstrate to Admiral’s
stakeholders how the creation of an
effective, transparent and accountable
corporate governance framework,
aligned to the purpose and values of the
Company, assists the Board in building our
special Admiral culture and delivering the
business strategy within the relevant legal
and regulatory landscapes in which the
Group operates.
Admiral is required to report to
shareholders on how it has applied the
principles and provisions of the Code
during the year and, where we have not,
the reasons for not doing so. The Board
confirms that Admiral has complied
with all of the provisions set out in the
Code for the year ended 31 December
2023, with the exception of Provision 19.
This is explained in further detail below.
Details on how Admiral has applied the
principles set out in the Code and how
governance operates throughout the
Group have been summarised throughout
this Governance section and elsewhere
in this Annual Report and are set out in
the table below.
Provision 19 of the Code states that
‘The chair should not be in post beyond
nine years from the date of their first
appointment to the Board.’ Annette
Court was appointed as Board Chair
in April 2017, having spent five years as
a Non-Executive Director of the Board.
Annette reached her nine-year tenure
as Non-Executive Director on the Board
in March 2021. As reported in the 2021
Annual Report, the Board considered and
agreed, having consulted shareholders,
that Annette should remain in post to
facilitate an effective succession process
for both CEO in 2021 and Chair in 2023.
Mike Rogers was appointed Chair at
Admiral’s AGM held on 27 April 2023,
at which time Annette stood down from
the Board.
Compliance with Corporate Governance Code Principles
Board leadership and Company purpose
1
Effective Board
A
Purpose, values and culture
B
Governance framework
C
Stakeholder engagement
D
E Workforce policies and practices
2
F
G
H
I
3
J
K
L
Division of Responsibilities
Board roles and responsibilities
Independence
External commitments and conflicts of interest
Board resources
Composition, Succession and Evaluation
Appointments to the Board
Board skills, experience and knowledge
Annual Board evaluation
4
Audit, Risk and Internal Control
M External Auditor and Internal Auditor
N
O
Fair, balanced and understandable review
Internal financial controls and risk management
5
P
Q
R
Remuneration
Linking remuneration to purpose and strategy
Remuneration policy review
Performance outcomes 2023
Pages
118
8, 132
113
56, 87, 136
96, 132
118, 140
118, 152
143, 154
144
118, 146
153
158
163
161, 201
98, 161, 168
172
176
185
Provision 19 of the Code states that ‘To facilitate effective succession planning and the development of a diverse board, this period can
be extended for a limited time.’ Annette’s re-election was supported by shareholders at the 2022 AGM (99.3% votes in favour) and her
2022 performance review, led by the Senior Independent Director, concluded that she continued to perform effectively as Board Chair,
continued to exercise objective judgement and promoted constructive challenge amongst Board members. Following Annette stepping
down and the appointment of Mike Rogers as the new Chair in April 2023, Admiral has been in full compliance with the Code.
Corporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Corporate GovernanceAdmiral Group plc Annual Report and Accounts 2023
126126
Board Leadership and Company Purpose
continued
Principal areas of focus
How the Board spent
its time during 2023.
In 2023, the Board held seven scheduled
meetings, in addition there were a
number of ad hoc Board meetings to deal
with significant matters that were unable
to wait until the next scheduled meeting.
A Board planner is in place which sets out
those items to be reviewed on an annual
basis at scheduled Board meetings in
accordance with the Matters Reserved for
the Board Schedule. The items below are
not exhaustive but demonstrate some of
the key areas of the Board’s focus during
the year ended 31 December 2023.
Strategy and business plan
• Received regular updates around
key areas of business strategy across
the Group including progress against
current plan and strategic priorities
for the business going forward
Operational performance,
financial and risk management
• Review of the operational performance
of the business through regular reports
from the CEO and presentations from
CEOs and senior management from
across business divisions
• Regular updates from the CFO on
the Group’s financial performance
against strategic objectives, business
plans, capital allocation and budgets,
tax planning and international tax
considerations, planning liquidity and
adequacy of solvency thresholds and
prudential buffers considering market
conditions, analyst forecasts and
financial and non-financial KPIs
• Approval of significant debt refinance -
see principal decision page 129
• Review and approval of the half year
and full year results and consideration
and approval of interim and
final dividends
• A two-day Board strategy meeting
• Consideration of fair, balanced and
took place at Admiral’s Swansea office
in October where the Group’s business
strategy, 5-year plan, Admiral 2.0,
capital allocations and diversification
were discussed
• Consideration of individual business
strategies within the Group business
presented by divisional CEOs, evaluating
how these tied into the wider
Group strategy
• Approval of acquisitions and disposals
including disposal of Compare.com
to Insurify, Inc., and the acquisition
due to complete in 2024 of UK direct
home and pet personal lines insurance
operations of RSA, review of M&A
processes and lessons learnt – see
principal decision page 128
• Review of ESG, sustainability and
community strategies and how these
are integrated throughout the wider
business strategy
• Brand, technology and digital
programme updates.
understandable requirements in the
half and full year financial reports,
along with going concern and viability
statements following review by the
Audit Committee
• Reviewed and approval of risk
framework, policy and appetite
for the Group through the Group
Risk Committee
• Integration of new technology -
see principal decision page 130
• Oversight of internal control
environment and framework through
updates from Audit Committee and
Risk Committee including Cyber
Risk, ORSA, Solvency II and Group
Governance framework.
Culture and stakeholders
• Consideration of how the Group
purpose and values have been
imbedded throughout the business
• Review of how Admiral’s culture
continued to develop including analysis
of feedback from Great Place To Work®
(GPTW) survey results, working groups,
culture scorecard and Diversity and
Inclusion Policy review - see more on
pages 56 and 132.
• Consideration of stakeholder map
and respective stakeholder updates
throughout the year, including
engagement mechanisms - see more
on pages 56, 87 and 136
• Employee welfare review and
considerations including cost of living
analysis and hybrid and remote working
practice considerations - see pages 129
and 132
• Presentations and discussion from
the Chairs of the UK and Overseas
Employee Consultation Groups -
see page 138
• Overview of Group reward strategy
including review of share-based awards
and approval of Directors Remuneration
Policy through the Remuneration
Committee – see page 172
• Talent management and succession
planning throughout the Group
• Review of Investor Relations reports
• Group health and safety updates.
Society, environment
and sustainability
• Oversight of Group ESG and
sustainability strategy to ensure
alignment with the Group’s wider
strategic objectives and culture –
see page 79
• Review of climate change strategy,
related activities and risk management
including progress towards climate
commitments and understanding the
evolving expectations of stakeholders
• Updates on progress against
sustainability targets
• Analysis of suppliers and partners
and the communities within which
Admiral operates
• Updates on volunteering and charity
propositions within the Group as part of
a wider community outreach strategy
including sponsorship of community
events, charitable giving, volunteering
and fundraising
• Updates on the customer journey,
customer engagement and ensuring
fair and reasonable claim outcomes for
all customers with special consideration
of vulnerable and disadvantaged groups
within society
Governance and Regulatory
• Received regular reports from the
Chairs of the Audit, Risk, Nomination
and Governance and the Remuneration
Committee’s
• Consideration of the work of the
Nomination and Governance
Committee on Board composition
and succession planning, including
approval of the appointments of Mike
Rogers as Chair and Fiona Muldoon as
Independent Non-Executive Director
• Regular updates and consideration of
new regulatory requirements including
implementation mechanisms for
the new Consumer Duty regulation
and oversight and education on
the integration of IFRS 17 reporting
framework - see page 131
• The fostering of good relations and
open and constructive dialogue
with regulators
• Discussions around conclusions of
the external Board evaluation findings
and agreed areas of focus and Board
objectives for 2023
• Consideration of skills, experience and
time requirements for Directors and
recommendations to shareholders
regarding their reappointment
• Discussions around The Parker
Review disclosure requirements
for senior management ethnicity
through Nomination and Governance
Committee and the implications for
succession planning
• Review and approval of Group policies
including Board members’ potential
Conflicts of Interest, Modern Slavery
and Anti-Bribery considerations
and approval of Admiral’s Modern
Slavery Statement
• Considered and approved the Notice
of 2023 Annual General Meeting (AGM)
for issue to shareholders
• Reviewed matters reserved for the
Board and the committees’ respective
terms of reference.
Principal areas of focus for
the Board for 2024
• Continued focus on accelerating the
evolution of Admiral’s core business
and competencies toward ‘Admiral
2.0’, leveraging the Group’s historical
strengths whilst being even more agile
and technology focused
• Oversight of progress of the Group’s
diversification strategy to ensure
long-term resilience within the
business whilst strengthening
and complementing existing
customer propositions
• Monitoring the ongoing embedding
of culture and values throughout the
business, including closely monitoring
the effects of hybrid working to ensure
that the uniqueness of Admiral’s culture
is maintained and developed
• To continue focus in relation to the
Admiral internal model, supporting a
planned regulatory pre-application and
subsequent full regulatory application
• Provide steering and oversight for
capital management and reinsurance
• Embedding the Group’s sustainability
strategy ensuring that it continues
to be integral to the Group’s
wider strategy
• Focus on Board composition and skills
in conjunction with Nomination and
Governance Committee along with
executive team succession planning
• Ensure diversity and inclusion objectives
are embedded throughout the Group
and continued progress is made in
respect of ethnic diversity
• Monitoring progress against
key pledges for climate change
and community
• Continued deepening of the Board’s
understanding of external risk factors
• Ongoing oversight of FCA’s Consumer
Duty regime implementation across
the business.
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THINKING AT
ADMIRAL
Whilst a significant proportion of
the Board’s time is focused towards
addressing the short to medium term
business considerations required in
managing a business such as Admiral,
it is also important that the Board is
allowed the opportunity to take a step
back and assess the bigger picture,
to promote discussion and strategic
planning over the medium to long term
in order to identify and address those
significant opportunities and risks
that may present themselves. As well
as being part of every Board meeting,
Admiral annually dedicates two full days
to focus on its strategy. In 2023, the
Board was taken to Admiral’s Swansea
office for their annual strategy meeting,
at this meeting the following items are
examples of some of those issues the
Board addressed.
• Group-wide strategy and objectives
• Admiral 2.0
• Diversification strategy
• Motor evolution strategy
• UK insurance strategy
• Organic versus inorganic growth
• International business strategy
• Five-year plan
• Strategic opportunities
• Organisational requirements.
2
full days each year
to focus on strategy
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Board Leadership and Company Purpose
continued
s172 Principal
decisions
Our section 172 statement, set out
on page 87, highlights how the Board
considers those matters set out under
s172. On the pages that follow are
examples of some of the key discussions
and decisions taken by the Board during
the year along with details around how
those considerations set out under
s172 were taken into account during
the Board’s decision-making process.
Key: Board considerations as
defined under s172:
A Long-term impact
B Interests of employees
C Fostering business relationships
D Impact on community
and environment
E Maintaining reputation for high
standards of business conduct
F Treating stakeholders fairly
Key
Customer
Shareholders
People
Partners/
Suppliers
Communities
Principal decision 1
Acquisitions
and disposals
The strategic objectives the Board
considers when evaluating potential
acquisitions and disposals are:
1. To accelerate Admiral’s diversification
strategy: to increase the pace of
growth of non-motor products, such as
Household, Pet and Travel in the UK
2. To build new capabilities: acquiring
knowledge in fields where Admiral
has not yet developed the
required competencies
3. A path to scale: opportunities
identified where Admiral is able to drive
incremental value through pricing
and claims expertise and driving
cost efficiencies
4. To divest from non-attractive markets:
generating value from adjusting the
portfolio to focus on markets where we
see long-term growth potential.
In alignment with Admiral’s strategy of
diversification of its product offering
into insurance products beyond Motor,
the Board was pleased to announce
the acquisition of the More Than direct
Home and Pet personal lines insurance
business from RSA in December 2023.
This transaction will see Admiral welcome
c.300 new colleagues as well as the
transfer of the renewal rights and the
‘More Than’ brand.
The proposal to engage in the process to
acquire the More Than business was first
presented to the Board in September
2023, and then on a number of occasions
at milestone points throughout the
process. Board deliberations focused on:
• Strategic fit: The Board concurred with
management that the acquisition
represented a strong strategic fit and
achieved the objective of diversification
in the UK by accelerating the scale and
market share of both Admiral’s Home
and Pet products
• Impact on core business: The Board
considered the impact on the core/
existing business, particularly in terms
of management time, and felt that
this could be mitigated by a properly
structured, funded and resourced
integration team
• Comparison of organic versus inorganic
growth: An alternative approach
of investing in organic growth was
considered. The Board agreed that
there was no alternative opportunity
equivalent to the increase in scale for
the Home and Pet businesses which
would be achieved by this acquisition
• Brand reach: The Board agreed to
offer RSA customers an Admiral
Home product and discontinue the
More Than brand for home insurance.
Admiral would continue to offer
the More Than brand to RSA Pet
customers at renewal and to sell new
business under this brand, whilst also
maintaining the Admiral brand.
A key consideration for the Board in
respect of the More Than acquisition was
the impact on all stakeholders in the short
and the longer terms. This was factored
into the Board’s evaluation and decision-
making process. In such situations,
key stakeholders will be identified, for
example, employees, customers and
shareholders, and analysis is undertaken
to understand any relevant issues specific
to each stakeholder group. The Board will
balance the often-conflicting interests
of stakeholders whilst, at the same
time, ensuring all receive equitable
treatment. In the case of the More Than
business, after in-depth analysis the
Board agreed that this was a strategic
fit with the existing Admiral business
and its stakeholders, and approved the
acquisition as being in the long-term best
interests of the Admiral Group.
During the year, Admiral said goodbye
to our colleagues at Compare.com in
the US, as the final step in our exit from
the comparison market. The sale of
Compare.com Insurance Agency LLC to
Insurify, Inc., a US-based virtual insurance
agent, was completed in March 2023 and
demonstrated the Boards divestment
strategy to focus on markets Admiral
has identified as having the potential for
longer term growth.
Key s172 criteria considered
A B C D E F
Relevant stakeholders considered
resulting in 743 free parking spaces.
The Board also approved a free share
award to employees to ensure a sense
of shared ownership in the success of
the business. As a result of these and
multiple other initiatives overseen by
the Board, attrition rates continued to
see improvements, overall absenteeism
continued to see small reductions
and recruitment performed well with
increases in application volumes and
strong acceptance of offers. The Board
was also pleased to see an increase in
the hiring of internal candidates for
senior positions.
Employees were able to feedback
to the Board through the Employee
Consultation Group (ECG), where topics
such as the cost of living, employee
engagement and morale were discussed.
Engagement scores across the Group
remained strong, signposting areas for
continued focus. Pleasing results were
noted around inclusion, bolstered by
external recognition and accreditation
across several areas such as the
government’s Disability Confident Leader
and the gold Corporate Health Standard.
The Board was delighted that the work
carried out by the team during the year
was recognised with Admiral achieving
multiple awards for its workplace culture -
see page 13.
Key s172 criteria considered
A B C D E F
Relevant stakeholders considered
Principal decision 2
Liquidity/
Refinancing of
subordinated debt
In June 2023, Admiral Group successfully
priced a GBP £250 million 10.5-year Tier
2 bond issue, this was the second bond
issue in its history. The bond issue was
accompanied by a tender for Admiral’s
existing £200 million 5.5% subordinated
Tier 2 notes, due to mature in July 2024,
which attracted participation in line
with expectations.
The Board considered the Tier 2 bond
issue to be an important part of the
Company’s active management of its
debt profile and capital base and took
the opportunity to refinance, prudently
well ahead of the maturity date in July
2024. The proceeds of the new notes
were to be used to fund general business
and commercial activities of the Group
and to allow the Group to refinance
its existing notes well in advance of
maturity. The success of the new bond
issue, which was oversubscribed, and the
refinancing demonstrated the strength of
Admiral’s credit and investor confidence in
the Group.
The Board sought external advice as
to the most opportune timing for the
proposed new issue and tender given
the maturity date of the existing Tier 2
notes. The Board approved the refinance
of the notes in June 2023 subject to
favourable market conditions and pricing,
given inflationary pressures and an
uncertain global economic backdrop, in
the best interests of the business and
its stakeholders.
Key s172 criteria considered
A B C E F
Relevant stakeholders considered
Principal decision 3
Employee
welfare and the
cost of living
Admiral takes great pride in looking
after its colleagues by helping them to
look after their future, this is especially
important in challenging economic times.
In 2023 the Board continued its focus
on maintaining a workforce which was
healthy, motivated and productive, whilst
also ensuring that the required talent
and skills were built on to equip Admiral
for the future. During the year, the Board
oversaw investment in multiple initiatives
to build on pre-existing employee
engagement, believing that employees
who feel supported during uncertain
times, were better equipped to deal
with them.
In H1 2023, conscious of the ongoing cost
of living situation in the UK, the Board
oversaw a one-off maximum salary uplift
of 5% to all directly employed UK based
colleagues. In addition, the timing of
this increase was accelerated to ensure
colleagues received benefit from the
uplift for the majority of the year rather
than awaiting the annual pay review
date. Admiral also committed to paying
the Real Living Wage for all of UK roles,
to continue to support those impacted
by the ongoing increased cost of living.
This rate was paid from March 2023 and
Admiral will be making the increase to
£12, effective from 1 March 2024. This was
approved at the EUI Board, the main UK
trading business.
In addition to multiple health, wellbeing,
diversity and inclusion and career
initiatives - see pages 62 and 132,
examples of additional initiatives overseen
by the Board to specifically assist
employees with the cost of living have
included a canteen subsidy of 50% for
food and drink covering approximately
2000 people a day and a car park subsidy
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131
Board Leadership and Company Purpose
continued
Moving to Admiral 2.0 is a strategic
priority for the Board. Board oversight
around the introduction of new
technology and the migration of systems
to the cloud will assist the business
in meeting this objective. The roll out
of new technologies brings modern,
capable platforms that allow Admiral to
create great features and experiences
for customers, a faster time to
market, improved scalability, stability
and resilience, whilst also assisting in
addressing the increasing risks around
the protection of customer data and
cyber security. The Board received
updates and presentations from the
business in addition to oversight of
project milestones and agreed targets.
As a result of the changes made as part
of this transformation journey, Admiral
aims to become a much more digitally
diverse business both to customers and
employees and the changes will also help
in meeting sustainability targets.
Key s172 criteria considered
A B C D E F
Relevant stakeholders considered
Principal decision 4
New technology
New technology
A strategic priority for the Board is to
accelerate the evolution of Admiral’s
core business and competencies toward
‘Admiral 2.0’, leveraging the Group’s
historical strengths whilst being even
more agile and technology focused
to ensure that it continues to put the
customer first. To support the journey to
Admiral 2.0 the Board is overseeing the
building of next generation architecture,
leveraging cloud, data, analytics and
digital to continually improve the
customer experience.
Following the implementation of the
Guidewire Claims Centre platform in 2022,
this year the Guidewire Policy Centre and
Billing Centre were migrated to the cloud
and at the same time updated to the
latest version. Policy Centre and Billing
Centre has been used by Admiral in the
UK since 2016 but the cloud deployment
and updates to the latest version allows
the business to benefit from new features,
mitigate technology and security risk,
further improve the speed of release by
shifting to an ‘environments on-demand’
model, and reduce the overall total cost
of ownership of the estate. There were
also improvements in customer contact,
supported by the scaled deployment
across the business of a new cloud contact
centre platform which allows Admiral
to utilise new technologies to enhance
the customer telephony experience.
In addition to telephony, Admiral is also
modernising the customers’ digital
experience through a new web portal
and mobile applications. Work has also
commenced on the implementation of a
new customer master database, which will
provide a single customer view across the
Admiral Group.
The Board oversaw the implementation
of the Consumer Duty regime through its
relevant regulated subsidiary entities who
fell under the scope of the new regime.
Subsidiary board Non-Executive Directors
were appointed as Consumer Duty
“champions” in their respective businesses
and implementation plans were approved.
The FCA attended a Group Board
meeting in April 2023 where constructive
discussions were held around Consumer
Duty implementation expectations,
which were then fed back to the relevant
subsidiary boards. The Group Board
attained oversight and assurance through
reports from the Group Risk Committee,
Group Compliance Committee and
Consumer Duty Steering Committee that
appropriate implementation plans were in
place to ensure the Group would meet its
obligations which came into effect in July
2023, and that monitoring processes were
in place to ensure effective embedding
within the business and the continued
delivery of requirements to customers in
line with the Group’s purpose and values.
Internal model
The Board along with the Group Risk
Committee continued its focus on the
Admiral internal model during the year,
receiving regular reporting to help drive
key discussions and decisions in relation
to the model. The Board oversaw the
updating of the UK Car model in 2023
to address limitations identified during
prior independent validation reviews.
This will help to ensure that the model
is well placed to support a regulatory
pre-application – see pages 33 and 169 for
further information.
Key s172 criteria considered
A B C E F
Relevant stakeholders considered
Principal decision 5
Regulatory
decisions
IFRS 17
IFRS 17, the new insurance contracts
accounting standard, which establishes
the principles for the recognition,
measurement, presentation and
disclosure of insurance contracts,
including information about a Company’s
financial position and enhanced
disclosures in respect of claims reserves,
was effective from 1 January 2023.
The new standard applies to the Group
and its insurance subsidiaries in the UK
and Gibraltar.
During 2023, the Group Board continued
to closely monitor the implementation
of IFRS 17 and discuss and approve key
information including accounting policy
decisions, the impact on the transition
balance sheet, 2022 comparatives,
and projected future results, proposed
revisions to key performance indicators.
In August 2023 the Board, in conjunction
with the Audit Committee oversaw the
successful conclusion of the IFRS 17
implementation programme, delivering
the first external reporting under IFRS
17 as part of Admiral’s interim results.
Given the significance of the changes in
reporting, external stakeholders were
provided with supplementary information
within the presentation, and additional
opportunities to discuss the results
in order to clarify the impact of the
reporting changes.
Consumer Duty
The FCA’s Consumer Duty regime came
into effect on 31 July 2023. The Duty
introduced higher and clearer standards
of consumer protection across financial
services and required firms to focus
on customer outcomes. This new
requirement aligned with Admiral’s wider
Group purpose and commitment to
delivering good customer outcomes for
all our customers.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 132132
Board Leadership and Company Purpose
continued
Culture
An important part of the Board’s role is
to lead from the front in promoting and
safeguarding Admiral’s unique culture.
This is achieved through establishing
purpose and values and is especially
important in times where there may be
significant challenges and changes to how
the business operates.
The Code emphasises the importance of
the role of the Board regarding culture,
with specific recommendations that the
Board assesses and monitors culture, and
ensures that workforce policies, practices
and behaviours are aligned with the
Company’s purpose, values and strategy.
At Admiral we believe that our culture
is the real essence of what our business
is; how we act, what makes us different,
our character and personality, and how
we treat our employees, customers and
other key stakeholders. Our culture is a
culmination of the implementation of our
purpose through our values. The Board
sets the tone and leads by example, this
permeates through the business and
creates a culture lived daily by colleagues
as well as our wider stakeholders.
We strongly believe that Admiral’s culture
is unique as we aim to demonstrate
throughout this report. It is fundamentally
important that Admiral’s culture evolves
Implementing our purpose through our four pillars of culture
At Admiral we implement
our purpose through our
unique workplace culture.
This is reinforced by our
values – the ‘Four Pillars
of our Culture’.
Recognition and reward
85% of employees believe that good work and
extra effort is appreciated. All colleagues in
the business will receive up to the equivalent of
£3,600 of shares in Admiral during the year.
Equality
95% of employees
believe Admiral is a diverse
and inclusive employer
and 96% believe that
Admiral’s culture is open
to different sensibilities
and backgrounds.
Our Purpose
“Help more people to
look after their future.
Always striving for
better, together.”
Fun
84% of employees perceive
Admiral as being a fun place
to work and 93% of employees
believe that they work
in a friendly environment.
Communication
90% of employees believe their managers are
approachable and easy to talk to and 85% believe they
are kept informed on important issues and changes.
Fun
We want our people to look
forward to coming to work,
to celebrate who they are,
and to feel happy and supported
enough to give that little
bit extra.
What makes Admiral a fun
place to work can be found
throughout our Strategic Report
on page 14 and in our Corporate
Governance Report on page 132.
Communication
We encourage effective and
transparent communication
at all levels. This is aided by
accessible management and
opportunities to encourage
feedback across the Group.
Further information on our
channels of communication can
be found on pages 89 and 136.
Equality
We work hard to promote a
sense of fairness and equality.
Everyone has the opportunity
to succeed, backed up by
multiple focus and working
groups supporting diversity,
inclusion and social mobility.
Further information as to how
we do this can be found in our
Strategic Report on page 62 and
the Nomination and Governance
Committee Report on page 154.
Recognition and reward
A job well done should be
appropriately rewarded. At the
heart of this pillar is our share
ownership scheme, which
rewards employees with a stake
in the Company. The Group’s
approach to investing in and
rewarding its workforce can be
found in our Strategic Report on
pages 17, 89, 129 and 172.
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Striving
TO BE A
GREAT PLACE
TO WORK
Admiral has been recognised as the
best big Company to work for in the
UK in 2023 by the Best Companies
awards, as well as being in the top 15
best multinational companies to work
for in Europe by ‘Great Places to Work’
a global authority on workplace culture.
Sharing
OUR
EXPERIENCES
In October 2023, Jayaprakasa
Rangaswami (JP), our Group
Non-Executive Director, held an
all-employee forum on diversity and
inclusion along with a question-and-
answer session at our head office in
Cardiff. This included his experiences
growing up from an ethnically diverse
background and the challenges and
opportunities he faced throughout his
career. This session was well attended
by colleagues across the business, both
in-person and online.
and adapts as the business environment
changes. It is even more critical that those
parts of our culture that we see as our
competitive advantage and a key driver of
our success to date, are fiercely protected,
especially during continuing periods
of change.
Aligning our culture with our
purpose, values, strategy,
policies and practices
Admiral’s culture is strongly aligned to
our purpose to ‘Help more people to
look after their future. Always striving for
better, together’. Providing customers
with great products and services, whilst
caring for our people and other important
stakeholders is key to what we do.
Our Four Pillars of Culture are built into
the fabric of our training, communication,
policies and the way we do business.
During the year, the Board received
assurance from management that
the Group purpose continued to be
Admiral’s cultural initiatives
embedded within the operational process
and policies and that there continued
to be alignment with its rewards and
incentives. Maintaining culture was a
key part of Admiral’s Board discussion
throughout the year and will continue to
be at the forefront of its decision-making
rationale through the year to come.
Guiding and promoting culture
Our Board has the responsibility to act
with integrity, to lead by example and to
promote the desired culture. The Board
does this through its governance
framework, its decision-making processes
and its everyday interactions. We also
ensure that any policies which apply
to Directors are consistent with those
equivalent policies for the workforce.
Many initiatives take place during the
year to promote Admiral’s unique culture,
examples of these are shown below:
Fun and inclusive activities: Our 30th
anniversary celebrations included,
amongst other things, an all-
employee ‘Admiral Olympics’ and
staff music festival called ‘MultiFest’
Flexible working arrangements.
Empowering teams to define their own
optimum working blueprint and self-organise in
the most effect way, whilst coming together to
share key moments
Department and team away days
including spending allocated time
giving back to the community
Employee induction workshops
focusing on Admiral’s culture
Diversity and inclusion working
groups and initiatives
Group Top 10 competition:
departments compete in a Group-
wide competition which includes
a presentation to a panel of senior
managers on a different subject each
year in order to be awarded
the best department
A compensation and promotion structure based
on meritocracy, including a 5% increase in
salary to all UK employees during the year and
excellent employee benefit offers
Star lunches where colleagues are recognised
for their performance and are invited to attend a
lunch with a senior manager
Excellent opportunities for career development
throughout the business leading to high
retainment of employees
Health and wellbeing initiatives to encourage
employees to speak up if they needed support,
a weekly health and wellbeing bulletin, yoga
and meditation classes, choirs, running clubs,
webinars and art classes, amongst many
other things
Annual manager awards
Local reward and recognition programmes
Encouraging use of training
opportunities for work and
personal development
High five feedback programmes, where
employees can submit feedback on colleagues
across departments who have given great service
The Ministry of Fun organises
events and entertainment
throughout the Group.
Regular Group-wide updates on business
performance and matters of importance from
Executive Directors and senior management.
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Board Leadership and Company Purpose
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How the Board monitors
and assesses culture
People and culture scorecard
The people and culture scorecard
continues to provide a good analysis
of the key people and culture metrics
in order to help management and the
Board’s assessments of the overall health
of the Group’s culture. It also supports
the identification of any trends in the
evolution of the Group’s workforce and
culture, including any associated risks
which could impact the execution and
support of the Group’s strategy.
The Group continues to view the following
people and culture metrics that are
derived from the annual Great Place
To Work® (GPTW) survey and Admiral’s
regular internal pulse surveys as the
lead indicators for people and culture at
Admiral. The GPTW survey is an external
survey which collates anonymised
question responses from all colleagues
to provide an overall result, as well as
departmental results.
Score
85%
2022: 84%
83%
2022: 82%
Index
GPTW Trust Index:
The Trust Index comprises 60 questions from
the GPTW survey, which are stable over time,
benchmarked against the best companies in each
market, and highly representative of the overall
people sentiment of a positive culture.
GPTW Engagement Index:
The Engagement Index is a specific measure
comprising nine questions from the GPTW
survey relating to willingness to go the extra mile,
intention to stay with the business and likelihood
of being an employer brand promoter. It is also
benchmarked and stable over time and has a proven
correlation with business performance. According
to the GPTW institute research, the drivers that are
most correlated to higher engagement scores are:
(i) teamwork, (ii) career development, (iii) values
and ethics, (iv) empowerment and accountability,
and (v) innovation.
GPTW Culture Index:
The Culture Index is a specific measure comprising
of eight questions from the GPTW survey relating
to employee perception of the workplace as friendly,
fun and welcoming.
87%
2022: 89%
Pulse surveys:
Pulse surveys are undertaken four times a year
and ask the same questions of our people to
enable management to track any trends.
Pulse survey results in 2023 demonstrated that
colleagues at Admiral continued to feel well
supported by their managers. Hybrid working
arrangements were welcomed by employees
and communication was scored highly.
Other people metrics:
Recruitment, gender balance, headcount,
absence, attrition.
* Q3 2023 Pulse survey results
** Q3 2022 Pulse survey results
87%
of our people feel they are well
supported by their manager*
2022: 86%**
84%
of our people think we are
truly customer focused*
2022: 86%**
88%
of our people think that
important knowledge and
information is shared with
them by their manager*
2022: 88%**
92%
of our people believe
Admiral Group is a diverse
and inclusive employer*
2022: 92%**
Scores pertaining to culture continue
to be very high across the Group
demonstrating the strength and impact
of the Admiral culture. During the year
Admiral was recognised as the best big
Company to work for in the UK in 2023
by the Best Companies awards, as well
as being in the top 15 best multinational
companies to work for in Europe by
‘Great Places to Work’ a global authority
on workplace culture. Admiral was also
placed 3rd in the UK’s Best Workplaces for
Women award in 2023.
The Board received an update on the
people and culture scorecard metrics
during the year, this included a review as
to how hybrid and remote working were
impacting on Admiral’s unique culture and
how this potential risk to the Company’s
culture should be managed. This oversight
was achieved by focusing on several
key metrics across the Group, including
recruitment, engagement, productivity,
absence and attrition trends, which
were closely associated with the risks to
culture heightened by a move to a more
permanent model of hybrid working.
The Board agreed that a hybrid working
model was an effective working model for
Admiral in the current climate, however
close attention should be maintained as
to the effects that this was having on the
culture of the business, and more ‘office
based moments’ should be encouraged
whilst, at the same time, empowering
teams to set their own blueprint for
working patterns and avoiding mandated
days in the office.
How Admiral retains its unique
culture whilst offering flexibility
in working practices
For a Company of Admiral’s size there
can be no ‘one size fits all’ solution
to working practices. The Board
understands that a post Covid world
has increased the opportunity and
expectation for greater flexibility
within the working environment, with
a hybrid working model becoming
more common practice. At Admiral,
individual business functions and
departments are empowered to define
their own blueprint and self organise
their teams in a manner which they
believe creates maximum benefit for
the business, whilst, at the same time,
ensuring that our special culture is
retained and enhanced. For example,
at a Group level a guide as to where
and when colleagues should be
spending time together is driven by
our ‘Admiral Moments’ model, these
are key moments when it matters for
colleagues to be together in-person.
The Board enables each business
division to interpret these principles in
their own way to maximise workplace
efficiencies and enhance culture
throughout the Group.
Admiral Moments
Admiral promotes a hybrid working model, empowering business functions and
departments to organise their own working arrangements in a manner that creates
maximum benefit for the Group. However, our ‘Admiral Moments’ model below
sets out examples where we encourage in-person or ‘face to face’ engagement
amongst our teams, to ensure that Admiral’s unique culture is retained
and enhanced.
Team building
activities
Charity
contribution
Connections &
networking
Onboarding new
starters and
learning activities
Awards &
celebrations
Feedback
and appraisal
moments
Brainstorming
and innovating
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 136136
137
Board Leadership and Company Purpose
continued
Other tools
In addition to employee participation in
regular monthly surveys and the annual
GPTW survey, there are several other
mechanisms used by the Group and the
Board to monitor and assess culture.
For example, culture audits conducted
by the internal audit function; ‘Meet
the Manager’ meetings; the ‘Ask Milena’
scheme; regular online manager chats;
ECG and IECG meetings (see page 137),
mandatory training completion rates;
health and safety data; whistleblowing
and grievances; and customer net
promoter score (NPS). All are felt to be
valuable methods of capturing the mood
of our people and to gauge the health of
our culture.
The Board Committees also help the
Board monitor and assess culture through
their respective responsibilities, some
examples of which are highlighted below.
Nomination and Governance Committee
– Succession and talent management
strategies, along with a diversity and
inclusion strategy and policies and
progress against targets to ensure
alignment with the Group’s strategy
and values.
Remuneration Committee – Monitoring
of alignment of workforce remuneration
policies to culture and strategy, risk
events reported to it by the Risk
Committee under the malus and claw
back framework.
Audit Committee – Whistleblowing,
Internal Audit, Group Minimum Standards.
Group Risk Committee – Risk events that
would impact remuneration from a malus
and claw back perspective, financial crime
and misconduct risks.
As well as receiving updates on the
Group’s culture at Board meetings,
Directors utilise other mechanisms
to assess and monitor culture, such
as attending meetings of the UK ECG,
subsidiary boards and performing site
visits across the different entities within
the Group which, during their discussions
with a cross-section of colleagues, enables
the Directors to gauge the culture for
themselves. In 2023, Mike Rogers, the
Board Chair visited L’olivier offices in
Paris and Lille, the Admiral Seguros office
in Seville and Madrid, and the Admiral
Europe Compañía de Seguros S.A.U.
(AECS) in Rome for meetings with the
management team and employees.
Whistleblowing
The Board has in place arrangements by
which employees can raise concerns in
confidence and, if necessary, anonymously.
During the year, the Board received an
update on the Group’s whistleblowing
arrangements from the management
team. The Audit Committee, chaired
by the Group’s Whistleblowing
Champion, Karen Green, was satisfied
that the update was proportionate for
independent internal investigation of the
matters raised and supported an ethical
business culture where colleagues felt
safe raising concerns. In addition, and on
an exceptions basis, the Board is updated
in respect of reports arising from matters
that have been raised by employees
under the Policy. The Audit Committee
receives more regular updates in respect
of whistleblowing matters, see page 161
for further information.
Shareholder engagement
The Board has continued to focus
on effective engagement with its
stakeholders during the year, to ensure
that their interests are taken into
account in its decision-making processes.
Detailed information is set out in the
Strategic Report on pages 56 and 87
outlining how the Board has discharged
its duties under s172(1) of the Companies
Act, including further information on
the ECG and IECG see page 137, which
constitute formal workforce advisory
panels under the Code.
Communication and interaction with
shareholders remains very important
and engagement occurs on a regular
basis. Open and frequent dialogue
enables shareholders to fully understand
the Group’s strategy, objectives and
governance processes. The Investor
Relations team has day-to-day
primary responsibility for managing
communications with institutional
shareholders through a combination of
briefings to analysts and institutional
shareholders, both at the half-year and
full-year results and on other occasions
such as roadshows and conferences.
Meetings, briefings and conferences
with investors have taken place both
in-person and virtually, with investor
visits generally taking place twice a year.
In addition, the Chair, CEO and Chair of the
Remuneration Committee held meetings
during the year with major shareholders
to understand their views on governance,
for example the proposed Remuneration
Policy, and also Admiral’s performance
against strategy and reported to the
Board on any significant issues raised
with them. During 2023, there were over
80 separate engagements held with
institutional shareholders.
Meetings with investors are
supplemented by regular feedback to
the Board. The Investor Relations team
produces a report on their activities in
the previous quarter which is circulated
to the Board for their consideration.
The report contains an analysis of share
price performance, a summary of analyst
reports received during the month, and
of meetings that have been held with
investors and analysts, together with
details of any significant changes to the
shareholders’ register.
The Senior Independent Director has
specific responsibility to be available to
investors who have any issues or concerns,
and in cases where contact with the Chair,
Chief Executive Officer and Chief Financial
Officer has either failed to resolve their
concerns, or where such contact is
inappropriate. No such concerns have
been raised in the year under review.
All shareholders are invited to attend the
Company’s Annual General Meeting (AGM)
in person. The 2023 AGM was held on
27 April 2023 with the required quorum.
Shareholders were able to vote on the
important customary annual business
and encouraged to submit questions
to the Board in advance of the AGM.
The Chairs of the Audit, Remuneration,
Nomination and Governance, and Group
Risk Committees attend the AGM along
with the other Directors and are available
to answer shareholders’ questions on
the activities of the Committees they
chair. Shareholders are also invited to ask
questions during the meeting and have an
opportunity to meet with Directors after
the formal business of the meeting has
been concluded. Details of proxy voting by
shareholders, including votes withheld, are
made available on request and are placed
on the Company’s website following
the meeting.
The Group maintains a corporate website
(www.admiralgroup.co.uk) containing
a wide range of information of interest
to institutional and private investors.
The major shareholders of the Company
are listed in the Directors’ Report on
page 199.
The regular channels of communication
with both the Financial Conduct Authority
(FCA) and Prudential Regulation Authority
(PRA) that existed throughout the year
were supplemented by the regulators
being invited to attend Board meetings.
The FCA attended the Board remotely
in April 2023, which gave the Board an
opportunity to directly hear their views
on specific areas such as Consumer Duty,
as well as wider market issues. The PRA
had previously attended a meeting of
the Board in December 2022. The Board
is also kept up to date with the regular
communications between the Admiral
Insurance (Gibraltar) Limited Board
and the Gibraltar Financial Services
Commission as well as contact between
the Group’s other insurance subsidiaries
and respective regulators.
Employee Consultation Group
Purpose
The Board recognises the importance of
engaging with its workforce and does
so through a combination of formal and
informal channels. To ensure a two-
way communication platform and an
effective means by which the views of
the workforce can be heard, the Board
established a UK Employee Consultation
Group (ECG) in 2019 with the aim of
enhancing and formalising its pre-existing
employee engagement arrangements.
For the purposes of Provision 5 of the
Code, the ECG is a formal workforce
advisory panel.
Membership and attendance
Membership of the UK ECG comprises
elected colleague representatives and
the remit of the ECG is to act as a forum
for employee consultation, gathering
colleague opinion and fostering a safe
environment to raise matters of interest
and generate ideas. There is a democratic
member election process and members
are provided with an induction to ensure
that there is clarity about the role and
remit of the ECG, as well as their role
as members.
Non-Executive Directors are invited to
attend ECG meetings on a rotational basis
and report back to the Board on matters
discussed, as well as actions agreed at
the ECG meeting. Taking this approach
ensures that each of the Non-Executive
Directors can engage with the workforce
directly and hear first-hand the issues and
matters that are affecting the workforce.
To ensure that the meetings remain a
two-way mechanism, Non-Executive
Directors are also asked to comment on
any insights from ECG meetings at the
following Board meeting and the Chair of
the UK ECG is regularly invited to attend
Board meetings to report on matters
discussed by the ECG and highlight any
areas of concern. Minutes of the ECG
meetings are also published on the
intranet for all employees to view. Non-
Executive Directors also provide an update
at ECG meetings on recent matters
discussed by the Board.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 138138
139
Board Leadership and Company Purpose
continued
Areas of focus for the Employee Consultation Group
During 2023, the Employee Consultation Group (ECG) forum remained focused on important issues for employees, such as hybrid
and remote working, remuneration and the cost of living, the performance management and appraisal processes, ideas on how to
improve engagement, employee morale, attrition and absence, proposals to support mental health and wellbeing, staff survey results
and improving diversity. There were four scheduled ECG meetings during 2023, with a wide range of topics discussed. There were also
a number of ad hoc meetings where important one-off items were brought to the ECG’s attention that required an ‘employee voice’
prior to being presented to the Board. Presentations on the following topics were given to the ECG during the year, the results of these
discussions were presented to the Board by the ECG Chair:
Meeting
Main presentations and key topics discussed
Outcome/impact
February 2023
Group strategy refresh
Director remuneration
May 2023
UK Insurance, customer outcomes
Operational resilience
September 2023 New representative orientation
Share dividends
October 2023*
Hybrid working
November 2023* Remuneration Policy
December 2023
Climate change update
Group sustainability
The Group CEO attended the meeting to discuss Group strategy,
diversification, investments, technological advancements and elements of
the international business. Members were able to direct questions to the
CEO to gain a greater understanding of how business strategy was aligned
with Admiral’s purpose and values.
The Chair of the Remuneration Committee took the meeting through
the current Director’s Remuneration Policy to ensure the ECG had full
transparency around executive reward structure. Questions were asked
around alignment with the wider workforce.
The ECG was updated on the steps Admiral was taking to deliver first class
customer outcomes and experience, how these were benchmarked, and
measures taken to ensure the customer was always treated fairly.
A discussion was held around Admiral’s ability to prevent, adapt, respond
to, and learn from operational disruptions in line with FCA and PRA
requirements. Admiral’s important business services were identified
together with what the priorities were for the remainder of the year.
New employee appointed representatives were welcomed and inducted to
the ECG.
A presentation and discussion was held around share dividends and how
new tax treatment may impact employees, along with focus on Admiral’s
dividend reinvestment scheme.
The ECG discussed the impact of hybrid working on the business and
actions being taken to preserve the Admiral culture in an evolving
working environment.
A presentation was made on the proposed amended Remuneration Policy
to be put to shareholders at the 2024 AGM for approval.
A presentation was made on the increasing expectations and regulatory
reporting requirements for banks and insurers on climate change, the
ambitious targets Admiral had set itself on net zero and the initiatives
being rolled out to meet these targets.
The meeting discussed how Admiral had a long track record of delivering
on key sustainability and ESG issues. A new Group wide approach was
being embedded into the core strategy and governance framework of the
business led by a recently appointed new Group Head of Sustainability.
* Ad hoc ECG meetings to address important one-off items that required an ‘employee voice’ prior to being presented to the Board.
Whilst recognising that this engagement mechanism will evolve over time, the Board continues to believe that the operation of the
ECG has been, and continues to be, an effective means of engaging with the workforce, to help the Board understand matters that
concern the workforce and their specific interests, whilst having regard to these matters in the discussions and decisions that take place
at the Board. The Board will ensure that the ECG continues to develop as an effective, formal workforce advisory panel and that regular
interaction between the Board and the ECG is maintained.
International Employee Consultation Group (IECG)
The International Employee Consultation Group has been formally meeting since 2022, and is Chaired by Costantino Moretti, Head of
International Insurance.
This year, five IECG meetings took place in-person across the international offices of ConTe, L’olivier, Admiral Seguros together with
Admiral Tech, AECS and Elephant alongside the Admiral Europe Compañía de Seguros (AECS) Board meetings. The meetings were
attended by candidates chosen on a voluntary basis, with an agenda created to incorporate employee interests, questions and proposals.
Entity/Meeting
Topics discussed
Outcome/Impact
AECS –
February 2023
Insurance market developments
Challenges faced by employees
Talent and opportunities
Discussions were held around how the insurance market had developed
in recent years through advancements in technology, new competitors
entering the market, and new regulatory requirements.
Concerns were shared regarding challenges being experienced
by employees and potential improvements that could be made
were discussed.
Members discussed the opportunities Admiral offered in terms of
professional development, for example taking temporary opportunities in
other Group entities.
L ’olivier –
March 2023
Admiral culture
Members shared their views on Admiral’s culture and how this was evolving
with changing working practices.
L’olivier growth over the year
Product diversification
The importance of being eco-friendly
Main challenges for the future
Discussions took place around the progress and growth of the business
over the year when compared to the other European countries. It was
confirmed that much had been achieved already, however development
and improvements were still required.
Members discussed how the insurance market had changed in recent years,
and how, through a strategy of expanding into different products, Admiral
continued to evolve to meet future consumer requirements.
It was agreed that social and ecological issues were of growing importance
for brands and customers, in step with this was an increasing demand
for transparency and accountability. Admiral’s initiatives in this area
were discussed.
A discussion was held around what members regarded to be the three main
challenges for the businesses over the next few years and how these should
be addressed.
ESG and sustainability
The meeting discussed how the evolving Group strategy was incorporating
ESG and sustainability trends.
EU collaboration
Diversification
Members agreed that greater collaboration between businesses in EU
countries could add value to the Admiral Group.
The meeting discussed how a key element of the Group strategy was
focused on the diversification of products and channels.
New technologies and hybrid working The new technologies introduced to both improve the customer
experience and also assist in the work life balance of employees were
highlighted. Members confirmed that employees had benefitted from the
versatility that came from a hybrid working model.
Strong culture and working practices Members agreed that there was a strong culture within the business,
where they felt valued, listened to and trusted by management.
Flexibility in working arrangements was viewed positively and assisted in
easing concerns around cost of living.
Admiral Seguros
and Admiral Tech –
September 2023
ConTe –
November 2023
Elephant –
November 2023
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 140140
Division of Responsibilities
141
Through the strong governance framework that it has in place, the Board is able to deliver on its
strategy and, in doing so, provide strong, sustainable financial and operational performance for
our shareholders and wider stakeholders.
Board and Committee framework
Our Board and Committee framework supports the development of the highest standards of governance practices across the Group
which is integral to the successful delivery of our strategy.
Shareholders
The Board
The Board is collectively responsible for establishing the purpose, values and strategy of the Group and for promoting
the long-term success of Admiral for the benefit of our shareholders and stakeholders.
Principal Board Committees
Audit Committee
Responsible for
overseeing the
Company’s systems for
internal financial control,
risk management and
financial reporting,
and monitoring
the integrity of the
financial statements.
See page 161
Nomination
and Governance
Committee
Reviews the composition
of the Board, considers
succession planning at
both Board and senior
management level and
leads the process of
appointments to
the Board.
See page 146
Remuneration
Committee
Responsible for
remuneration policy,
performance-related
pay schemes and share-
based incentive plans.
Group Risk
Committee
Assists with the
oversight of the
Group’s risk appetite,
tolerance and strategy.
Monitors current
and potential risk
exposures and the
effectiveness of the risk
management framework
Recognition and reward
Colleagues in the business will receive up
to the equivalent of £3,600 of shares in
Admiral during the year.
See page 168
See page 172
CEO
Group Board Management Committees
Group
Reserving
Committee
Group Model
Governance
Committee
Group Assets
and Liabilities
Committee
Group
Investments
Committee
Group
Disclosure
Committee
Divisional CEO’s, Subsidiary Boards and Committees,
Management Committees and Senior Management
Admiral Business
Chair
• Runs the Board and sets its agenda, with an emphasis on strategic issues.
• Ensures the Board has effective decision-making processes, demonstrating
objective judgement and applying sufficient challenge to proposals.
• Facilitates constructive Board relations, including effective contributions from
Non-Executive Directors.
• Ensures the Board has an appropriate balance of skills, knowledge, experience
and diversity.
• Leads the induction and development plans for new and existing Board members.
• Communicates with major shareholders and ensures the Board understands
their views.
• Ensures the Board receives accurate, timely and clear information.
• Leads the annual Board evaluation.
Senior Independent Director
• Supports the Chair in the delivery of their objectives.
• Acts as a sounding board for the Chair and serves as an intermediary
for the other Directors.
• Available to shareholders if they have concerns that cannot be resolved
through the normal channels.
• Works with the Chair and other Directors/shareholders to resolve significant issues
where necessary.
• Leads the annual performance evaluation of the Chair.
• Leads the Chair appointment process.
Chief Executive Officer
• Runs the Group’s business and delivers its commercial objectives.
• Proposes and develops the Group’s strategy, in close consultation with the
Group’s senior management, the Chair and the Board.
• Implements the decisions of the Board and its Committees.
• Ensures operational policies and practices drive appropriate behaviour, in line
with the Group’s culture.
• Leads the communication programme with key stakeholders, including employees.
• Ensures management provides the Board with appropriate information and
necessary resources.
Our CEO, Milena Mondini de Focatiis
was awarded the Best Leader of
a Big Company at the 2023 Best
Companies Awards. You can find out
more at www.b.co.uk
Board roles and responsibilities
The Chair is primarily responsible for
leading the Board, setting its agenda,
promoting a culture of openness and
debate and monitoring its effectiveness.
The Chair is supported by the Senior
Independent Director, who acts as
a sounding board and serves as an
intermediary for the other Directors
if required. Neither are involved in the
day-to-day management of the Group.
Save for the matters reserved for the
Board, the Chief Executive Officer
(with the support of the Chief Financial
Officer and the senior executives) is
responsible for proposing the strategy
to be adopted by the Group, running the
business in accordance with the strategy
agreed by the Board and implementing
Board decisions.
It is the Non-Executive Directors’ role to
provide constructive challenge, strategic
guidance, offer their respective specialist
advice and hold management to account.
It is the role of the Company Secretary
to support the Chair and administer the
workings of the Board and Committees,
ensuring Directors have precise and
timely information to enable an effective
decision-making process, whilst providing
governance, legal and statutory advice
and ensuring a record of decisions and
actions is clear and attributable.
The Board has approved a statement
that sets out the clear division of
responsibilities between the Chair,
Chief Executive Officer and SID. This and
Matters Reserved for Decision by the
Board are reviewed annually and are
available to review on Admiral’s website
at www.admiralgroup.co.uk.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 142142
Division of Responsibilities
continued
Role of the Board
The Board is responsible for promoting
the long-term, sustainable success of the
Group, generating value for shareholders,
taking into consideration all of its
stakeholders and contributing to the
wider society in which Admiral operates
its business. The Board is the principal
decision-making forum for the Group,
providing entrepreneurial leadership, both
directly and through its committees, and
delegating authority to the Executive
Directors and the senior management
team for the day-to-day operation of
the business.
The Board has determined the Group’s
purpose, to ‘help more people to look
after their future. Always striving for
better, together’. This is embedded in
the culture of the business through our
aligned values and strategy. Part of the
Board’s role is to promote the Group’s
culture and, in particular, ensure that its
uniqueness is safeguarded. This has been
especially important in recent years where
there have been significant challenges to
how the business operates and its culture,
such as the recent Covid-19 pandemic
(see page 132).
The Board is responsible for organising
and directing the affairs of the Group in
a manner that generates and preserves
value over the long-term. Through the
strong governance framework that it has
in place, the Board is able to deliver on its
strategy of providing strong sustainable
financial and operational performance.
The Board is also accountable for ensuring
that in carrying out its duties, the Group’s
legal and regulatory obligations are being
met; and for ensuring that it operates
within appropriate risk parameters.
The Group’s UK-regulated entities are
accountable to the Financial Conduct
Authority (FCA) and the Prudential
Regulatory Authority (PRA) for ensuring
compliance with the Group’s UK
regulatory obligations and that dealings
with the FCA and PRA are handled
in a constructive, co-operative and
transparent manner. Similar provisions
apply in respect of the Group’s
international businesses with regard
to the relevant regulatory authorities,
such as the Gibraltar Financial Services
Commission and Dirección General de
Seguros y Fondos de Pensiones in Spain.
Board and Committee meeting attendance
Mike Rogers1 (Chair)
Milena Mondini de Focatiis (Chief Executive Officer)
Geraint Jones (Chief Financial Officer)
Karen Green
Justine Roberts
Andy Crossley
Michael Brierley
Jayaprakasa (JP) Rangaswami
Evelyn Bourke
William (Bill) Roberts
Fiona Muldoon5
Annette Court6
Jean Park7
Board
4/4
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
2/2
3/3
1/1
Audit Committee
–
–
–
8/8
–
7/84
8/8
–
–
–
2/2
–
–
Board and Committee meetings
Directors are expected to attend all
meetings of the Board and the Board
committees on which they serve and to
devote sufficient time to the Group to
perform their duties. Where Directors are
unable to attend meetings, they receive
papers for that meeting, giving them
the opportunity to raise any issues with
the Chair in advance of the meeting.
The number of scheduled Board and
Board committee meetings attended by
each Director during 2023 is provided in
the table below.
In addition to the scheduled meetings
of the Board set out in the table
below, the Board also held a number of
additional late notice, ad hoc meetings
to discuss matters that were of sufficient
importance that they could not wait until
the following scheduled Board meeting.
All Directors are invited to participate in
such meetings which, by their nature,
are arranged at short notice. Where they
are unable to do so due to pre-existing
commitments, Directors are given the
opportunity to contribute their views to
the Chair prior to the meeting. The Board
also delegates authority to a Board
sub-committee for the approval of final
drafts of announcements and proposals
which had already been considered by the
Board or its committees. The Board met
in-person for all seven of its scheduled
meetings held during the year, including
its strategy meeting (and October Board)
which was held over two days in the UK.
Group Risk
Committee
–
–
–
8/8
–
8/8
–
8/8
–
–
–
–
1/1
Nomination
and Governance
Committee
4/4
–
–
–
6/6
–
–
–
–
6/6
–
2/2
1/1
Remuneration
Committee
–
–
–
1/12
5/73
–
7/7
–
7/7
–
–
–
–
Justine Roberts joined the Remuneration Committee on 31 January 2023, she missed two Committee meetings due to pre-existing engagements made prior to her joining the Committee.
1 Mike Rogers joined the Board on 27 April 2023.
2 Karen Green was appointed to the Remuneration Committee on 2 October 2023.
3
4 Andy Crossley missed one meeting of the Audit Committee due to a pre-existing engagement.
5 Fiona Muldoon joined the Board and Audit Committee on 2 October 2023.
6 Annette Court stepped down from the Board on 27 April 2023.
Jean Park stepped down from the Board on 20 January 2023.
7
143
Group conflicts of interest
In compliance with the requirements
of the Companies Act 2006 regarding
Directors’ duties in relation to conflicts
of interest, the Group’s Articles of
Association allow the Board to authorise
potential conflicts of interest that may
arise and to impose such limits as it
thinks fit. The Group has a Conflicts of
Interest Policy which deals with conflicts
of interest, and this was reviewed and
approved by the Board in October 2023.
The Policy sets out the process and
procedure by which the Board manages
potential conflicts of interest that
may arise at Board level, within Board
Committees, and within the Group’s
Subsidiary Boards. Following this review,
the Board concluded that the process
continued to operate effectively.
In addition, each Board member is asked
to complete, annually, a conflicts of
interest questionnaire that sets out any
situation in which they, or their connected
persons, have, or could have, a direct or
indirect interest that could conflict with
the interests of the Company. Any current
directorships that they, or their
connected persons hold, any advisory
roles or trusteeships held, together with
any companies in which they hold more
than 1% of the issued share capital are
also disclosed. The Board is satisfied that
none of the Directors had any potential
conflicts of interest during the year which
could not be authorised by the Board.
Matters reserved for the Board
The Board has adopted a formal schedule
of matters reserved for the Board’s
consideration. This is monitored by the
Company Secretary and reviewed by the
Board on an annual basis. Specific matters
reserved to the Board include the
approval of:
• The Group’s long-term objectives and
corporate strategy
• Operating and capital budgets, financial
results, and any significant changes to
accounting practices or policies
• The Group’s capital structure
• Results and financial reporting
• The system of internal control and
risk management
• The Group’s overall risk appetite
• Changes to the structure, size and
composition of the Board, including
new appointments
• Succession plans for the Board and
senior management
• Dividend policy and proposals for
dividend payments
• Major acquisitions, disposals, and other
transactions outside delegated limits
• The annual review of its own
performance and that of its
Board Committees
• Annual review of selected
Group policies
• The review of the Group’s overall
corporate governance arrangements.
Board Committees
The Board has delegated authority
to several permanent committees to
deal with matters in accordance with
written Terms of Reference. The principal
committees of the Board – the Audit,
Remuneration, Risk, and Nomination and
Governance Committees all comply with
the requirements of the Code.
All committees are chaired by an
independent Non-Executive Director,
except for the Nomination and
Governance Committee, which is chaired
by the Chair of the Board, and comprise a
majority of independent Non-Executive
Directors. In accordance with the Code,
all members of the Audit Committee are
independent Non-Executive Directors.
Appointments to the Committees are
made on the recommendation of the
Nomination and Governance Committee
and are for a period of up to three
years, which may be extended for two
further three-year periods, provided
the Director remains independent and
they are annually reappointed to the
Board by shareholders. The committees
are constituted with written Terms of
Reference that are reviewed annually
to ensure that they remain appropriate
and reflect any changes in good
practice and governance. These Terms
of Reference are available on request
from the Company Secretary and can
also be found on the Company’s website:
www.admiralgroup.co.uk.
Directors are fully informed of all
committee matters by the committee
Chairs who report on the proceedings
of their committee at the subsequent
Board meeting. Copies of committee
minutes are also distributed to the
Board. Committees are authorised
to obtain outside legal or other
independent professional advice if they
consider it necessary. The Chair of each
committee attends the Annual General
Meeting to respond to any shareholder
questions that might be raised on the
committee’s activities. An evaluation
of the performance of each committee
against the duties set out in each Terms of
Reference is carried out annually.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 145
144144
Division of Responsibilities
continued
Information flows to
and from the Board
Agendas and papers
Agendas and papers are circulated to
the Board electronically in a secure
manner in preparation for Board and
Board committee meetings. The Board
agenda is structured by the Chair
in consultation with the Company
Secretary and CEO. An annual schedule
of agenda items is reviewed and updated
regularly to ensure that items are
considered at the appropriate point
in the financial and regulatory cycle.
Meetings are structured so as to allow for
consideration and debate of all matters.
Routine Board papers are supplemented
by information specifically requested by
the Directors from time to time.
At each scheduled meeting, the Board
receives updates from the Chair, the
CEO and CFO as to the financial and
operational performance of the Group
and any specific developments of which
the Board should be aware. In addition,
there is an update provided at each Board
on the matters discussed and considered
Board and Board committee meeting preparation process
at each of the Group’s principal subsidiary
Board meetings. Additional meetings
are called as and when required and
there is contact between the Board,
Board committees, subsidiary boards
and management, where necessary,
to progress the Group’s business.
The Company Secretary manages a yearly planner
of scheduled agenda items for the Board and
Board Committees.
The Company Secretary liaises with the Chair,
Executive Directors, committee Chairs and key
members of senior management in advance
of each respective meeting to confirm agenda
items and required attendees.
Board and committee papers are drafted
by relevant authors throughout the business
and are subject to an established
review process ahead of submission.
Board and committee papers are circulated
electronically at least one week prior to the meeting.
The Chair will meet with Executive Directors and
Non-Executive Directors ahead of the meeting to
ascertain any areas of particular concern or focus.
Standardised Board reporting
templates and report cover
sheets are in place and
training has been given to
those producing Board and
Committee reports to ensure
there is consistency, clarity and
conciseness in approach.
Attendees
The CEO of UK Insurance (Cristina
Nestares), together with the Chief Risk
and Compliance Officer (Keith Davies),
the Head of International Insurance
(Costantino Moretti) and the CEO of
Admiral Money (Scott Cargill) are invited
to attend every Board meeting and
regular Board dinners. This has proved
an effective means of ensuring that
senior managers below Board level have
exposure to and gain experience of the
operation of the Board.
Dynamics
All Board and committee meetings during
the year were held in an open atmosphere
conducive to robust and constructive
challenge and debate. All Directors have
therefore been able to bring independent
judgement to bear on issues such as
strategy, risk management, performance,
and resources.
Cross-committee membership
As shown on pages 118 and 142,
committee membership is composed
in a way that ensures that there is
cross-committee membership, which
allows items of importance to be flagged
from committee to committee in a
timely manner. This complements the
committee briefings that the Board
receives on the key points of discussion
following each committee.
Advice
All the Directors have access to the advice
and services of the Company Secretary,
who has responsibility for ensuring that
Board procedures are followed and for
advising the Board, through the Chair,
on governance matters. The Company
Secretary provides updates to the Board
on regulatory and corporate governance
issues, new legislation, and Directors’
duties and obligations. The appointment
and removal of the Company Secretary
is one of the matters reserved for the
Board. Dan Caunt has held the position
of Company Secretary since 1 May 2022,
his biography can be found on page 124.
The Directors are also given access
to independent professional advice
at the Group’s expense, should
they deem it necessary to carry out
their responsibilities.
Training and professional
development
The development and training of Directors
is an ongoing process and is considered
throughout the year. The Directors are
regularly updated on the Group’s business;
legal matters concerning their roles and
duties; the competitive environments
in which the Group operates; and any
other significant changes affecting the
Group and the industry of which it is a
part. During the year, the Board received
deep dive updates, briefings and training
on the following topics: Admiral internal
model (AIM), IFRS 17, Chat GPT education
session (Large Language Models), Pioneer
Toolbox SME Market overview, Consumer
Duty training provided by KPMG, amongst
several business deep dives.
Other information flows
The Board Chair met with a wide range
of Admiral colleagues and visited various
parts of the business during 2023 as
part of his induction process. The Non-
Executive Directors are invited to visit
areas of the business for in-person on
site visits to meet employees and review
business functions.
As referenced within the commentary
on employee consultation on page
137, the Non-Executive Directors are
invited to attend ECG meetings and
participate in the two-way engagement
with employees.
The Non-Executive Directors met
in-person during the year without the
Executive Directors being present.
From April 2023, Non-Executive Directors
individually met with the Chair for
discussion ahead of each Board meeting
and also met with the CEO for a debrief
at the conclusion of each scheduled
Board meeting.
The Chair holds one-to-one meetings
with members of the Group’s senior
management team either in-person
or on a virtual basis. Members of the
senior management team were invited
to join Board dinners which allows the
opportunity for informal interaction
between Directors and the senior
management team.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 146146
147
Nomination and Governance Committee Report
Overseeing
OUR BOARD
COMPOSITION
Dear Shareholder,
On behalf of the Board,
I am pleased to present my
first report as Chair of the
Nomination and Governance
Committee (the Committee).
The Committee plays a key
role in overseeing Admiral’s
Board composition, ensuring
it has the optimum balance
of skills, experience and
knowledge, as well as ensuring
diversity in the broadest sense
on the Board and all of its
committees. The Committee
also ensures that the
Group operates within
a robust and transparent
governance framework.
This report sets out the
Committee’s main activities,
along with how it has
discharged its responsibilities
throughout the year ended
31 December 2023.
As a Committee, we have
continued our focus on
the composition, skills and
experience of the Board
and Board committees
to ensure these reflect the
current requirements of the
Admiral business and meet
the expectations
of our stakeholders.
Six committee
meetings
held in 2023.
Succession planning was a key focus
for the Committee during 2023.
As I discussed on page 114, I succeeded
Annette Court as Chair following the
2023 AGM in April. My induction process,
which began following the announcement
of my appointment in January 2023,
was bespoke and comprehensive.
Further details on this are set out on
page 151. In addition to myself as
Chair, the Board, on recommendation
from the Committee, also appointed
Fiona Muldoon as a new Non-Executive
Director in October 2023. The full search
and recruitment process for Fiona’s
appointment is set out on page 149.
As a Committee, we have continued
our focus on the composition, skills
and experience present on the Board
and Board committees to ensure these
reflect the current requirements of
the Admiral business and meet the
expectations of our stakeholders.
To effectively oversee this process, the
Committee has maintained and refined
a skills matrix which maps those skills
currently present on the Board and those
required to ensure the effective delivery
of our business strategy. Where gaps
in skills and experience are identified
these are reviewed and addressed by
the Committee and the necessary
recommendations are made to the Board.
Diversity and inclusion were key topics for
Committee discussion during the year.
The Committee ensured that the Board
continued to meet the FTSE Women
Leaders Review target that 40% of the
Board should be female, in addition to
The Parker Review’s target that the
Board should include at least one director
from an ethnic minority background by
2024. The evolving requirements of The
Parker Review at a senior management
level were discussed in detail, and the
Committee ensured that the Group’s
policy on diversity and inclusion was
reviewed during the year and continued
to be embedded throughout the
Group. Where necessary, changes were
implemented to the appointment
and succession processes to ensure
that evolving diversity considerations
were key to discussions during these
processes. More details on this and wider
considerations around diversity and
inclusion in the workplace are set out on
page 154.
Following an external review of the Board
and Board Committee’s effectiveness
in 2022, the 2023 annual review of the
Committee’s effectiveness, which took
place in December, was carried out by
way of an internal review led by myself
in conjunction with the Company
Secretary. This review concluded that,
overall, the Board and its committees
remained effective but noted some areas
for improvement for 2024. These are
outlined on page 160 of this report, along
with progress against the previous year’s
recommendations set out on page 159.
In line with the requirements of Solvency
II, the Senior Insurance Manager Regime,
and in accordance with the Group’s Senior
Managers & Certification Regime Policy,
I have also carried out the process of
assessment for the Group CEO, Group
Non-Executive Directors, and the Chairs
of the Group’s material, regulated
subsidiaries; EUI Limited, Admiral
Insurance Company Limited, Admiral
Insurance (Gibraltar) Limited, and Admiral
Financial Services Limited (Admiral
Money), Able Insurance Services Limited
(Admiral Pioneer), Elephant Insurance
Company (USA), and Admiral Europe
Compania de Seguros - AECS (Europe) to
ensure they meet the requirements in
terms of qualifications, capability, honesty
and integrity.
The rest of this Report sets out in more
detail the activities of the Committee
during 2023. I would like to thank the
Committee members for their continued
contributions and support throughout
the year.
Mike Rogers
Chair of the Nomination and
Governance Committee
6 March 2024
Committee meetings
held during the year
The Committee meets at least twice
per year, in accordance with its Terms of
Reference, and at such other times as
the Chair may require. During 2023, the
Committee held six formal scheduled
meetings. The Committee Chair agrees
the meeting agendas for each meeting
with the Company Secretary, items
covered during the year are linked
to an agenda planner covering the
responsibilities of the Committee.
Attendees at Committee meetings
The above table shows the attendance
of Committee members at meetings
during 2023. The Company Secretary
acts as Secretary to the Committee.
Other individuals, such as the Chief
Executive Officer, the Group Head of
People Experience and representatives
of different parts of the Group, may
be invited to attend all or part of any
meeting, as and when appropriate.
Role and responsibilities
of the Committee
The Committee reviews the leadership
and succession needs of the Board and
ensures appropriate procedures are
in place for nominating, training and
evaluating Directors. It also oversees the
governance of the Group to ensure the
business is operating within a transparent
and accountable framework.
Committee Membership
and Meeting Attendance
The Committee is chaired by
Mike Rogers, in addition to Mike,
the Committee comprises two
independent Non-Executive Directors:
Justine Roberts and Bill Roberts.
Individual meeting attendance and
changes to membership during the
year are detailed below.
Member
Mike Rogers2
Justine Roberts
Bill Roberts
Annette Court3
Jean Park4
Attendance1
4/4
6/6
6/6
2/2
1/1
1 Scheduled meetings only, additional ad hoc
Committee meetings took place during the year.
2 Mike Rogers joined the Committee as Chair on
27 April 2023.
3 Annette Court retired from the Board and all of her
committee memberships following the 2023 AGM
on 27 April 2023.
Jean Park retired from the Board and all of her
committee memberships on 20 January 2023.
4
Composition
The Committee met formally six times
during the year. The membership of
the Committee at the year-end was
Mike Rogers (Chair), Justine Roberts
and Bill Roberts. Mike Rogers was
appointed as Chair of the Committee
following the 2023 AGM on 27 April
2023, replacing Annette Court who
stood down from the Committee
and the Board at this time. Jean Park
retired from the Committee and
the Board on 20 January 2023.
Justine Roberts and Bill Roberts are
independent Non-Executive members
of the Committee, in accordance
with the Code which requires that
the majority of members should be
independent Non-Executive Directors.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 148148
149
Nomination and Governance Committee Report
continued
The Nomination and Governance Committee is primarily responsible for:
Reviewing the structure size and composition of the Board as a whole, along with consideration of the balance of skills, knowledge,
experience, time commitment and diversity of the Board and its committees.
Succession planning for Executive Directors and Non-Executive Directors and leading the process for Board appointments by making
recommendations regarding Board vacancies.
Make recommendations to the Board on refreshing the membership of the Board’s principal committees.
Overview of succession planning at executive and senior management level throughout the Admiral Group, ensuring there is an
experienced and diverse pipeline for succession.
Devising the selection criteria for the role, skills, capabilities and experience required for a particular appointment and engagement
with independent, third-party recruitment experts.
Consideration of results of the Board evaluation and consideration of the proposed annual re-election of Directors to the Board
at the AGM.
Review of Admiral’s governance framework to ensure transparency and accountability, and to consider developing corporate governance
matters to bring to the attention of the Board where necessary.
Consideration of the Committee’s draft report for inclusion in the Annual Report and Accounts.
The Committee is regularly updated on proposed senior appointments and governance changes across the Group, as well as key
developments within the corporate governance landscape. The terms of reference of the Committee include all the relevant matters set
out under the UK Corporate Governance Code, they are reviewed annually by the Committee and are available to view on the Company
website in the investor relations section.
Key activities of the Committee during the year
A description of the activities the Committee has focused on during the year ended 31 December 2023 is outlined under the
following headings:
Non-Executive Director appointment process and appointments made during 2023
Appointments to the Board are the responsibility of the Board as a whole, acting on the advice and recommendations of the Nomination
and Governance Committee. The Committee seeks to balance the retirement and recruitment of Non-Executive Directors well ahead
of relevant deadlines so as to avoid a dislocation of Board process by losing experience and skills. The Committee is mindful of the need
to promote diversity and inclusion in appointments to the Board and throughout the Group. Appointments are made on merit and
against objective criteria, having due regard to the benefits of diversity, and with a view to ensuring the Board has the appropriate mix of
personalities, skills and experience.
The policy on Board appointments involves the Committee developing an appropriate job specification that identifies the required skills
and experience for the role and, in most instances, engaging external recruitment consultants, to lead the search process and identify
suitable candidates. Interviews of the shortlisted candidates are held with the Chair and members of the Committee. After consideration
by the Committee, a recommendation is made to the Board to appoint a preferred candidate. Further details of how this process
worked effectively during the year are set out below. The Committee is satisfied that this constitutes a formal, rigorous and transparent
process for the appointment of new Directors to the Board and its subsidiaries, embracing a full evaluation of the skills, knowledge and
experience required of new Directors.
Mike Rogers, Chair: Appointed 27 April 2023. Mike Rogers joined the Board as Chair following the 2023 AGM. Mike was also appointed
as Chair of the Nomination and Governance Committee at this time. The search and recruitment process for Mike was set out in detail
in the Committee Report in the 2022 Annual Report and Accounts. Annette Court, the Board and Committee Chair until the 2023
AGM, played no part in the recruitment process of the replacement Board Chair. This process was led by Justine Roberts, the then
Interim Senior Independent Director. Justine was appointed as the Senior Independent Director on a permanent basis with effect from
31 January 2023.
Fiona Muldoon, Non-Executive Director: Appointed 2 October 2023. Fiona Muldoon joined the Board as Non-Executive Director and,
having specific and relevant financial experience, became a member of the Audit Committee on 2 October 2023. A summary of the
recruitment process for Fiona is set out below.
External Recruitment Consultant
Heidrick and Struggles (‘H&S’) was engaged as the external independent recruitment search consultant in the appointments of both
Mike Rogers and Fiona Muldoon. H&S is committed to promoting diversity in the candidates that it presents on an annual, global
and cumulative basis and this was reflected in the candidates it identified for the appointments of Mike and Fiona. H&S has no other
connection with the Admiral Group or its Board Directors.
Fiona Muldoon
Non-Executive Director search and recruitment process
Candidate criteria and search
January – February 2023
Shortlist and interview
March – June 2023
Approval and appointment
July – October 2023
STEP 4
Shortlisting candidates
H&S prepared an initial longlist of
candidates which was presented
to the Committee in March 2023.
Shortlisted candidates were then
reviewed at the Committee meeting
held in April 2023. Following the
meeting, shortlisted candidates were
contacted to establish interest and
an initial interview was undertaken
by H&S.
STEP 6
Committee recommendation
and Board approval
Following the satisfactory receipt of
references, the Committee met to
discuss a proposal to recommend
to the Board the appointment of
Fiona Muldoon as Non-Executive
Director and member of the Audit
Committee. The Board considered
and accepted the recommendation
of the Committee. A formal offer was
put to, and accepted by, Fiona.
STEP 7
Appointment
Fiona was appointed to the Admiral
Board and as a member of the
Audit Committee with effect from
2 October 2023. Fiona immediately
embarked on a personalised
and in-depth induction process.
Her appointment will be put before
shareholders for approval at the
2024 AGM.
STEP 5
Interview process
Following further discussions, the
leading three candidates were
interviewed by the sub-committee
and two additionally met the CFO.
The merits and suitability of the
candidates were scrutinised at
each stage during this process
against the candidate specification.
Fiona Muldoon emerged as being
the Committee’s preferred candidate
given her strong and relevant skills
and experience, including relevant
financial experience. It was agreed
that she would be a good cultural fit,
and had the capability to contribute
effectively to the Group Board.
Fiona subsequently met with the
Group CEO.
STEP 1
Identification of role
requirements
The Committee, led by the Chair,
gave consideration as to the skills,
experience, knowledge and diversity
of the Board and those required
for optimal Board and Committee
composition. During this process
the Committee canvased the views
of the Board and senior Admiral
management. From this, Non-
Executive Director (NED) candidate
criteria requirements were agreed
at the Committee meeting in
January 2023.
STEP 2
Engagement of third party
advisor
Heidrick and Struggles (‘H&S’),
experts in the field of search and
recruitment, were engaged by the
Committee to assist with the search
for potential NED candidates. H&S
was asked to ensure the search
identified candidates from a diverse
range of backgrounds and industries.
Alongside the Committee, H&S
prepared the Admiral Group plc Non-
Executive Director role specification,
this included a requirement for
relevant financial experience to allow
the candidate to be considered for
membership to the Audit Committee.
STEP 3
Initial search process
A sub-committee of the Committee
was formulated consisting of the
Chair, Non-Executive Directors and
the Head of People Experience to
oversee the recruitment process.
H&S commenced a wide-ranging
search process and regular updates
on progress were given to the
sub-committee.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 150150
151
Nomination and Governance Committee Report
continued
Non-Executive Director induction
Upon appointment, our Non-Executive Directors embark on a bespoke and comprehensive induction programme, comprising common
elements for all Non-Executive Directors, as well as elements tailored to the individual depending on their role, skills, knowledge and
experience. The induction process, led by the Company Secretary, covers topics such as the role of a Non-Executive Director and their
responsibilities, the workings of the Board and the Group’s subsidiary boards, and the Company’s operations. Non-Executive Directors are
provided with a suite of background reading materials before induction sessions are arranged with individuals from each of the Group
businesses, again, depending on the individual’s induction requirements. Ongoing professional development needs of newly appointed
Non-Executive Directors are then monitored via annual individual Director evaluations and the Committee’s oversight of the Non-
Executive Director skills matrix.
Inductions took place for both Mike Rogers, Chair, and Fiona Muldoon, Non-Executive Director, during the year. Outlined opposite is
a summary of Mike Rogers’ induction process at Admiral. Fiona also received a comprehensive and bespoke induction similar to that
outlined opposite.
Board Committee changes, term extensions and internal appointments addressed by the Committee during 2023
The Board, on recommendation from the Committee, agreed to the following proposals/changes during the year:
• Jean Park retired from the Board including all of her committee memberships on 20 January 2023
• The appointment of Justine Roberts as permanent Senior Independent Director and permanent member of the Remuneration
Committee was made effective from 31 January 2023
• Annette Court retired as Chair of the Board including all of her committee memberships following the 2023 AGM held on 27 April 2023
• Mike Rogers was appointed as a Chair of the Company and Chair of the Committee effective from 27 April 2023
• The extension of JP Rangaswami’s three-year term as Non-Executive Director became effective on 29 April 2023
• Fiona Muldoon was appointed as a Non-Executive Director and member of the Audit Committee effective 2 October 2023
• Karen Green was appointed as a member of the Remuneration Committee effective 2 October 2023
• The appointment of Andy Crossley as Chair of the Group Risk Committee was made permanent on 23 October 2023
• Approval of internal senior subsidiary board and non-executive appointments
• Approval of additional external appointments for existing Board Directors
• Consideration of and recommendation for reappointment of all Directors at 2023 AGM.
Annual re-election
As set out in the Group’s Articles of Association, all Directors should retire and offer themselves for re-election at each AGM, in accordance
with the UK Corporate Governance Code (the Code) and the Company’s current practice. Therefore, all Directors will be submitting
themselves for election or re-election by shareholders at the forthcoming AGM.
Following a full review and evaluation during the year, the Board is satisfied that all Directors are properly qualified for their election or
re-election by virtue of their skills and experience and their contribution to the Board and its committees. Further details of why each
Director’s contribution is, and continues to be, important to the Company’s long-term sustainable success is provided on page 118 and
within the notes to the Notice of the 2024 Annual General Meeting.
Mike Rogers
Chair induction process
Previous Chair
Prior to Annette Court stepping
down as Chair, she met with Mike to
facilitate the smooth transition of
the responsibilities of Chair. She gave
an overview as to the workings of
the Board and its committees, her
key thoughts from a cultural and
governance perspective, and the
challenges and opportunities facing
Admiral. This also included her work
as Chair of the Committee.
Senior Independent Director
As Senior Independent Director,
Justine Roberts works closely with
the Chair providing a sounding board
and additional perspective into Board
matters. Justine was able to give Mike
the benefit of her seven years of
service on the Admiral Board.
CEO
Mike and Milena Mondini de Focatiis
met frequently to discuss key areas
of focus for the Company and the
Board. Milena briefed Mike on Group
matters including an overview of
Group strategy, operations, risks,
people and culture, markets and
succession planning.
CFO
Geraint Jones briefed Mike on all
Group finance matters including;
financial performance and
projections, investor feedback,
market analysis, investments, capital
management, budgets, reporting and
control processes.
External advisors
Mike met with many of Admiral’s
key external advisers including our
external auditor, lawyers and brokers
to obtain external perspectives of
the business.
Senior management
Mike met with key members of
Admiral’s senior management team
including the Chief Executives of
each of our UK and overseas business
divisions along with the department
heads of Investor Relations,
Compliance, Finance & Actuarial,
Risk Management, Internal Audit,
IT, Pricing, IT Security and People
Services to understand these key
areas of businesses.
Mike Rogers
Chair Mike joined Admiral as Chair
following the 2023 AGM held on
27 April 2023. Mike was subject to a
comprehensive and bespoke induction
programme designed to provide him
with the necessary information to
effectively take on the role as Chair,
this process began following the
announcement of his appointment
on 31 January 2023.
Company Secretary
Dan Caunt, spent time with Mike
explaining the Group governance
framework; this included all
operational aspects of the Board
and its committees as well as
engagement with stakeholders,
Admiral’s AGM process, Director
duties, UK Corporate Governance
Code requirements, Board policies,
the results of the most recent Board
evaluation and areas of Board focus
for the coming year.
Non-Executive Directors
Mike met and has continued to
meet individually with each of the
Non-Executive Directors who gave
their insight into Board dynamics,
culture and governance as well as
highlighting their backgrounds and
areas of expertise. Mike also met
with the Chairs of our subsidiary
Boards and overseas businesses.
Board Committee Chairs brought
Mike up to speed on their respective
Committee’s business.
Site visits
Mike undertook various site visits
during his first year and met with
management and colleagues across
the business as part of his induction
process, this included our UK sites in
South Wales, as well as L’olivier offices
in Paris and Lille, the Admiral Seguros
office in Seville, AECS in Madrid and
ConTe in Rome.
Significant shareholders
Mike has met with a number of
Admiral’s significant shareholders,
including the founders of the
Company, Henry Engelhardt and
David Stevens, to understand their
views on the business. Mike regularly
meets with employee shareholders
throughout the business and the
opportunity for individual retail
shareholders to meet the Chair takes
place annually at the AGM.
Information and educational
materials
A comprehensive suite of educational
materials was provided to Mike by
the Company Secretary including,
for example; Admiral’s business
plan and strategy, key roles and
responsibilities of the Board, its
committees, Directors, guidelines
and policies for a UK Listed insurance
Company regulated by the FCA and
PRA, minutes of meetings, terms of
reference etc.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 152152
153
Nomination and Governance Committee Report
continued
Our Board composition and how we plan for succession
The composition of the Board is kept under constant review by the Committee. As at 31 December 2023, the Board comprised 11
Directors: The Chair (who was independent on appointment), two Executive Directors, and eight independent Non-Executive Directors –
see page 118.
The Committee carefully considers the independence, composition and balance of skills and knowledge of the Board. As a result,
the requirement to refresh Board and committee memberships in an orderly manner is continually monitored so as to maintain the
continuity of Board process and the strength of personal interaction which underlies the effectiveness of the Board.
Our Board has a
broad range of
skills and experience
which it uses to
bring independent
judgement to bear
on issues of strategy,
performance,
risk management,
resources and
standards of conduct
which are integral
to the success of
the Group.
Balance of skills,
knowledge and
experience
Board
diversity
Board
composition
and succession
planning
Non-Executive
tenure and
independence
Annual Board
evaluation and
individual
director appraisals
Time
committment
and external
appointments
Tenure and independence
The table below details the length of service of the Chair and each of the current Directors. It illustrates the balance between experience
and bringing in fresh perspective, as well as the independence of each of the Non-Executive Directors.
Board tenure
Director
Non-Executive Directors
Mike Rogers (Chair)
Justine Roberts
Andy Crossley
Michael Brierley
Karen Green
JP Rangaswami
Evelyn Bourke
Bill Roberts
Fiona Muldoon
Executive Directors
Milena Mondini de Focatiis
Geraint Jones
Date of appointment
27 April 2023
17 June 2016
27 February 2018
5 October 2018
14 December 2018
29 April 2020
30 April 2021
11 June 2021
2 October 2023
Length of service as a Director
as at 31 December 2023
Independence
8 months
7 years 6 months
5 years 10 months
5 years 3 months
5 years
3 years 8 months
2 years 8 months
2 years 6 months
3 months
On appointment
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Director – 11 August 2020
CEO – 1 January 2021
13 August 2014
3 years 4 months
Executive Director
9 years 4 months
Executive Director
The Chair, Senior Independent Director and independent Non-Executive Directors are currently appointed for fixed periods of three
years, subject to election by shareholders. The initial three-year period may be extended for two further three-year periods subject
to performance review and annual re-election by shareholders. JP Rangaswami’s term of appointment as Non-Executive Director was
extended by a further three-year period during the year, subject to annual re-election by shareholders. Letters of appointment may be
inspected at the Company’s registered office or can be obtained on request from the Company Secretary.
The tenure of the previous Group Board Chair, Annette Court, came to an end at the 2023 AGM held on 27 April 2023. Annette had no
involvement in the recruitment of her successor, Mike Rogers, as Chair. An explanation as to why Annette’s tenure extended beyond
the nine years recommended by the Code is provided on page 125. Mike Rogers appointment as Chair of the Board became effective
following the AGM held on 27 April 2023. On appointment, the Board considered that Mike met the independence criteria set out in
provisions 9 and 10 of the Code. The Chair’s biography can be found on page 118.
The independence of each Non-Executive Director has been assessed during the year, in line with the independence criteria contained
within provision 10 of the Code. The Board has identified on page 152 which Directors it considers to be independent. The Board
considered all the Non-Executive Directors to be independent during the year. For the year ended 31 December 2023, 80% of the Board,
excluding the Chair, were considered independent Non-Executive Directors. The number of independent Non-Executive Directors meets
the requirements set out under provision 11 of the Code which requires that at least half of the Board, excluding the Chair, should be
Non-Executive Directors whom the Board considers to be independent.
Balance of skills, knowledge and experience
The Directors have a broad range of skills, knowledge and experience and can bring independent judgement to bear on issues of strategy,
performance, risk management, resources and standards of conduct which are integral to the success of the Group.
The Committee understands that a wide range of complementary skills on the Board will assist in the meeting of Board objectives and
the delivery of Company strategy. The Committee regularly reviews the Board skills matrix, particularly in the context of succession
planning and skills that are potentially lost at the end of a Director’s tenure on the Board. The current skills and experience on the
Board are outlined below and an explanation regarding how this feeds into succession planning follows later in this report.
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Mike Rogers (Chair)
Justine Roberts
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Karen Green
JP Rangaswami
Evelyn Bourke
Bill Roberts
Fiona Muldoon
Executive Directors
Milena Mondini de Focatiis
Geraint Jones
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
154154
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Nomination and Governance Committee Report
continued
Time commitment and external appointments
On appointment, all Directors are advised of, and requested to make, the necessary time commitment required to discharge their
responsibilities effectively. This time commitment is also outlined in the letters of appointment issued to the Chair and Non-Executive
Directors. When making new appointments, the Committee takes into account other demands on the Directors’ time. Prior to
appointment, significant commitments are disclosed by Directors to the Committee and the Board.
As part of the annual performance evaluation each Director is appraised on their time commitment dedicated to the Company.
The Committee also reviews the time commitment required of all Non-Executive Directors at least annually to consider whether the
guidance on time commitment of certain roles needs to be extended due to market or responsibility changes. The Board is satisfied that
all Directors have dedicated the required amount of time to the Company to effectively fulfil their roles, and that the Company has given
the Non-Executive Directors sufficient time to perform the duties required of them.
As well as considering the demands of a Director’s time upon appointment, as required under provision 15 of the Code, there is in
place a formal procedure for the approval of additional external appointments for Directors through the Committee and the Board.
The Committee and the Board are satisfied that the external commitments of all the Non-Executive Directors do not conflict with their
duties and commitments as Directors of the Company.
Overall assessment of composition
The Board, through ongoing assessment and annual performance review, remains satisfied that it has the appropriate balance of skills,
experience, independence and knowledge of the Group to enable it and its committees to discharge their duties and responsibilities
effectively, as required by the Code. In addition, the Directors are aware of their legal duties under s172 of the Companies Act 2006 to act
in a way they consider, in good faith, will be most likely to promote the success of the Company for its shareholders, as well as considering
the interests of wider stakeholders. Further details of how the Board fulfils its duty in this regard are outlined on page 87.
Board and senior management diversity and inclusion
The Listing Rules and Disclosure Guidance and Transparency Rules were amended to include new disclosure requirements for listed
companies for financial years starting on or after 1 April 2022. As required under the amended requirements, a table setting out gender
and ethnicity diversity at Board and senior management level is included on page 156. The Board diversity targets, which are in-line with
the targets set by the FTSE Women Leader’s Review and the Parker Review, are: at least 40% of the board are women; at least one of
the senior board positions (Chair, SID, CEO and CFO) is held by a woman; and at least one member of the Board is from a minority ethnic
background. As set out below, the Committee is content that Admiral meets the targets set out in the Listing Rules and Disclosure
Guidance and Transparency Rules 9.8.6(9)(a).
Gender diversity
Diversity and inclusion and the variety of perspectives that it brings has been proven in studies to increase innovation and creativity, and,
as a result, improves performance. It also has other positive impacts, such as providing greater awareness, widens the talent pool and
challenges the views or practices that may have become embedded over time. Admiral depends on all of the above, which are enhanced
through having a diverse workforce, to successfully implement its business strategy.
During the year, the Committee reviewed the Board Diversity and Inclusion Policy and discussed the appropriateness of the measurable
targets to increase diversity and inclusion at Board, Subsidiary board and senior management level. The wording of our policy has been
updated to increase the breadth of diversity we aim to see in our business, this includes wording explicitly referencing additional diversity
aspects such as “ethnicity, sexual orientation, disability and socio-economic background (in addition to the aspects of age, gender
or educational and professional backgrounds)” and “approach, skills and experience, race, age, gender, educational and professional
background and other relevant personal attributes”. The Committee seeks to ensure that a clear recruitment strategy for Board and
senior management appointments is in place and is aligned to this policy.
Measures that are covered under the Policy, including progress updates against each, include:
(i)
Having one member of the senior executive team who is responsible and accountable for gender diversity and inclusion at Group
level. Cristina Nestares (EUI CEO) is the accountable executive for gender diversity
(ii) Setting internal targets for gender diversity in senior management. Progress against the Group’s target of 40% of women in senior
management by 2023 is detailed below
(iii) Publishing progress annually against these targets in reports on the Group’s website. Progress updates on the UK business’ progress
against the HM Treasury’s Women in Finance Charter commitments are provided on an annual basis on the Group’s website
(iv) Linking the pay of the EUI CEO to the progress made against internal targets on gender diversity. The Remuneration Committee has
also approved the linkage of progress against the Women in Finance target within the non-financial performance measures of the EUI
CEO, Cristina Nestares.
Women on the Board represented five (46%) of its 11 Director membership as at 31 December 2023, compared with six (55%) as
at 31 December 2022. Admiral continues to be one of only a few FTSE 100 companies where the Board positions of CEO and Senior
Independent Director are held by women, demonstrating Admiral’s continued strong support for the progression of women in senior
leadership roles. Official data published by the FTSE Women Leaders (succeeding the Women on Boards Report and Hampton Alexander
Review), issued in February 2023, reported that the percentage of women on FTSE 100 Boards was 40.5% improving from 39.1% in 2022,
this demonstrates Admiral’s outperformance when compared with the average of the FTSE 100.
Board diversity
Nationality
Age
Ethnicity
Gender
British 7
Non-British 4
40s 2
50s 5
60s 3
70s 1
White British or other
White (including white
minority groups) 10
Asian/Asian British 1
Male 6
Female 5
As a result of the continued progress to balance gender diversity at Board level and to align with the Women in Finance Charter’s aim of
increasing female representation at the UK senior executive level to 40% by the end of 2023, and the FTSE Women Leaders target of
40% representation by 2025, the Committee has aligned the annual target of women in senior management positions at 40%. The aim
is to achieve this level of gender diversity at an aggregate level across the subsidiary boards too. As at 31 December 2023, women
represented 33% of all of the subsidiary board appointments. Focus will continue to improve gender diversity at this level during 2024.
Female representation was 40% of our Senior Executives (Executive Committee equivalent) and 34.4% of their direct reports. Admiral is
working to ensure it continues to achieve the 40% target by the end of 2025. As at 31 December 2023, the gender diversity split across
the Admiral Group was 50% female / 49% male. The remaining 1% included non-binary and other genders, and colleagues who’d prefer
not to say.
Ethnic diversity
The Committee continues to monitor the requirements of The Parker Review’s report on ethnic diversity in the context of the
composition of its Board and the new reporting requirements for senior management. It also monitors the initiatives that are being
implemented across the Group to increase diversity, along with consideration as to how measures to develop a diverse pipeline of talent
for Board and senior management appointments should be developed and monitored. The Board includes one Director from an ethnic
minority background, which meets one of The Parker Review’s key recommendations for FTSE 100 companies, as well as Listing Rules
and Disclosure Guidance and Transparency Rule 9.8.6(9)(a). Further information on how the Group is developing a pipeline of ethnically
diverse candidates is outlined below.
The Group remains strongly supportive of the principle of boardroom diversity, of which gender and ethnicity are important, but not the
only, aspects. What is also important is diversity of thought, experience and approach and each new appointment must complement
what already exists around the Board table.
Ethnic diversity amongst senior management and the wider workforce is something that Admiral continued to focus on throughout
2023. Admiral produced its first ethnicity pay gap report in the UK during the year, further demonstrating its commitment to ethnic
diversity in the workplace. Whilst the Committee recognises that the workforce is not always comfortable with voluntarily sharing such
personal information, there have been initiatives introduced to encourage more people to make such voluntary disclosures. As a result,
we have seen an increase this year to 84% disclosure in the UK. As set out in the table below, the percentage of ethnic diversity at senior
management levels is 3%. The Committee has discussed The Parker Review recommendations to implement a target for ethnic diversity
representation at senior management level within the Group by 2027 and will be updating shareholders in this regard in due course.
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Nomination and Governance Committee Report
continued
Activity to improve diversity and inclusion in the talent pipeline
Examples of the work Admiral has undertaken to improve its diversity pipeline during the year are set out below, for further information
see pages 62 and 132.
1
2
3
Admiral’s recruitment strategy
aims to increase the number of
candidates from ethnically diverse
backgrounds and women onto
shortlists for leadership roles.
The ‘Get Discovered’ programme
focuses on developing talented
women within the Group to become
the leaders of tomorrow.
Admiral is designing a talent
and development program, in
partnership with McKinsey which
focuses on finding talented
employees from ethnically diverse
backgrounds at different levels and
supporting these employees into
leadership roles.
Admiral has signed several pledges
such as the Menopause Pledge,
Endometriosis Friendly Employer,
Neurodiversity Friendly Employer
and continued a commitment to the
Race at Work Charter by signing up
to their extended initiatives.
4
5
6
Admiral has completed its third year
of the Admiral Aspire Programme,
an internship aimed at offering
students from ethnically diverse
backgrounds and Women in STEM
(Science, Technology, Engineering
and Mathematics) valuable work
experience over 12 weeks.
Admiral has partnered with a global
diversity and talent consultancy
called Green Park to undertake an
in-depth ‘Culture and Inclusion’
audit, focused on Equality, Diversity
and Inclusion (EDI).
Admiral’s focus on culture and
inclusion was demonstrated by
winning the best UK Company
at the 2023 Best Companies
awards, being named the 6th best
super large workplace (1,001+
employees) in the UK by the Great
Place To Work® Institute, the global
authority on workplace culture.
Admiral also placed 3rd in the UK’s
Best Workplaces for Women award
in 2023.
Admiral remains committed to providing equal opportunities, eliminating discrimination, and encouraging diversity amongst its
employees both in the UK and overseas. A breakdown of the gender and ethnicity of Directors and senior employees at the end of the
financial year together with details of the Group’s Equality, Diversity and Dignity at Work Policy are set out in the tables below.
Gender
Men
Women
Other Category
Not specified/prefer not to say
Number of Board
members
6
5
–
–
Percentage of the
Board
55%
45%
–
–
Number of senior
positions on
the Board
(CEO, CFO, SID,
and Chair)
2
2
–
–
Number of senior
positions on
the Board
(CEO, CFO, SID,
and Chair)
Number in executive
management
48
26
–
–
Percentage
of executive
management
65%
35%
–
–
Number in executive
management
Percentage
of executive
management
Ethnicity
White British or other White (including
minority white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other Ethnic group, including Arab
Not specified/prefer not to say
Number of Board
members
Percentage of the
Board
10
–
1
–
–
–
91%
–
9%
–
–
–
4
–
–
–
–
–
72
–
2
–
–
–
97%
–
3%
–
–
–
Succession planning
The Committee oversees the succession planning strategy and appointment procedure for new Director’s on behalf of the Board.
The Committee reviews those skills present on the Board in order to understand where there are strengths and potential weaknesses,
and where there may be the opportunity to bring in complementary skills to improve the functionality and depth of experience
of the Board. These requirements are then fed through to an independent consultant who will seek out candidates matching the
skillset provided and draw up a diverse shortlist of candidates for the Committee to review. The Committee will also consider senior
management appointments on behalf of the Board and consider where these appointments fit in with established Board succession
planning strategy. Any new recruitment process for the Board is based on merit and assessed against objective criteria. The Committee
considers diversity in all of its forms as a central consideration to this process. Further information around Admiral Board’s recruitment
process can be found in the appointment process for Fiona Muldoon set out on page 149.
Non-Executive Directors
Non-Executive Director succession planning is split into short, medium and longer-term horizons to ensure that all eventualities, as far as
possible, are planned for.
Horizon: Emergency cover
Description
There are emergency succession plans to ensure that there is sufficient short-term cover or a plan in place for key roles of the Board,
namely, the Chair, the SID, committee Chairs and, in turn, Committee members if a Committee Chair’s absence is longer than expected.
These plans take account of any requirements under the respective Committee’s Terms of Reference, as well as any Code requirements.
Horizon: Medium term (3–6 year tenure)
Description
The Committee’s medium-term succession planning involves considering the replacement of Non-Executive Directors over time to
refresh the Board. The Committee considers (i) each Director’s period of tenure and aims to have staggered departure dates, (ii) the
skills and experience gaps that will be created as each Director’s tenure comes to an end, and (iii) the diversity gaps that might also
become present.
Horizon: Longer term (6–9 year tenure)
Description
The Committee’s longer-term succession planning involves the consideration of the skills, experience, and diversity that the Board
will need over the longer-term, taking into account the Group’s strategy and the main trends and factors that are likely to affect the
Group’s long-term success.
The regular review of these succession plans provides an opportunity for the Committee to discuss the insights provided by the data
in order to inform the desired mix of skills, experience and diversity that the Board needs now and in the future, in the context of the
Group’s strategic objectives.
Executive Directors and senior management
The responsibility for making appointments within senior management rests with the CEO, with direction from the Committee.
Talent management continues to be a key area of focus for the Committee to ensure that there is a diverse pipeline of talent for senior
management and Executive Director succession.
During 2023, the Committee considered progress in improving talent management and succession planning within the Group.
The Committee strongly believes that an effective internal talent management process will ensure the preservation of Admiral’s unique
culture as far as possible. During the year, the Committee received an update on the succession planning framework which is used across
the Group. This framework encourages more structured thinking about opportunities across departments and internationally, even in
circumstances where this is a well embedded practice already within Admiral. Discussions on success profiles have also helped to visualise
how success will look in the future for the critical senior management roles, whilst also providing future talent with visibility on what
future development might look like for them.
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Nomination and Governance Committee Report
continued
The review of succession planning undertaken during the year concluded that there was a healthy pipeline of talent across the Group,
with no immediate risk in respect of leadership continuity, and the right level of talent to execute our ‘internally grown leaders’ strategy.
The Group continues to work to ensure that all areas of the business are working to achieve Admiral’s commitment to diversity at
all levels in all its forms. The Committee will continue to monitor levels of diversity across the business through 2024 and will work
to improve the ethnic diversity of entities located in geographies where such diversity should be better represented. For further
information as to what the Company is doing in relation to diversity see page pages 62 and 154.
The Committee remains satisfied that effective succession plans for Directors and senior management are in place to ensure the
continued ability of the Group to implement strategy and compete effectively in the markets in which it operates.
Governance
The Committee also regularly reviews the Group’s governance arrangements, including any changes to the subsidiary board or
committee structure, changes to the UK Corporate Governance Code and FCA Listing Rules, as well as oversight of the regulatory
applications made under the Senior Managers Regime.
Committee effectiveness review
The Committee’s 2023 annual review was conducted by way of a self-assessment, overseen by the Company Secretary, this involved
completion of a wide-ranging questionnaire. The questionnaire asked a set of questions designed to provide objective assessment of the
Committee’s performance, including its effectiveness in monitoring Board composition, consideration of Executive and Non-Executive
Director succession, overseeing talent management, senior management succession planning and developing directors’ knowledge.
The Committee discussed the output from this performance review at its meeting in December 2023 and concluded that, overall,
the Committee had performed effectively during the year under review. Areas of focus for the Committee in 2024 were identified,
this included ensuring effective governance around Admiral’s subsidiary board structure and further oversight in the areas of talent
management and executive succession planning.
Evaluation of the effectiveness of the Board, Board committees and individual Directors
How we assess our Board’s effectiveness
Each year Admiral conducts an evaluation to assess the skills, experience, independence and knowledge of the Board to confirm
it has been able to discharge its duties and responsibilities effectively. The composition and diversity of the Board and its
committees and how well the Directors are working together is considered, as well as the individual performance of the Directors
and the Chair. In line with the provisions of the Code, Admiral undertakes an externally facilitated evaluation every three years.
In the two intervening years, internal reviews of the Board, its committees and individual Directors are carried out. This year the
process was facilitated internally by way of questionnaire led by the Chair in conjunction with the Company Secretary. The 2022
Board evaluation was conducted by way of external evaluation by Bvalco Ltd. Progress against the Board objectives that stemmed
from the 2022 Board evaluation process are set out opposite.
2020
Internal Board
Evaluation
2021
Internal Board
Evaluation
2022
External Board
Evaluation
2023
Internal Board
Evaluation
Progress against 2022 Board evaluation recommendations
In December 2022, the Board undertook an externally facilitated Board, Board Committee and individual Director evaluation of its
performance for the year ended 31 December 2022, carried out by Bvalco Ltd. Bvalco Ltd had no other connections with the Group or its
Directors. The results of the evaluation were discussed at the Board meeting in January 2023, they demonstrated a Board that appeared
to be functioning well, with some identified opportunities for improvement. The recommendations from the Board evaluation fed into
the Board’s agreed objectives for 2023 and were detailed in the 2022 Annual Report as “Principal areas of focus for the Board in 2023”.
At the June 2023 Board meeting, the Board received a six-month update on progress against these agreed areas for focus. The Board
discussed the 2022 Board evaluation recommendations at their meeting in December 2023 and agreed good progress had been made
against all recommendations during the year. This progress is set out in the table below. It was agreed that, where appropriate, the Board
would continue to focus on these recommendations during 2024 to ensure these were fully implemented and embedded.
Areas of focus during 2023
Progress update
To review the quality of information
presented to the Board to ensure
improved decision-making processes.
Review the balance of allocated
Board agenda time between strategy
and governance/regulatory matters.
To ensure Non-Executive Directors have
opportunities to meet together outside
of scheduled Board time and also with
executive management.
Review the value of Board strategy
sessions and ensure the Board has early
involvement in the development of
strategic proposals.
The overall quality of information presented to the Board in terms of clarity and
context continued to improve throughout the year enabling improved Board
discussions and effective challenge around key items of business resulting in better
decision-making processes.
Agenda planners for the Board and Board committees were reviewed and redrafted
during the year to ensure that the balance between strategic and governance/
regulatory matters was appropriate. Terms of reference were reviewed and updated
to allow for further delegation of non-strategic matters to Board committees and
subsidiary boards where appropriate.
Non-Executive Directors have the opportunity to meet with the CEO following each
Board meeting and also have a separate Non-Executive Director only debrief session.
Board members and other senior management are invited to attend Board dinners,
this allows for informal conversations to take place outside of normal Board activities.
A Non-Executive Director session on mobility took place during the year. Opportunities
for further engagement continue to be considered.
The October Board strategy session was well received with Directors having the
opportunity for early involvement in the strategic planning process along with the
option to contribute to the development of the specific proposals. The Board provided
constructive feedback on individual presentations and topics. The format of Board
strategy sessions will continue to be reviewed and updated to ensure alignment with
the requirements of the business.
Ensure required metrics and milestones
are present to allow the Board to hold
executives to account on strategic
implementation.
The Capital Allocation Framework alongside budgets and the five-year plan were
presented to the Board and discussed in detail during the year to enable the
measurement of the implementation of strategy against plan and ensure management
was held to account.
Consideration of the value of an
overarching approach to ESG initiatives.
A new Group Head of Sustainability was recruited during the year to ensure the
co-ordination of ESG initiatives. Significant focus was given to ESG through strategy
discussions, reporting and risk management which will continue throughout 2024.
The executive team should be canvased
on key skills required when considering
Board appointments.
Executive management’s views had been canvassed in respect of the key skills required
when considering all new Group Non-Executive Director appointments and senior
management hires during the year.
Review how hybrid meeting arrangements
could be improved to allow the full
participation of all participants in
meetings.
Scheduled Board and Board committee meetings generally take place in person,
therefore it is rare for Board members to attend virtually. However, where this is
necessary, for example where ad hoc, late notice meetings are required, updates to
technology allow for effective attendance and participation where a member cannot
attend in person. Where Board members were unable to attend meetings, they were
able to submit questions and comments in advance to the Chair.
Contributors to Board agenda items to
be reminded of the guidelines as to form,
content and paper submission deadlines.
The Company Secretary and his team continued to drive improvements in the content
and delivery of Board papers throughout the year. Improvements in the Board and
committee meeting preparation process were acknowledged by the Board.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 160160
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Nomination and Governance Committee Report
continued
Audit Committee Report
2023 Board evaluation
Having carried out an external Board evaluation in 2022 in accordance with the Code requirement that FTSE 350 companies should
carry out an externally facilitated evaluation of the Board at least every three years, the 2023 Board evaluation process was facilitated
internally, led by the Chair with the support of the Company Secretary. The evaluation used a questionnaire developed by the external
consultancy Independent Audit, who has no other connection with the Group or its Directors. The online questionnaire was used to
evaluate the Board’s performance and dynamics throughout 2023 and was sent to all Board members as well as regular Board attendees
in November 2023, it considered:
• Board dynamics and the interaction between the Chair, Non-Executive Directors and executive management to achieve the
Board’s objectives
• Leadership and succession planning, including the oversight of the Group’s processes for managing, developing and retaining talent
• Understanding by the Board of the prevailing culture within the Group
• Quality, timeliness of delivery and presentation of Board papers and Board support
• Time management and operational performance of Board and Committee meetings
• Risk management and the effectiveness of the Board in considering the Group’s risk management framework and internal controls
• The effectiveness of the Board’s strategic and operational oversight
• Priorities for change that would enhance Board performance.
The results of the evaluation were collated by the Company Secretary and discussed at the December 2023 Board meeting. The overall
impression from the evaluation process was that the Admiral Board and its committees continued to be performing strongly and
function effectively. The Board was open and inclusive and supported the culture of the Admiral Group with some opportunities for
improvement identified. A summary of the main recommendations resulting from the 2023 Board evaluation process are set out in the
table below. Recommendations have fed into the Board’s agreed objectives for 2024 and are detailed under the ‘Principal areas of focus
for the Board in 2024’ section on page 127.
Outcomes and areas of focus for 2024
Culture
ESG
Control framework
Board reporting
Informal Board interactions
To improve understanding around the impact of hybrid working on the Group’s culture
and the associated risks.
Focus on environmental, social and governance considerations, including ensuring the
Board has the correct information to monitor ESG performance, and the setting of ESG
targets that reflect the Group’s values.
Review of control framework to ensure appropriate focus on compliance and changes
to the regulatory risk outlook and associated risks.
To ensure standard reporting templates are rolled out across all committees and
subsidiary Boards for consistency of approach.
Consideration of further opportunities for informal Board and management interactions
to ensure management was able to benefit from Non-Executive Director insight and
experience. Group Board Non-Executive Directors to have further engagement with
subsidiary Board Non-Executive Director’s to ensure sharing of knowledge and experience.
2023 Board Committee effectiveness reviews
Further information on each of the Board Committee’s evaluations of their own performance can be found within the respective Board
Committee reports.
Individual Director evaluation
The performance of the CFO is appraised annually by the CEO, to whom he reports. The Chair, taking into account the views of the other
Directors, reviews the performance of the CEO. The Chair also carries out the performance assessments of each of the Non-Executive
Directors. Each of the Directors were determined to have continued to effectively contribute to the work of the Board in 2023.
The performance of the Chair is reviewed by the Board led by the Senior Independent Director. The latest review took place in December
2023 and was reported to the December Board. The Senior Independent Director considered and discussed with the Chair the comments
and feedback that had been received from the Directors as part of the Chair’s evaluation questionnaire and was able to confirm that the
performance of the Chair from his time of appointment in April 2023 was effective.
Overseeing
THE IMPLEMENTATION
OF IFRS 17
Dear Shareholder,
I am pleased to set out
in this report an update
on the main activities of
the Committee in 2023.
Areas of focus in the
reporting period
The Committee considered the economic
backdrop facing the Group, including
the geopolitical backdrop and supply
chain challenges. It gave particular
consideration to current UK inflationary
pressures and the impact on the key
accounting and actuarial judgements
made by management in relation to the
valuation of insurance contract liabilities
and credit loss provisions, as well as the
potential impact on going concern and
viability assumptions. The Committee
also dedicated a significant amount of
time to understanding and assessing the
impact of the new IFRS 17 (Insurance
Contracts) accounting standard on the
Group’s financial results and ensuring
appropriate disclosure in the financial
statements. The Committee monitored
the continued effectiveness of the
Group’s key internal controls in a hybrid
working environment, in particular given
the implementation of various new
important systems.
Significant financial reporting issues
The setting of insurance contract
liabilities in accordance with the Group’s
agreed reserving methodology is a key
accounting judgement in the Group’s
financial statements (as set out in
note 2 to the financial statements),
and the Committee continues to
place considerable focus on this area.
The Committee challenged the key
reserving assumptions and judgements,
movements, emerging trends and
analysis of uncertainties underlying
the analysis of outstanding claims for
the UK Car Insurance business proposed
by management alongside that of the
Group’s external independent actuarial
advisers. In 2023, this included the
impact of inflation on the claims reserves
as set out in more detail below, future
scenarios for the Ogden discount rate
and ensuring the accuracy of claims data
following the transition to the new claims
management system. It also focused on
management’s selection of a confidence
level for the IFRS 17 risk adjustment held
within the liability for incurred claims.
The Committee also received reports on
the claims reserving processes performed
for insurance businesses other than UK
Car and recommended to the Board the
aggregate claims reserves for inclusion
in the Group’s financial statements.
In addition to claims reserving, the
Committee spent time reviewing
management’s support for a number
of other significant financial reporting
matters including the expected credit
loss provision held in relation to the Loans
receivable balance held by the Group’s
consumer lending business Admiral
Money, other potential provisions and
contingent liabilities, and the results
of impairment testing performed in
relation to the Group Parent Company’s
investments in Group subsidiaries.
“The Committee
dedicated a significant
amount of time to
understanding and
assessing the impact
of IFRS 17 on the
Group’s results.”
Karen Green
Chair of the Audit Committee
Eight
meetings1
in 2023
Members Attendance
Member
Karen Green (Chair)
Andy Crossley2
Michael Brierley
Fiona Muldoon
1 Based on scheduled meetings.
2 Andy Crossley missed one meeting due
to a pre-existing arrangement.
Attendance
8/8
7/8
8/8
2/2
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 162162
Audit Committee Report
continued
IFRS 17 (Insurance Contracts)
The Group successfully implemented
the new IFRS 17 (Insurance Contracts)
accounting standard ahead of the
1 January 2023 implementation date.
Given the fundamental changes to
the Group’s financial statements, the
Committee dedicated a significant
amount of time to understanding
and assessing the impact of the
standard on the Group’s financial
results. The Committee reviewed
and challenged key judgements and
accounting considerations, as well as
the financial statement disclosures on
the impact of the new standard required
by IAS 8 (Accounting Policies, Changes
in Accounting Estimates and Errors)
and related accounting disclosures.
Corporate governance and
reporting changes
The Committee was kept informed
of the Group’s engagement with the
Department for Business, Energy &
Industrial Strategy (BEIS) consultation on
‘Restoring trust in audit and corporate
governance: proposals on reforms’
during 2023 including the proposed
changes to the UK Corporate Governance
Code and will continue to monitor
developments in this area. The Committee
also oversaw, in conjunction with the
Group Risk Committee, the Group’s
progress in further aligning reporting
with the Taskforce on Climate-related
Financial Disclosures (TCFD) published
recommendations. The Committee
received a report from the Group’s
external auditor on TCFD and other
climate-related reporting and trends in
the market.
Internal controls
The Committee has continued to review
the effectiveness of the internal control
systems across the Group, in particular
given the implementation of various
system changes, including areas of
potential weakness highlighted through
audit and other assurance reports.
I hope you find the above summary, and
the more detailed report, both useful
and informative.
Karen Green
Chair of the Audit Committee
6 March 2024
How the Committee operates
Membership
Membership of the Committee at the
end of the year was: Karen Green (Chair),
Andy Crossley, Michael Brierley and
Fiona Muldoon.
Two of the Committee’s members are
Fellows of the Institute of Chartered
Accountants in England and Wales,
and one is a Fellow of the Institute
of Chartered Accountants in Ireland.
Given the insurance and financial services
experience of the members of the
Committee, the Board considers that they
have a broad range of skills, experience
and knowledge of the insurance and
financial services sector, which represents
the principal market in which the Group
operates, and also the area of consumer
lending in which the Group has a growing
business, such that they are able to
effectively analyse, challenge and debate
the issues that fall within the Committee’s
remit. The Board is satisfied that the
Committee as a whole has competence
relevant to the sectors in which the Group
operates and further considers that a
number of its members have recent and
relevant financial experience.
Attendance at meetings
The Company Secretary acts as Secretary
to the Committee. The Group Chief
Financial Officer, Group Chief Risk Officer,
Director of Group Finance & Chief
Actuary and Group Head of Internal Audit
routinely attend all Committee meetings
(other than certain private sessions).
Other individuals, such as the Chair of the
Board, Chief Executive Officer, Head of
Group Compliance, and representatives
of different parts of the Group, may be
invited to attend all or part of any meeting
as and when appropriate. The Chairs of
the Audit Committees of the Group’s
European insurer and US subsidiary also
attend at least one meeting each year to
present on their activities.
The external auditor was invited to
attend all of the Committee’s meetings
held in 2023, except in respect of those
agenda items when its own performance,
reappointment and fees were reviewed
and discussed, or where any other conflict
was identified.
Meetings held
The Committee meets at least six times
per year and has an agenda planner linked
to events in the Company’s financial
calendar and other significant issues that
arise throughout the year, which fall for
consideration by the Committee under its
remit. The Chair of the Audit Committee
agrees the agenda for each meeting.
There were eight scheduled Committee
meetings held during the year (with
two of these meetings focused on
reserving matters in conjunction with
the half year and full year reporting and
another on the approval of the Group’s
Solvency and Financial Condition Report).
Two additional meetings were held during
the year, focused on various matters
relevant to the Committee’s remit.
Details of member attendance at the
Committee meetings held during the year
are outlined on page 162.
How the Committee
keeps up to date
The Committee is kept up to date with
changes to Accounting Standards and
relevant developments in financial
reporting, Company law, and the
various regulatory frameworks through
presentations from the Group’s external
auditor, Group Chief Financial Officer,
Group Chief Actuary and Group Company
Secretary. In addition, all members
attend relevant seminars, briefings and
conferences provided by external bodies.
The Committee also receives tailored
reports from management and the
Group’s external auditors from time to
time. Topics included the Task Force on
TCFD and other climate-related reporting
proposed changes to the UK Corporate
Governance Code in 2023.
The Terms of Reference of the audit
Committee include all the matters
required under the Code and are reviewed
annually by the Committee.
The Chair of the Audit Committee meets
with the Group Head of Internal Audit,
Group Chief Financial Officer, Director
of Group Finance & Chief Actuary, Head
of Reserving, the external auditors and
UK Head of People Services (who has
overall responsibility for coordinating the
Group’s whistleblowing arrangements) on
a regular basis. The Committee also held
(i) two private meetings with the Group
Head of Internal Audit, (ii) one private
meeting with the Chief Financial Officer,
and (iii) two private meetings with the
external auditor during the year.
163
Role and responsibilities
of the Committee
The Audit Committee’s primary
responsibilities are to:
Financial reporting
• Monitor the integrity of the Group’s
financial statements and any
formal announcement relating to
the Group’s financial performance,
including the Group’s Solvency and
Financial Condition Report, reviewing
any significant financial reporting
judgements which they contain,
including that of the Group’s Going
concern status
• Provide advice (where requested by the
Board) on whether the Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable, and
provides the information necessary
for shareholders to assess the Group’s
position and performance, business
model and strategy
• Oversee the Group Risk Committee’s
work on climate-related
financial disclosures.
Internal controls and internal audit
• Keep under review the effectiveness
of the Company’s internal financial
controls, internal control and risk
management systems
• Monitor and assess the role and
effectiveness of the Group’s internal
audit functions in the context of the
Group’s overall internal control and risk
management systems.
External audit
• Make recommendations to the Board,
to be put to shareholders for their
approval at the Annual General Meeting
(AGM), in relation to the appointment,
reappointment and removal of the
Group’s external auditor
• Approve the remuneration and
terms of engagement of the Group’s
external auditor
• Review and monitor the Group external
auditor’s independence and objectivity,
and the effectiveness of the audit
process, taking into consideration
relevant UK professional and
regulatory requirements
• Review the policy on the engagement
• Updates from the Group’s consumer
of the Group external auditor to provide
non-audit services, ensuring that there
is prior approval of non-audit services,
considering the impact this may have
on independence and taking into
account the relevant ethical guidance
in this regard.
Other
• Oversee the Group’s procedures
for handling allegations
from whistleblowers
• Report to the Board on how it has
discharged its responsibilities.
Summary of key activities
during 2023
During the year the Committee reviewed
the following:
Financial reporting
• The Group Annual Report and interim
results announcement, including key
accounting judgements and disclosures
• Parent Company financial statements
(both annual and interim), and related
key accounting judgements and
disclosures, including impairment
testing of the Parent Company’s
investments in subsidiaries
• Reports from the Chair of the Group
Risk Committee on the principal
risks faced by the Group and the
work undertaken by the Group
Risk Committee to ensure risk is
appropriately managed
• Reports from the Chair of the Admiral
Insurance Company Limited (AICL) and
Admiral Insurance (Gibraltar) Limited
(AIGL) Audit Committees on the
financial statements for AICL and AIGL
at HY 2023, including key accounting
judgements and disclosures
• The Group Solvency and Financial
Condition Report, including disclosures
specific to AICL and AIGL
• Presentations from the Group’s
actuarial reserving team and
independent external actuarial
experts to assist the Committee in
concluding on the adequacy of the
Group’s IFRS reserves and Solvency II
technical provisions
• Information supporting the Group’s
Going concern assumption
• Information prepared by management
demonstrating risk transfer within
reinsurance contracts in line
with the requirements of IFRS 17
(Insurance Contracts)
lending business on the IFRS 9
(Financial Instruments) expected credit
loss provision
• Reports assessing the accounting and
disclosure impacts of risk events arising
across the Group
• Information supporting the accounting
treatment of a historic Italian
tax matter
• The financial statement disclosures
on the impact of the new standard
required by IAS 8 (Accounting Policies,
Changes in Accounting Estimates
and Errors) (further detail on the
Committee’s work in relation to IFRS 17
is set out below)
• The Group’s disclosures relating
to climate risk, including those
disclosures required by the TCFD
and CFD, and received a report from
the external auditor on regulatory
developments in climate-related
disclosure requirements.
Internal audit and internal controls
• Reports from the internal audit
functions within the Group on the
effectiveness of the Group’s risk
management and internal control
procedures and progress against the
2023 Audit Plan, approval of changes
requested to the 2023 Plan and the
Audit Plan for 2024 including resourcing
levels, details of key audit findings,
and actions taken by management to
manage and reduce the impact of the
risks identified
• Performance and effectiveness of the
Internal Audit function
• A summary of the key findings from all
reports from Internal Audit, including
management responses to the
conclusions set out in the reports
• Reports on the controls in place,
including significant breaches or
incidents, across the Group and its
overseas subsidiaries
• European insurance internal audit
updates, including an update from the
Chair of the European Audit Committee
(of the Group’s subsidiary Admiral
Europe Compañía de Seguros, S.A.,
(AECS) which underwrites the Group’s
European insurance businesses) on the
activities of that Committee
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 164164
Audit Committee Report
continued
• US insurance internal audit updates,
including an update from the Chair of
the Audit Committee of the Group’s US
subsidiary Elephant, on the activities of
that Committee
• Reports on the output of the
assessments of adherence to and
embedding of the Group Minimum
Control Standards’ framework and
planned developments in relation to
that framework
• Reports on the various improvements
underway to the Group’s control
environment including regular updates
on work to strengthen the Group’s IT
access control management and plans
to further enhance the Group’s Fraud
and Financial Crime Framework.
External audit
• Reports from the external auditor
highlighting system and control
recommendations, key accounting and
audit issues and conclusions on the half
year and full year reporting
• Confirmation of the external
auditor’s independence
• Reports from Deloitte, the external
auditor, on their proposed audit scope
and plan
• Proposed external audit fee and the
drivers of the year-on-year increase.
Other
• Updates on tax matters supporting the
Group Tax Strategy which is available at
www.admiralgroup.co.uk
• Progress updates on the BEIS
consultation relating to audit and
corporate governance reforms,
including updates received from the
external auditor
• The effectiveness of the Group’s
Whistleblowing Policy, which sets
out the arrangements for raising
and handling allegations from
whistleblowers, and receiving regular
reports on instances of whistleblowing
that have been raised
• The Committee’s terms of reference
• The Committee’s effectiveness.
Significant issues considered
by the Committee
After discussion with both management
and the external auditor, the Audit
Committee determined that the key risks
of misstatement of the Group’s financial
statements, as in prior years, related
to the valuation of insurance contract
liabilities under IFRS 17. This key risk of
misstatement can be separated into
the best estimate of future cashflows
required to fulfil insurance contracts,
and the methodology and measurement
of the risk adjustment for non-financial
risk. In addition, given the inflationary
environment referenced above, a specific
significant risk was agreed in relation to
inflation assumptions applied to UK Car
bodily injury claims reserves given the
long-tail nature of the claims and the
current higher inflationary environment.
The implementation of IFRS 17 in
the period also gives rise to a key
audit matter given that the standard
introduces a number of new key
accounting judgements.
Furthermore, the IFRS 9 provision for
expected credit losses in relation to
the Group’s lending business, Admiral
Money, and the impairment testing
exercise performed in relation to the
Group Parent Company investments
in Group subsidiaries were significant
financial reporting issues considered by
the Committee.
These significant issues were discussed
with management during the year and
with the external auditor at the time
the Committee reviewed and agreed
the external auditor’s Group audit plan,
when the external auditor reviewed
the interim financial statements in
August 2023 and also at the conclusion
of the external audit of these full year
financial statements.
Valuation of insurance
contract liabilities
The Committee continued to spend
significant time reviewing and challenging
the approach, methodology and key
assumptions adopted by management
in setting reserves for insurance liabilities
in the financial statements to ensure
consistency with the Group’s stated
accounting policies, which have been
updated following the implementation
of IFRS 17.
In this context, the Committee challenged
management on the important
judgements and assumptions used in
estimating the best estimate of future
claims cashflows, including specific
focus on inflation assumptions applied in
relation to UK Car bodily injury claims, and
the measurement of the risk adjustment
for non-financial risk. Further information
is set out in more detail in the critical
accounting estimates section of note 2 to
the financial statements.
As in previous periods, the Committee
held meetings specifically focused on
reserving, receiving presentations on UK
Car Insurance reserves from the internal
actuarial reserving and finance teams, as
well as the independent external actuarial
advisors. At these meetings management
provided further information on the
projected best estimate claims reserves,
as well as payment patterns used to
estimate the resulting future claims
cashflows. Management also presented
to the Committee on the measurement
of the risk adjustment for non-financial
risk including the methods used to
estimate the reserve risk probability
distribution and the selection of the
confidence level in line with the Group’s
stated 85th – 95th percentile accounting
policy. The Committee also received
presentations from the external actuarial
firm that performed independent
validation of the best estimate claims
reserves and the external Big Four
firm that performed independent
validation of the reserve risk distribution
and the appropriateness of the risk
adjustment at the target confidence
level. Management were challenged by
the Committee on the key assumptions
and judgements made in these processes
and justification for the movement
in confidence level since the start of
the year.
The Committee reviewed and discussed
the effects of inflationary pressures on
claims reserves in relation to both damage
and bodily injury claims. In addition,
the move to a new claims system was
considered as well as scenarios in relation
to the future Ogden rate and updates
regarding the FCA’s multi-firm review of
motor total loss claims. The Committee
also reviewed management’s assessment
of the level of uncertainty inherent in
the claims reserves, and changes to that
assessment from previous periods as well
as the results of management’s reserve
stress and scenario testing.
165
The Committee also received updates
from the Group’s external auditor,
Deloitte, on its work in relation to this
significant audit risk. This included
reviewing management’s actuarial data
quality assessments, best estimate
reserve projections and the risk
adjustment for non-financial risk, as well
as assessing management’s qualitative
and quantitative support for gross
insurance contract liabilities included
in the financial statements. Based on
this work, the auditor was satisfied that
the financial statement reserves remain
appropriate and consistent with the
Group’s accounting policy.
The Committee also received reports on
the reserving processes for the Group’s
insurance businesses other than UK Car
Insurance. Management presented an
overview of the claims reserving processes
and resulting recommendations for
the UK Household and UK Van lines of
business as well as European and US
motor businesses, including the results
of actuarial best estimate reserving
processes and justification for the risk
adjustment for non-financial risk for
each business.
Whilst acknowledging that the setting
of reserves for claims which will settle in
the future is a complex and judgemental
area and having had the opportunity
to challenge management’s proposal
in respect of both best estimate
reserves and risk adjustment held above
best estimate to cover unforeseen
deteriorations in the best estimate,
the Committee is comfortable that an
appropriate process has been followed,
and that there has been sufficient
scrutiny, challenge and debate to give
confidence that the reserving levels set
incorporate a risk adjustment for the
uncertainty in the best estimate which is
consistent with the Group’s stated IFRS 17
accounting policies.
Inflation assumptions applied
within valuation of UK motor
bodily injury claims reserves
The Committee placed focus during the
year on reviewing and challenging the
approach, data inputs, methodology
and key assumptions adopted by
management in determining an
allowance for excess inflation on
bodily injury claims, included in claims
reserves. Whilst acknowledging that
ultimate outcome is highly uncertain,
the Committee had the opportunity to
challenge management’s judgements
in respect of selected projections of
inflation, in particular future wage
inflation as well as the elements of
bodily injury claims that will be subject
to this excess inflation. The Committee
concluded that the data and underlying
methodology used in calculating excess
inflation was reasonable, and in line with
market practice and that the inflation
assumptions adopted were appropriate.
Other financial reporting issues
IFRS 17 implementation
IFRS 17 is the new insurance accounting
standard that came into effect from
1 January 2023. Given the fundamental
changes to the Group’s financial
statements and systems and processes
that have arisen because of the new
standard, the Committee dedicated
a significant amount of time during
previous financial reporting periods
to understanding and assessing the
impact of the standard on the Group’s
financial reporting process and the
progress of implementation of chosen
software solutions.
In 2023, the Group presented interim
and full year financial statements under
the new standard, including a transition
balance sheet as at 1 January 2022, a full
restatement of 2022 primary financial
statements and related notes to the
financial statements as well as revised
accounting policies and other disclosures.
Throughout the year the Committee
continued to dedicate significant time to
the subject and received regular updates
on implementation activities, as well
as reviewing and approving accounting
policies, methodologies and judgements
relating to the new standard. Activities of
the Committee included:
• Regular updates as to the programme
status, ahead of the first reporting
under IFRS 17 in the Group’s interim
financial statements including
progress against plans for individual
workstreams and other issues such as
resourcing levels
• Review and approval of the Group’s
transition balance sheet as at 1 January
2022, including the work of the
external auditor Deloitte in respect of
the transition
• Review and approval of the Group’s
restated 2022 interim and full year
financial statements under IFRS 17,
including the work of the external
auditor Deloitte in respect of
the restatement
• Review and approval of all IFRS 17
related policies including accounting
policies and those related to accounting
judgements and materiality
• Review and approval of the Group’s
revised methodology for estimating
co-insurance profit commission, which
is recognised under the accounting
standard for revenue, IFRS 15.
Whilst not directly impacted by IFRS 17,
the loss ratio inputs to the calculation
were amended to ensure consistency
with the new standard
• Reports setting out management’s
assessment of key technical accounting
matters as part of the review of 2023
interim and final financial statements,
including the status of the work of the
external auditor Deloitte in respect of
those technical issues
• Updates from the Group’s external
auditor on their audit of the Group’s
IFRS 17 work and IFRS 17 developments
in the market generally.
The critical accounting judgements
reviewed by the Committee in relation
to IFRS 17 included management’s
justification for the use of the simplified
‘Premium Allocation Approach’, the
lowest unit of account under IFRS 17
and the classification and presentation
of reinsurance contracts under the
standard. The Committee, having
reviewed management’s supporting
papers and hearing from external auditor
Deloitte on the matters, concluded
that the judgements were reasonable
and appropriate.
The Committee was pleased to note the
positive findings of the FRC’s thematic
review of companies’ disclosures relating
to IFRS 17 ‘Insurance Contracts’ in the
interim accounts, which highlighted the
Group’s disclosures as an example of
better practice.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 Audit fee
During 2023, the Committee reviewed
and approved the audit fee proposal
for the 2023 year end Group audit.
The agreed fee for the audit and other
assurance related services for 2023 is
£3.48 million (2022: £2.76 million), with
the increase reflecting inflation in line
with market increases, the impact on
ongoing audit work required relating
to IFRS 17 (Insurance Contracts) and
the impact on audit work required
in relation to new financial systems.
The Committee approved the fee increase
having discussed with the auditor the
rationale for the proposal.
In addition to the agreed fee for 2023,
the Group incurred a one-off audit fee
during 2023 of £0.83 million relating
to the transition to IFRS 17 and the re-
presentation of the Group’s 2022 financial
statements under the new standard.
Safeguarding the external auditor’s
independence and objectivity
The Committee reviewed and approved
its policy on non-audit services in February
2023 and was satisfied that it continued
to align with current regulatory guidance.
Under the policy, the Group’s statutory
auditor will only be engaged to carry
out non-audit services in prescribed
circumstances or where there is a
regulatory request, and where agreed
by the Committee. This is to ensure that
the independence and objectivity of
the external auditor is safeguarded.
The Committee will continue to monitor
regulatory developments in this area to
ensure that its policy on non-audit fees
adheres to current guidance.
166166
Audit Committee Report
continued
The Committee challenged
management’s proposal for recognition
of impairment losses as well as
conclusions for other subsidiary entities
where indicators for impairment were
present but no impairment was deemed
necessary as a result of recoverable
amounts being in excess of the carrying
value of investments.
Misstatements
No material unadjusted audit differences
were reported by the external auditor.
The Committee confirms that it is
satisfied that the auditor has fulfilled
its responsibilities with diligence and
appropriate professional scepticism.
After reviewing the presentations
and reports from management and
consulting, where necessary, with the
auditor, the Committee is satisfied that
the financial statements appropriately
address the critical judgements and key
sources of estimation uncertainty (both
in respect to the amounts reported and
the disclosures). The Committee is also
satisfied that the significant assumptions
used for determining the value of assets
and liabilities have been appropriately
scrutinised, challenged and are
sufficiently robust.
External audit
External auditor appointment
The Group last completed an audit
tender during 2020/21 when, following
the completion of a transparent and
independent audit tender process,
Deloitte LLP were recommended to
shareholders as the Group’s auditor at
the Annual General Meeting (AGM) in
April 2021 and a resolution was passed
to that effect. Deloitte LLP’s overall tenure
up to and including the 2023 financial
year is eight years. The Committee
confirms it is in compliance with the
provisions of the Statutory Audit
Services for Large Companies Market
Investigation Order 2014.
On the recommendation of the
Committee, the Board approved that
Deloitte should be recommended
to shareholders for reappointment
as the Group’s auditors at the 2024
AGM. A resolution to that effect will be
proposed at the AGM.
IFRS 9 provision for
expected credit losses
During the year, the Committee has
continued to review and challenge the
IFRS 9 provision for expected credit loss
arising through the Group’s loans business,
Admiral Money. Areas of focus included
the potential impact of UK inflationary
pressures and the increase in UK market
interest rates on default experience,
the assessment of circumstances
indicating a significant increase in credit
risk and underlying forward-looking
economic assumptions.
Further information on the provision and
key assumptions are found in note 7 to
the financial statements.
On the basis of the work performed and
having had the opportunity to challenge
management’s proposal in respect of
the provision for expected credit losses,
the Committee was comfortable that an
appropriate process has been followed,
noting the continued enhancements
made to the provisioning methodology
reflecting the increasing maturity of
the business, and that there has been
sufficient scrutiny and challenge to give
confidence that the provision has been
set in line with the IFRS 9 requirements
and included appropriate allowance for
uncertainties arising from the current
macro-economic environment.
Impairment testing for the Group’s
investment in subsidiaries
During the year, the Committee considered
management’s work in relation to the
Group Parent’s investment in subsidiary
entities. Under the relevant accounting
standard, IAS 36 ‘Impairment of Assets’
management identified entities with
indicators of impairment and performed
detailed impairment testing in relation to
those investments, calculating recoverable
amounts primarily through the use of
discounted cashflow calculations.
Management proposed the recognition
of non-cash impairment losses in
respect of investments in Elephant, the
Group’s US insurer, as well as subsidiary
entities supporting the Group’s newer
growth businesses in the UK and in
Italy. The impairment charge relating
to Elephant followed a similar approach
to previous periods and was the more
material of the impairment losses,
reflecting the reduction in net assets
of the business (used as a proxy for fair
value less costs to sell) arising from losses
incurred during 2023.
167
The Committee discussed the results of
the review at its meeting in December
2023 and concluded that the Committee
continued to operate effectively and
within its remit. There were a number of
areas identified for further improvement,
such as ensuring that issues and
risks were prominently presented in
Committee papers.
Priorities for the Committee for 2024
include ensuring that the Committee
is appropriately briefed on the UK
Corporate Governance Code change and
climate-related reporting, requesting the
relevant business managers to attend
Committee meetings to answer questions
on significant internal audit reports and
reinforcing the use of more effective
summaries to highlight the issues and
risks that the Committee needs to
focus on.
Whistleblowing
On behalf of the Board, the Committee
considered and reviewed the
Group’s whistleblowing policy and
received quarterly updates on the
use and effectiveness of the policy,
whistleblowing metrics and the
instances of whistleblowing that had
been raised across the Group during the
year. During the year, the Committee
concluded that the Group’s current
whistleblowing arrangements were an
appropriate means by which employees
could raise concerns in confidence
and anonymously.
Effectiveness of the external
audit process
The Committee undertakes an annual
review to assess the independence and
objectivity of the external auditor and the
effectiveness of the audit process, taking
into consideration relevant professional
and regulatory requirements, the progress
achieved against the agreed audit plan,
and the competence with which the
auditor handled the key accounting and
audit judgements.
As part of its review, the Committee
considered, among other things,
the following: submissions by the
external auditor relating to their
continued independence, the output
of a questionnaire completed by all
Committee members and relevant
members of the Group’s Finance and
Internal Audit functions and the findings
of the FRC Audit Quality Reviews (AQR)
published in July 2023. Following this
review, the Committee concluded that
the external auditor, Deloitte LLP,
remained independent and that the
external audit process remained effective.
Internal audit
The Group Head of Internal Audit
attended all Audit Committee meetings
and provided a range of presentations
and papers to the Committee, through
which the Committee monitored the
effectiveness of the Group’s material
internal controls, including financial,
operational and compliance controls on
behalf of the Board.
The Group Head of Internal Audit also
carries out an annual review of the
effectiveness of the Group’s systems of
internal control and risk management
and reports on the outcome of this review
to the Committee. In February 2024, the
Group Head of Internal Audit reported
an adequate level of assurance in relation
to the Group’s arrangements for risk
management, control infrastructure,
governance and fraud prevention controls.
This was supported by a summary of the
assurance activity performed by the Line
2 Risk and Compliance functions and an
annual assessment of internal controls
by Line 2.
The Committee reviewed and approved
the Group Internal Audit Policy, which
includes the Group Internal Audit Terms of
Reference setting out the role, objectives,
reporting lines and accountability,
authority, independence, and objectivity
of the Internal Audit function.
The Committee also monitored and
discussed the evolution and development
of the Internal Audit function, and
considered the role, competence and
effectiveness of each internal audit
function across the Group. The Group
Head of Internal Audit continues to have
responsibility to ensure the quality of the
internal audit activities in the Group’s
overseas locations. The Chairs of the
European and US Audit Committees
each updated the Committee on their
respective activities during the year.
Members of the Committee also
receive all issued internal audit reports,
enabling them to challenge the reports’
content, including the rating, and related
recommendations. The Committee
approves the internal audit plan at the
start of each calendar year and any
inflight amendments to that plan, whilst
the effectiveness and workload of the
internal audit functions and the adequacy
of available resources are monitored
throughout the year.
The European operations in Spain, Italy
and France have a dedicated internal
audit team and the US business also has
its own locally based team. All reports
are evaluated by the Group Head of
Internal Audit to ensure the quality and
effectiveness of the reported findings,
and a summary of the key findings of
each completed audit is provided to the
Committee as part of the Group Head
of Internal Audit’s regular Committee
update. In addition, the UK internal audit
function carries out high-level governance
reviews of all foreign operations, assessing
the internal control frameworks and
system of risk management.
Committee effectiveness review
As part of the Committee’s annual review
of its own performance and processes,
each Committee member completed a
comprehensive questionnaire designed
to provide objective assessment of the
Committee’s performance, including its
effectiveness in monitoring internal and
external audit.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 168168
Group Risk Committee Report
169
Managing
RISK EFFECTIVELY
Dear Shareholder,
As Chair of the Group Risk
Committee, I am pleased
to present the Committee’s
report for 2023.
The Committee has received updates
on each of the Group businesses as
part of the Group’s Enterprise Risk
Management Framework (ERMF).
Developments considered by the
Committee throughout the year included:
• Admiral’s risk strategy and approach
to risk management including regular
reviews of the Group’s risk strategy and
risk appetite, monitoring a suite of
Key Risk Indicators, and oversight of the
management of material risk events
• Ongoing risk assessment and
monitoring of the impact of inflation,
market volatility, and economic outlook
on capital and liquidity risks across the
Admiral Group
• The implementation of Consumer Duty
• Oversight of work required to ensure
Admiral is prepared to meet the
challenges of climate change
• Oversight of material projects and
change programmes
• Oversight of Admiral’s technology and
Information Security work, including
the future technology strategy
• Discussions on people risk and
risk culture
• The continuing development of the
Admiral internal model.
Risk strategy and approach to risk
management: During the year the
Committee has discussed and considered
proposals to enhance the risk strategy
and the approach to risk management
in order to continue supporting the
effective and efficient delivery of the
Group’s overall strategy. The Committee
continues to monitor a suite of Key Risk
Indicators with associated triggers and
limits against the Group risk appetite.
The ongoing focus on monitoring and
reporting customer outcome risks
continues with the Committee reviewing
the Group Conduct Risk Framework
(aligned with the ERMF). The Committee
also received updates on the Group
Minimum Standards which continue
to be enhanced and embedded.
The Committee has spent time on
key risks that affect the Group as well
as reviewing the management and
outcomes of notable risk events reported
during the year.
Capital management: The Committee
has reviewed the Group’s proposed
dividend level, capital plan and capital
buffer in line with the Capital Policy.
The review considered the expected
impact on the Group’s solvency ratio
due to a range of different sensitivities,
and stress and scenario tests. The Group
continues to make use of Undertaking
Specific Parameters (USPs) in Admiral
Insurance (Gibraltar) Limited (AIGL) and
the Volatility Adjustment (VA) in AIGL and
its UK insurance entity, Admiral Insurance
Company Limited (AICL). The Committee
discussed the capital add-on, and received
updates on the process and outcome
during the year.
“The Group Board is of
the view that the Group’s
risk management and
internal control systems
have operated effectively
during the year.”
Andy Crossley
Chair of the Group Risk Committee
Eight
meetings
in 2023
Committee members
Members
Andy Crossley (Chair)
JP Rangaswami
Cristina Nestares1
Karen Green
Jean Park2
Attendance
8/8
8/8
7/8
8/8
1/1
1 Cristina Nestares missed one meeting due to a
2
preexisting arrangement.
Jean Park retired from the Board and all of her Committee
memberships on 20 January 2023.
The Committee held eight scheduled
meetings, with an additional meeting also
taking place.
Economic uncertainty: The Committee
has reviewed and continues to monitor
the Group’s solvency and liquidity
positions in response to market volatility
and wider economic uncertainty,
considering factors such as changes in
inflation, the wider impact of supply chain
disruption, banking events, high interest
rates, and the pressures on individual
household finances.
Consumer Duty: The Committee received
regular updates on the delivery of
Consumer Duty implementation during
2023. Since the Duty came into effect in
July 2023, the Committee has continued
to receive regular updates, focusing on
how the Duty is embedding and on the
delivery of good customer outcomes.
Climate change: The Committee has
received updates on the work being
undertaken relating to climate change to
ensure that Admiral is meeting current
requirements and is appropriately
preparing to meet future challenges.
These updates include commentary
on risk management, ongoing climate-
related strategic developments, and
the changes that may be necessary for
compliance with emerging regulatory
requirements. This is further described
in the Viability Statement (page 109),
and additional information on Admiral’s
approach to climate change can be found
in the Task Force on Climate-related
Financial Disclosures (page 73).
Geopolitical instability: The Committee
has been apprised of geopolitical
developments over the course of the
year. In particular, the Committee has
considered the effects of the 2022 Russian
invasion of Ukraine, which continues
to drive cost of living pressures and
put supply chains under strain, and the
added uncertainty from the more recent
Israel-Hamas conflict. The Committee
has also considered potential exposure to
disruption in the global electric vehicle
(EV) manufacturing industry, which is
dominated by China, if a geopolitical
conflict were to develop between China
and Taiwan or the United States.
Material projects and change
programmes: As a result of the
Committee’s oversight of individual
Group entities, combined with the
oversight afforded by the Group’s project
governance framework, the Committee
has considered and challenged updates
relating to material projects and change
programmes within the Group, including
those designed to accelerate existing
products. The Guidewire migrations in
the Group have been the topic of focused
sessions at GRC, in particular to ensure
consideration of the published lessons
learnt from an incident at a peer.
Technology and information security:
The level of oversight of technology
risks including operational resilience has
continued to increase over the year with
regular reporting and discussion of the
risk position at GRC. The Committee
has received regular updates on
relevant topics including the future
technology strategy.
People risk and risk culture: The
Committee has considered the potential
impact on people and culture when
reviewing strategic decisions. In addition,
a number of the Key Risk Indicators and
supporting commentary are focused on
people risk.
Progress of Admiral internal model
(AIM): The Group Risk Committee and
Board have maintained their focus in
relation to the Admiral internal model
during 2023, and have continued to
receive regular reporting to help drive
key decisions in relation to the model.
The UK Car model has been updated in
2023 to address limitations identified
during prior independent validation
reviews. This will help to ensure that the
model is well placed to support a planned
regulatory pre-application. The new UK
Car model will be subject to another
cycle of independent validation to ensure
that the updates have been successfully
implemented prior to the pre-application
regulatory submission. In parallel, the
project is continuing a programme to
expand the model to produce Solvency
Capital Requirements for Admiral Group,
AIGL and AICL and to expand its scope
to include UK Household, UK Van,
Travel and Pet products. This expanded
scope partial internal model will be the
basis of a regulatory full application.
Regular communications with the PRA
and GFSC are being held both at senior
management and project levels to align
delivery for the pre-application and full-
application regulatory reviews.
Andy Crossley
Chair of the Group Risk Committee
6 March 2024
Duties and responsibilities
of the Group Risk Committee
The duties and responsibilities of the
Committee are set out in the Committee’s
Terms of Reference, and were reviewed
and approved by the Admiral Group Board.
The main responsibilities of the
Committee are:
• Overseeing the development,
implementation and maintenance of
the Group’s overall Risk Management
Framework and ensuring that it is
in line with emerging regulatory,
corporate governance and best
practice guidelines
• Considering and recommending to
the Board for approval the Group’s risk
appetite, as well as ongoing monitoring
and review of the Group’s risk exposures
• Monitoring the Group’s prudential
risk exposure, which includes ensuring
that the Group’s capital resources and
liquidity profile are appropriate to
its needs, whilst meeting minimum
regulatory requirements, including
overseeing and challenging the design
and execution of the Group’s stress and
scenario testing
• Reviewing the Group’s capacity to pay
interim and final dividends
• Reviewing the annual Group ORSA
Report and any required interim ORSA
Reports, with recommendations being
provided to the Board for approval
• Reviewing and approving the Solvency
II Actuarial Function Reports on
Risk Management, Reinsurance and
Underwriting each year
• Reviewing the Group’s progress towards
approval of the Group’s internal
capital model
• Monitoring the adequacy and
effectiveness of the Group’s Risk and
Compliance functions
• Approving the annual plans and
resourcing for the Group Risk and
Compliance functions which include
reviewing regulatory developments and
any planned meetings between the
PRA and FCA and the business
• Reviewing any significant risk issues
that have a material impact on the
customers of the business and/or
concern the regulator
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 170170
Group Risk Committee Report
continued
• Ensuring the adequacy and
effectiveness of the Group’s systems
and controls for the prevention of
financial crime, and data protection
systems and controls
• Reviewing the Group’s compliance with
Solvency II
• Annually reviewing and approving the
Group Minimum Standards Framework
and required standards
• Reviewing compliance with Group
policies, including the Group’s
Reinsurance Policy, Group ORSA Policy,
and Group Underwriting Policy
• Reviewing the proposed risk-based
adjustments to remuneration for senior
managers and making subsequent
recommendations for approval to
the Group Remuneration Committee,
as well as providing feedback on the
Directors Remuneration Policy, and
commenting on remuneration metrics
to help ensure there is no conflict with
risk management objectives
• Reviewing reports from the Group
Risk, Group Compliance, Group Data
Protection and Privacy, and Group
Internal Audit functions
• Formally reporting to the Group
Audit Committee to facilitate their
recommendation of the Annual Report
and Accounts to the Board on the
following key areas and disclosures;
principal risks and uncertainties, risk
management and internal control,
viability, risks associated with material
transactions and/or strategic proposals,
and the Taskforce on Climate-related
Financial Disclosures.
The Committee Chair reports formally
to the Board on the Committee’s
proceedings after each meeting,
on all matters within its duties and
responsibilities, as set out in previously
circulated minutes to the Board.
The Committee Chair also reports on the
activities of the Committee in a formal
written report that is submitted to and
discussed by the Board annually.
The work of the Committee is supported
by more detailed work undertaken by
subsidiary Boards and/or executive
Risk Management Committees in each
of the Group’s operational entities.
At each meeting, the Risk Management
Committees consider notable:
movements in the operation’s risk
profile; risk events; and emerging risks.
Risk Management Committees also assess
and monitor regulatory issues, ensuring
that their resolution and the actions
taken are appropriately recorded. The Risk
Management Committees receive
regular information on Conduct Risk,
such as complaint handling reports and
other related management information.
The Group Risk Management function
reviews and collates information from
across the Group for consideration by
the Committee.
In addition, to ensure that the Committee
is operating effectively, it conducts a
periodic review of its performance (last
reviewed in November 2023) and at
least annually reviews its constitution
and terms of reference (last reviewed
in December 2023). Any changes it
considers necessary are recommended
to the Group Board for approval. As part
of the Committee’s annual review of
its own performance and processes,
all Committee members and regular
attendees were invited to complete an
online evaluation designed to provide
objective assessment of the Committee’s
performance, including its effectiveness.
The Committee discussed the results
of the review at its meeting in January
2024 and concluded that, overall, the
Committee remained effective with
feedback from the Committee being
largely positive. Areas of focus and
improvement for the Committee in 2024
included greater focus on change risk
and further examination of the business’s
ability to manage key/strategic risks.
Summary of key Group Risk
Committee activities in 2023
During the year the Committee:
• Reviewed the Group’s updated risk
strategy, and ongoing enhancements
to the risk appetite framework in
the context of the Group’s agreed
strategic objectives
• Recommended the 2023 Group ORSA
Report and ORSA Policy for Board
approval prior to submission of the
report to the regulator
• Reviewed the Group’s capacity to pay
dividends, capital plan and capital
buffer in line with the Capital Policy
• Received updates on the Group’s
regulatory capital add-on review as part
of the Solvency II capital requirements
• Received regular updates on customer
outcome risk, the Group Minimum
Standards, and Policy Framework
• Received in-depth updates of
individual Group entities, Admiral
Europe Compañia de Seguros (AECS),
EUI, Admiral Money (AFSL), Elephant
and Able
• Considered in-depth analysis of a
number of the Group’s most significant
risk areas, via stress and scenario testing
and reverse stress testing
• Considered the adequacy of risk
mitigation measures and contingency
planning including a review of the
Group’s reinsurance provisions
• Dedicated a significant amount of time
to developing the Admiral internal
model, receiving regular updates on the
progress of the project and providing
challenge to key project work streams
• Monitored climate change-related
initiatives, including continued
progress to reduce Scope 1 and 2
emissions, progress to validating Scope
3 emissions, and submitting science-
based targets
• Received regular risk monitoring
reports on performance of Key Risk
Indicators within the overall risk
management framework
• Received updates on the impact of
notable risk events throughout 2023
• Received regular updates in relation
to key programmes of work including
Identity and Access Management,
Guidewire Upgrade and Consumer
Duty, as part of the Group’s project
governance framework
• Considered the annual renewal of the
Group’s corporate insurance coverage
• Assisted the Group Board in its
oversight of M&A opportunities,
including the acquisition due in 2024 of
the UK direct Home and Pet personal
lines insurance operations of RSA.
Principal risks and uncertainties
The Board of Directors confirms that it
has performed a robust assessment of
the Group’s principal and emerging risks.
These risks, along with explanations
of how they are being managed and
mitigated, are included in the Strategic
Report, page 98.
Information on how key risk drivers have
impacted on the Group’s principal risks
has been included within the Viability
Statement, page 109.
171
Risk management and internal
control systems
The system of risk management and
internal control over Admiral’s insurance,
operational, market, credit and group
risk is designed to manage rather than
eliminate the risk of failure to achieve
business objectives and breaches of
risk appetites.
Furthermore, risk management can only
provide reasonable and not absolute
assurance against material misstatement
or loss. The Group Board is ultimately
responsible for the Group’s system of
risk management and internal control
and the Group Audit Committee (GAC)
has reviewed the effectiveness of this
system (a summary of GAC duties and
responsibilities, as well as key GAC
activities in 2023 is available on page 161.
The Group Board is of the view: that there
is an ongoing process for identifying,
evaluating and managing the Group’s risks
and internal controls; that it has been in
place for the year ended 31 December
2023 and that it has operated effectively;
and that, up to the date of approval of the
Annual Report and Accounts, it is regularly
reviewed by the Group Board and accords
with the internal control guidance
for Directors provided in the 2018 UK
Corporate Governance Code.
The Group Board confirms that it has
performed a robust assessment of the
Group’s principal and emerging risks.
These risks, along with explanations
of how they are being managed and
mitigated, are included in the strategic
report on page 98, with key risk drivers
impacting Admiral’s principal risks and
uncertainties being further discussed
in the Viability Statement on page
109. The Group Board is responsible for
determining the nature and extent of
the principal risks it is willing to take
in achieving its strategic objectives.
This assessment supports the Group
Board in monitoring the integrity of the
Group’s reported financial statements.
The Group Board meets at least seven
times a year to discuss the direction of
the Group and to provide oversight of the
Group’s risk management and internal
control systems.
The Group Board has delegated the
development, implementation and
maintenance of the Group’s overall risk
management framework to the Group
Risk Committee (GRC). The GRC reports
on its activities to the Group Board and
the GAC, supporting the overall opinion
provided by the GAC that the Group’s
internal control, risk management
and compliance systems continue to
operate effectively.
The Group Board has delegated to the
GAC the review of the adequacy and
effectiveness of the Company’s internal
financial controls, and internal control and
risk management systems.
The Group operates a “three lines
of defence” approach to Risk and
Internal Control.
1st Line of Defence: The Group
Board recognises that the day-to-day
responsibility for implementing policies
for risk identification, assessment
and management lies with the senior
management, whose operational
decisions must take into account risk and
how it can be controlled effectively.
2nd Line of Defence: The “second line of
defence” is led by the Group Chief Risk
and Compliance Officer and comprises
the Corporate Governance functions and
Committees that are in place to provide
oversight of the effective operation of the
internal control framework. The Corporate
Governance functions facilitate the
oversight and operation of the Group
Policy Framework and Group Minimum
Standards, covering risk management and
controls for all notable risks to the Group.
The Corporate Governance functions
perform second line reviews, including
reviews of the capital modelling and
business planning processes to support
the Group Board’s assessment of the
Group’s ongoing viability. Regular reviews
of risks are undertaken in conjunction
with senior management, with the
results of these reviews recorded in risk
registers and reported to the appropriate
governance forums and Boards.
3rd Line of Defence: The “third line of
defence” comprises the independent
assurance provided by the Group Internal
Audit function, overseen by the GAC.
Internal Audit undertakes a programme
of risk-based audits covering all aspects
of both the first and second lines of
defence. The findings from these
audits are reported to all three lines, i.e.
Management, the Executive and oversight
Committees, and the GAC.
The Subsidiary Boards, GRC, and entity
Risk Committees receive reports setting
out key performance and risk indicators
and consider possible control issues
brought to their attention by early
warning mechanisms that are embedded
within the operational units. They,
together with the GAC, also receive
regular reports from the Internal Audit
function, which include recommendations
for improvement of the control and
operational environments.
The Chair of the GRC provides a written
report to the Group Board of the activities
carried out by the Committee on an
annual basis (a summary of GRC duties
and responsibilities, as well as key GRC
activities in 2023 is available on page 168).
In addition, the Group Board receives
regular reports throughout the year from
the Chairs of the GRC and GAC as to their
activities, together with copies of the
minutes from Subsidiary Board meetings,
the GRC and the GAC.
The GAC’s ability to provide an opinion
to the Group Board depends on the
provision of periodic and independent
confirmation, primarily by Group Internal
Audit, that the controls established by
Management are operating effectively
and where necessary provides a high-
level challenge to the steps being
taken by the GRC to implement the risk
management strategy.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 172172
Remuneration Committee Report
173
Ensuring
OUR PEOPLE
ARE SUPPORTED
Dear Shareholder,
On behalf of the
Remuneration Committee,
I am delighted to present
the Directors’ Remuneration
Report for the year ended
31 December 2023.
I would like to thank shareholders for
supporting Admiral’s Annual Report
on Remuneration at the April 2023 AGM
with a vote of 88.5%. I look forward
to welcoming you at our AGM in 2024
and to your continued support.
2023 business context
2023 has been a landmark year for
the Group, celebrating thirty years
in business, however, it has not
been without its challenges – both
macroeconomic and geopolitical.
As Milena has made clear in her statement
this year, we have continued to deliver
the right products and service to our
customers. This is evidenced in 6% growth
in customer numbers and profit of £443m,
a solid performance given the challenging
context. We have been able to deliver
this performance due to reacting quickly
and navigating the changing market
conditions well.
During 2023 we have continued to ensure
that our people are supported through
the ongoing cost-of-living challenges.
We are clear that the continuing success
of Admiral is possible due to the hard work
and dedication of the people who work
for us, and we will continue to ensure they
are supported for the year ahead.
1. Justine Roberts joined the Remuneration Committee on
31 January 2023, she missed two meetings to pre-existing
engagements made prior to her joining the Committee.
2. Karen Green was appointed to the Remuneration
Committee on 2 October 2023.
Remuneration for 2023
Taking into account the approved
remuneration structure and Admiral’s
business performance, the Committee
made the following decisions during 2023.
2021–23 Discretionary Free Shares
Scheme (DFSS)
Based on our performance for the period
2021-2023, 43.76% and 43.73% of the
DFSS award granted in 2021 will vest to
Milena Mondini de Focatiis and Geraint
Jones, respectively. This is the lowest
vesting performance in recent times.
As the 2021 DFSS awards were granted
during the pandemic period, we needed
to consider whether windfall gains have
occurred, as this was a period where share
prices were generally lower than prior
years for most companies. The Committee
is satisfied that no such windfall occurred
on the basis that the share price at
the end of the performance period is
materially lower than the grant price,
and that DFSS awards are allocated as a
fixed number of shares, as opposed to a
percentage of salary.
The full details of the vesting outcomes
are on page 187.
2023 DFSS bonus
Milena Mondini de Focatiis and Geraint
Jones will receive a DFSS bonus of
£296,071 and £172,676 respectively.
This bonus is equivalent to dividends
which would have been paid during
the year on all outstanding DFSS and
salary shares awarded, but not yet
vested, plus a 6.43% adjustment for
performance against a scorecard of
Non-Financial Metrics. In addition, the
DFSS bonus is subject to a potential
downward adjustment to take account
of any risk events considered to have a
material customer, regulatory or financial
impact. For this year there were no such
risk adjustments. The full details of the
DFSS bonus calculations are on page 189.
“We are recommending
policy changes which
we believe make
the Executive Directors’
packages more competitive,
while reinforcing the
strong alignment with
shareholders’ interests and
maintaining fairness of
reward approach to reinforce
Admiral’s unique culture.”
Evelyn Bourke
Chair of the Remuneration Committee
Seven
meetings
in 2023
Committee members
Member
Evelyn Bourke (Chair)
Michael Brierley
Justine Roberts1
Karen Green2
Attendance
7/7
7/7
5/7
1/1
2023 DFSS award
On 28 September 2023, Milena Mondini
de Focatiis was granted an award of
90,000 shares and Geraint Jones was
granted an award of 52,500 shares
under the DFSS. Using the share price
on the date of the grant of £23.72,
this is the equivalent to £2,134,800
or 290% of Milena’s base salary and
£1,245,300 or 287% of Geraint’s base
salary respectively.
The awards will vest based on:
• EPS - 26.67% weighting;
• TSR vs. FTSE 350 (excluding investment
companies) – 26.67% weighting;
• RoE – 26.67% weighting; and
• the average outcomes of the scorecards
of Non-Financial Metrics used to assess
DFSS bonus adjustments over the
performance period – 20% weighting.
There will also be the potential for
downwards adjustment subject to an
assessment which will take account of
risk events considered to have a material
customer, regulatory or financial impact
over the course of the performance
period. Further details can be found
on page 187.
2024 Remuneration Policy review
The Remuneration Policy was last
approved by shareholders at the 2021
AGM, effective for a maximum of three
years. Consequently, the Committee is
seeking shareholder support for a revised
Remuneration Policy at the 2024 AGM.
In arriving at the planned changes to
the Remuneration Policy the Committee
sought to maintain the positioning of
fixed pay towards the lower end of the
market while ensuring that the variable
elements would deliver significant extra
reward for outperformance. The Chair
of the Committee consulted extensively
with shareholders, who were generally
very supportive of the changes.
There are three proposed changes
to highlight:
• Annual bonus – we propose to remove
the DFSS Cash bonus in favour of an
annual bonus plan. The maximum
bonus potential for the Executive
Directors is proposed to be 200% of
base pay, with 40% of any bonus earned
being deferred into shares for a period
of three years. Bonus payments will
be subject to potential downwards
adjustments to take account of risk
events, and are subject to malus
and clawback provisions, in line with
the Group’s Malus and Clawback
Framework. Full details of the plan can
be found on page 193.
• Pension – there is no change proposed
to the contribution rate (which is
consistent with that available to UK
employees), but we propose the
removal of the absolute cap on the
amount of Company contributions.
• Dividend equivalent on unvested
DFSS and invested annual bonus
share awards – we propose to give
the Committee the flexibility to apply
dividend equivalent shares to the
Executive Directors’ unvested awards.
This would only be deployed for
Executive Directors if it were also being
applied across the whole population
who receive DFSS awards.
2024 remuneration arrangements
Executive Director remuneration
arrangements for 2024 will operate in
line with the 2024 Remuneration Policy,
subject to shareholder vote.
We propose to increase Milena Mondini
de Focatiis’ salary by 4.97% to £774,000
and Geraint Jones’ salary by 7.27% to
£465,000, effective from 1 January 2024.
For Milena, this increase is in line with
the proposed base pay changes across
the UK workforce of the Group, where
we anticipate the average increase for
colleagues to be of the order of 5% as we
continue to support our people through
the impact of the high inflationary
environment. For Geraint, the increase
begins to address the competitiveness
of his base pay relative to the lower
quartile of the market. The Remuneration
Committee intends to increase his salary
to the lower quartile of the market by the
end of this policy period, in increments.
The Remuneration Committee will review
his increase each year to ensure it is
appropriate and moves his positioning
as intended. This means that the increase
for Geraint may be ahead of those
generally given to colleagues for the
duration of the policy.
We propose that Milena Mondini de
Focatiis be granted an award of 95,000
shares and Geraint Jones be granted
an award of 55,000 shares under the
DFSS for 2024. The Committee will review
these awards prior to the September
grant date to ensure the quantum
remains appropriate.
The Committee reviewed the metrics
that will apply to DFSS and Annual Bonus
awards for 2024. Further details are shown
on page 191.
In summary
The proposed Remuneration Policy will
be put to shareholders at the AGM in
2024 and is subject to a binding vote.
Both the Committee and the Board
strongly believe that the proposed
Remuneration Policy will continue to
serve the Group’s strategic ambitions and
incentivise executives to create value for
our shareholders. The Annual Report on
Remuneration (subject to an advisory
vote) will also be put to a shareholder vote
at the AGM. The Committee and I hope
that you vote in favour of both the report
and policy. I am happy to discuss our
Remuneration Policy and Annual Report
on Remuneration with shareholders.
Evelyn Bourke
Chair of the Remuneration Committee
6 March 2024
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 174174
Remuneration at a Glance
175
“I would like to thank shareholders
for supporting the Annual Report
on Remuneration at the April 2023
AGM with a vote of 88.5%.”
Evelyn Bourke
Chair of the Remuneration Committee
Overview of the Directors’ Remuneration Policy
The following chart shows the operation of the key
elements of the Directors’ Remuneration Policy for
the 2023 performance year:
Y1
Y2
Y3
Y4
Y5
Base salary
Pension, Benefits & Share
Incentive Plan (SIP)
Discretionary Free Share
Scheme (DFSS) Bonus
Performance period
DFSS
Holding period
How did we perform during 2023?
Profit
£443m 2022: £469m
2022 restated IFRS17: £361m
Earnings per share (pence)
111.2p 2022: 124.3p
2022 restated IFRS17: 95.4p
Return on equity (%)
36% 2022: 35%
2022 restated IFRS17: 29%
Full year dividend per share (pence)
103.0p 2022: 112.0p
1 year TSR
33.1% 2022: -26%
How are remuneration outcomes linked to Group Purpose and Strategy?
The table below details how each of the performance measures link to our Group Purpose and Strategy.
Group Purpose
Strategy
Great
Customer
Experiences
Successful
Business
Positive
impact on
society
Great place
to work
Accelerating
towards
Admiral 2.0
Diversification
Evolution
of Motor
Financial
performance
Non-financial
performance
Performance measures
EPS
ROE
TSR
Strategic Assessment
Customer Feedback
Customer Outcomes
Trust Index
Diversity
Inclusion
The Committee is committed to ensuring remuneration outcomes for the Executive Directors are commensurate with performance
and are aligned to the Group purpose, strategic priorities, and shareholders’ interests. Variable pay is subject to stretching
performance outcomes and is delivered primarily through shares to ensure a long-term focus and alignment with shareholders.
How was performance determined in 2023?
DFSS awards vesting on performance to 31 December 2023
A summary of the outcomes for the Executive Directors in respect of the 2021 DFSS award:
Financial
Performance measure
EPS growth (33.33%)
TSR vs. FTSE 350 (33.33%)
Return on Equity (33.33%)
Vesting
Non-financial performance
(20% weighting)
Performance range
Threshold
0.50%
Median
25%
Maximum
36%
Upper quartile
55%
Actual outturn
-37.70%
56th percentile
41.50%
Milena Mondini
de Focatiis
69.98%
Geraint
Jones
69.83%
Total financial performance
vesting at 80% weighting
Total non-financial performance
vesting at 20% weighting
Overall Vesting
Outcome as %
of maximum
0.00%
45.20%
66.40%
Vesting
Contribution
0.00%
15.07%
22.13%
37.20%
Milena Mondini
de Focatiis
29.76%
Geraint
Jones
29.76%
14.00%
13.97%
43.76%
43.73%
DFSS bonus in respect of 2023
A summary of the 2023 NFM outcomes and associated cash bonus outcomes for the Executive Directors:
Category
Strategy
Target
16.50%
Customer feedback
8.50%
Customer outcomes
8.50%
25.30%
9.44% (H2)
9.98% (H1)
5.46% (H1)
12.42%(H2)
People (Trust index)
9.00%
9.00%
Female representation
at senior level
3.75%
Inclusion survey results
3.75%
Total
Overall scorecard
multiplier
100.00%
5.63%
62.86% (H1)
69.29% (H2)
105.14% (H1)
107.72% (H2)
120.00%
* The Committee did not apply discretion to the outcome of the performance measures.
What did our Executive Directors earn in 2023?
• Pension, benefits and SIP include the
2023 pension contribution of £15,000
for the CEO and CFO, respectively.
• DFSS bonus of £296,017 and £172,676 for
the CEO and CFO, including an adjustment
for performance against the scorecard of
non-financial measures.
• DFSS value for the CEO and CFO relates
to 43.76% and 43.73% of their 2021
DFSS awards vesting, respectively.
£19,060
CFO
£433,472
£589,791
£172,676
£19,060
CEO
£737,326
£296,017 £1,011,775
Key
Salary
Pension, benefits & SIP
DFSS Bonus
DFSS Shares
Outcome
Maximum
33.00%
17.00%
17.00%
18.00%
7.50%
7.50%
7.50%
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 176176
Directors’ Remuneration Policy
Compliance Statement
This Remuneration Report has been prepared according to the requirements of the Companies Act 2006 (the Act), Regulation 11
and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2018, the
Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 and other relevant requirements
of the FCA Listing Rules. In addition, the Board has adopted the principles of good corporate governance set out in the UK Corporate
Governance Code (the Code) and the guidelines issued by its leading shareholders and bodies such as ISS, the Investment Association,
and the Pensions and Lifetime Savings Association.
Unless otherwise stated, information contained within this Remuneration Report is unaudited.
The following Remuneration Policy (the “2024 Policy”) will come into effect, subject to shareholder approval, from the April 2024 AGM.
The policy table below summarises the changes from the Remuneration Policy approved at the 2021 AGM (the 2021 Policy).
Key Principles of Admiral Remuneration Arrangements
The Group is committed to maximising shareholder value over time in a way that also promotes effective risk management, excellent
customer outcomes while ensuring that there is a strong link between performance and reward. This is reflected in the Group’s stated
Remuneration Policy of paying competitive, performance-linked and shareholder-aligned total remuneration packages. These comprise
basic salaries coupled with participation in performance-based share schemes to generate competitive total reward packages for
superior performance.
This policy has been reviewed in 2023 as part of the usual three-year cycle and will be put to a shareholder vote at the 2024 AGM.
The Board is satisfied that this revised policy continues to meet the objectives of attracting and retaining high quality executives
across the Group.
The Committee reviews the remuneration framework and packages of the Executive Directors and senior managers and recognises the
need to ensure that the Remuneration Policy is firmly linked to the Group’s strategy, including its risk management approach. In setting
the Policy and making remuneration decisions, the Committee takes into account pay and conditions elsewhere in the Group. The main
principles underlying the Remuneration Policy are:
• Competitive total package – the Group aims to deliver total remuneration packages that are market-competitive, taking into account
the role, job size, responsibility, and the individual’s performance and effectiveness. Prevailing market and economic conditions
and developments in governance are also considered, as are general salary levels throughout the organisation. There is sufficient
opportunity within the variable pay of Executive Directors to reward outstanding levels of performance, taking into account the
market context, with upper quartile remuneration outcomes;
• Significantly share-based – our base salaries are typically targeted towards the lower end of market but are combined with
meaningful annual share awards that vest on long-term performance to ensure strong alignment with shareholders and the
long-term interests of the Group. Executives are also encouraged to build up significant shareholdings in the Group to maximise
shareholder alignment;
• Long-term perspective – a significant part of senior executives’ remuneration is based on the achievement of appropriate but
stretching performance targets that support the delivery of the Group’s strategy and shareholder value. The extended performance
and vesting horizons promote a long-term perspective that is appropriate to the insurance sector;
• Effective risk management – incentives are designed to ensure they do not encourage excessive risk-taking. They are aligned with the
delivery of positive customer outcomes and reinforce the Group’s risk policy;
• Open and honest culture – the Group has a strong culture of focussing on collective success, whilst recognising individual contribution
to the Group’s performance, and this is reflected in our remuneration structure across the business; and
• Transparency for stakeholders – the remuneration structure is designed to be easy to understand, and all aspects are openly
communicated to employees, shareholders, and regulators.
Remuneration Policy table
This table describes the key components of the remuneration arrangements for Executive Directors.
Purpose and link to strategy
Operation
Opportunity and performance metrics
Base Salary
To attract and retain
talent by setting
base salaries at levels
appropriate for the
business.
Salaries are reviewed annually or
following a significant change
in responsibilities.
Salary levels/increases take account of:
• Scope and responsibility of
the position.
• Individual performance and
effectiveness, and experience of the
individual in the role.
• Average increase awarded across
the Group.
Pension
To provide retirement
benefits.
The Group operates a Personal Pension
Plan, a Defined Contribution Scheme.
This is available to all employees
following completion of their
probationary period.
Any salary increases are applied in line with
the outcome of the review.
For current Executive Directors, that
increases in cash salary will not normally
exceed the increase for the general
employee population over the term of this
Policy. More significant increases may be
awarded in certain circumstances including,
but not limited to: where there has been a
significant increase in role size or complexity,
to apply salary progression for a newly
appointed Executive Director, or where
the Executive Director’s salary has fallen
significantly behind market.
Where increases are awarded in excess of
that for the general employee population,
the Committee will provide the rationale
in the relevant year’s Annual Report on
Remuneration.
Executive Directors may receive an employer
contribution consistent with that received
by UK employees (currently matched
contribution up to 6% of base salary)
or the equivalent value in cash. Base salary
is the only element of remuneration that
is pensionable.
The pension provision and rules are the same
for Executive Directors and the main body
of UK staff.
177
Changes
No changes.
No change to
contribution rate
(which is consistent
with that available
to UK employees)
but the absolute
GBP cap has
been removed.
Other Benefits
To provide competitive
benefits.
Includes (but not limited to):
Benefits may vary by role.
No changes.
• Death in service scheme
• Private medical cover
• Permanent health insurance
• Relocation, at the
Committee’s discretion
All benefits are non-pensionable
None of the existing Executive Directors
received total taxable benefits exceeding
5% of base salary during the most recent
financial year, and it is not anticipated that
the cost of benefits provided will exceed this
level over the term of this Policy.
The Committee retains the discretion
to approve a higher cost in exceptional
circumstances (e.g., relocation), or in
circumstances driven by factors outside the
Company’s control (e.g., material increases in
healthcare insurance premiums).
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 178
Corporate Governance
Directors’ Remuneration Policy
continued
179
Purpose and link to strategy
Operation
Opportunity and performance metrics
Changes
Purpose and link to strategy
Operation
Opportunity and performance metrics
Changes
Maximum annual bonus potential for
Executive Directors is 200% of base salary.
For a Threshold level of performance,
a bonus of 25% of the maximum
potential award is payable and for target
performance 50% of maximum is payable.
The annual bonus is
a new arrangement
which will replace
the previous
DFFS Bonus
arrangement.
Bonuses will be based on a combination of
financial and non-financial performance
targets. The Committee has the ability to
determine the relevant metrics, weightings
and targets each year based on evolving
business priorities.
Discretionary Free
Share Scheme (DFSS)
To motivate and
reward longer term
performance, aid
long term retention
of key executive
talent, use capital
efficiently, grow profits
sustainably and
further strengthen
the alignment of
the interests of
shareholders and staff.
Annual Bonus
To motivate and
reward the delivery of
stretching near-term
financial and non-
financial targets
based on the
business strategy.
Bonus payments are determined after
the year end and will be based on
performance achieved against targets
over the financial year.
40% of any bonus will be deferred into
shares for a period of three years, with
the remaining portion paid in cash.
Any bonus earned is non-pensionable.
Where any bonus is deferred, dividend
equivalent shares may be accrued on
awards during the deferral period, only
receivable on shares which vest at the
end of the period.
Bonus payouts are subject to a
potential downwards adjustment
based on an assessment of risk events
considered to have a significant
customer, regulatory or financial
impact over the course of the
performance period.
Bonus payouts are subject to malus
and clawback provisions, i.e., forfeiture
or reduction of unvested awards and
recovery of vested awards. Events
which may lead to the application
of malus and clawback are set out
in the Group’s Malus and Clawback
Framework and include material
financial misstatement, responsibility
for conduct which results in
significant losses, material failure
of risk management, misconduct,
reputational damage and
corporate failure.
The Remuneration Committee has
discretion to adjust the formulaic
vesting outcome to ensure the final
outcome is a fair and true reflection
of underlying business performance,
both financial and non-financial.
No changes other
than providing
flexibility for
dividend equivalent
shares to be
provided.
Maximum opportunity: A maximum face
value on award of 500% of base salary
applies. Threshold performance will result
in vesting of up to 25% of the maximum
award.
DFSS shares are granted as a fixed number
of shares (subject to the quantum limits of
the plan, as described above). The number
granted is reviewed and may be adjusted
by the Committee, for example, if there
has been a significant change in share price.
Vesting of DFSS awards is subject to the
Group’s performance over a three-year
performance period. The performance
measures may include EPS growth, ROE,
relative TSR and a scorecard of non-financial
metrics selected by the Committee.
Details of the measures, weightings and
performance targets used for specific DFSS
grants are included in the relevant year’s
Annual Report on Remuneration.
Executive Directors may be granted
awards annually at the discretion of
the Committee.
Awards may be in the form of nil or
nominal priced options or conditional
shares. Awards are normally granted
on an annual basis and vest after a
minimum of three years subject to
Group performance and continued
employment.
A two-year holding period applies
to vested awards, during which time
Executive Directors may not sell
the vested awards except to cover
tax liabilities.
Awards are subject to a potential
downwards adjustment based on an
assessment of risk events considered
to have a material customer, regulatory
or financial impact over the course of
the performance period.
Awards are subject to malus and
clawback provisions, i.e., forfeiture or
reduction of unvested awards and
recovery of vested awards. Events
which may lead to the application
of malus and clawback are set out
in the Group’s Malus and Clawback
Framework and include material
financial misstatement, responsibility
for conduct which results in significant
losses, material failure of risk
management, misconduct, reputational
damage, and corporate failure.
The Remuneration Committee has
discretion to adjust the formulaic
vesting outcome to ensure the final
outcome is a fair and true reflection of
underlying business performance, both
financial and non-financial.
Dividend equivalent shares may be
accrued on awards during the vesting
period, only receivable on shares which
vest at the end of the period.
Approved Free Share
Incentive Plan (SIP)
To encourage share
ownership across all
employees, using HMRC
approved schemes for
eligible UK employees.
All eligible UK employees participate
in the SIP after completing a minimum
of 12 months’ service. Grants are
made twice a year based on the
results of each half year and vest after
three years subject to continued
employment.
The SIP is an all-employee scheme and
Executive Directors participate on the same
terms as other employees. The acquisition
of shares is therefore not subject to the
satisfaction of a performance target.
Maximum opportunity is in line with
HMRC limits.
No changes.
Admiral Group plc Annual Report and Accounts 2023
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 180180
Directors’ Remuneration Policy
continued
Purpose and link to strategy
Operation
Opportunity and performance metrics
Guideline to be met within five years
of the later of the introduction of the
guidelines and an Executive Director’s
appointment.
400% of base salary.
Changes
No changes.
Shareholding required to be maintained
at the in-employment requirement
(or number of shares held at time of
termination, if lower) for a period of
two years post termination.
400% of base salary (or number of shares
held at time of termination, if lower).
No changes.
In-employment
Shareholding
Requirement
To align interests of
Executive Directors
with shareholders.
Post-termination
Shareholding
Requirement
To further align the
interests of Executive
Directors with
shareholders and
encourage a focus on
long-term sustainable
performance.
The Committee is satisfied that the above Remuneration Policy is in the best interests of shareholders and does not promote excessive
risk-taking. The Committee retains discretion to make changes required to satisfy legal or regulatory requirements and other non-
significant changes to the Remuneration Policy without reverting to shareholders.
Notes to the Remuneration Policy table
Payments from Existing Awards
Executive Directors are eligible to receive payment from any award made prior to the approval and implementation of the 2024
Remuneration Policy. This includes all outstanding awards under the previous 2018 and 2021 Remuneration Policies, or any awards made
prior to appointment to the Board. Details of any such payments will be set out in the Annual Report on Remuneration as they arise.
Selection of Performance Measures
Vesting under the DFSS is linked to the following financial measures: EPS growth, ROE, and relative TSR.
EPS growth has been selected as a performance measure as the Committee feels it is a strong indicator of both long-term shareholder
return and the underlying financial performance of the business. It is transparent and highly visible to executives.
ROE has been selected as the Committee believes that a returns metric reinforces the focus on capital efficiency and delivery of strong
returns for our shareholders, thereby further strengthening the alignment of incentives with Admiral’s strategy.
Relative TSR has been selected to reflect value creation for Admiral’s shareholders as compared to comparative alternative investments.
Since the 2019 award, vesting of DFSS awards is also linked to non-financial measures which may include strategic, customer and other
measures. The Committee believes that the additional emphasis on these measures reinforces Admiral’s focus on our customers and
on other non-financial Group priorities, whilst also more clearly demonstrating alignment of Group remuneration practices with the
requirements of Solvency II.
The specific performance measures and their respective weightings for each DFSS award may vary to reflect the strategic priorities at
the time of the award.
For the annual bonus, forward-looking performance measures, weightings and targets are selected near the start of the year covering
financial and non-financial measures to align with the Group’s strategic objectives.
Performance targets are set taking into account the Company’s strategic priorities and the economic environment in which the
Company operates. The Committee believes the performance targets are stretching and motivational, and that maximum outcomes are
available only for outstanding performance.
181
Remuneration Policy for Other Employees
The Company’s approach to annual salary reviews is consistent across the Group, with consideration given to the role size, complexity,
experience required, individual performance and pay levels in comparable companies.
In general, the Remuneration Policy which applies to other senior executives is consistent with that for Executive Directors.
Remuneration is typically linked to Company and individual performance in a way that reinforces shareholder value creation.
Around 4,300 employees from across the Group, including the Executive Directors, participate in the DFSS. The Committee determines
DFSS awards for those executives within its remit and on an aggregate basis for all other participants in the DFSS. For the Executive
Directors, all DFSS share awards are subject to performance conditions. For other senior managers and employees, a proportion of awards
(ranging from half to two-thirds) are subject to performance, with performance conditions either in line with those described above
or set based on key performance drivers of the individual’s relevant business unit, and the remainder has no performance conditions
attached other than the requirement that the recipient remains an employee of the Group at the date of vesting. Award sizes vary by
organisational level and an assessment of both financial and non-financial performance.
Most holders of DFSS awards receive a DFSS cash bonus, which is equivalent to the dividend on unvested DFSS share awards. The bonus
for a number of senior managers is adjusted for performance against a scorecard of customer and other non-financial metrics.
The Company operates a personal pension scheme which is available to all UK employees once they have completed their probationary
period. For all employees, including the Executive Directors, the Company matches the employee contribution up to a maximum of 6%
of salary or provides the equivalent value in cash.
All UK employees who have served a minimum tenure at Admiral are eligible to participate in the SIP on the same terms. Most overseas
employees receive an equivalent award to the UK SIP awards and these awards have no performance measures attached.
Service Contracts and Leaver/Change of Control Provisions
The Company’s Policy is to limit payments upon termination of employment to pre-established contractual arrangements. In the event
that the employment of an Executive Director is terminated, any compensation payable will be determined in accordance with the terms
of the service contract between the Company and the employee, as well as the rules of any incentive plans. Under normal circumstances,
Executive Directors are entitled to receive termination payments in lieu of notice based on base salary and compensation for loss of
benefits. The Company has the ability to pay such sums in instalments. The notice period for all Executive Directors is one year.
Executive Director
Geraint Jones
Milena Mondini de Focatiis
Date of appointment
13 August 2014
11 August 2020
Contract duration
Rolling contract, 12-month notice period
Rolling contract, 12-month notice period
There is no provision in the Executive Directors’ contracts for compensation to be payable on early termination of their contract over and
above the notice period element. The Executive Directors’ service contracts are available to view at the Company’s registered office.
When considering termination payments, the Committee reviews all potential incentive outcomes to ensure they are fair to both
shareholders and participants. The table below summarises how the awards under the DFSS and Annual Bonus scheme are typically
treated in specific circumstances, with the final treatment remaining subject to the Committee’s discretion.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 182182
Corporate Governance
Directors’ Remuneration Policy
continued
Plan
DFSS
Scenario
Resignation.
Death, injury or disability, redundancy,
retirement, or any other reasons the
Committee may determine.
Change of control.
Timing of vesting
n/a.
Normal
vesting date.
Immediately.
Treatment of awards
Awards lapse under most circumstances
e.g., dismissal for cause or resignation.
Any unvested award will be pro-rated for
time with reference to the proportion
of the vesting period remaining at termination,
and performance, unless the Committee
determines otherwise.
Unless the Committee determines otherwise,
any unvested award will be pro-rated for time
with reference to the proportion of the
vesting period remaining at change of control,
and extent to which the Committee determines
that the performance conditions have been
met or are likely to be met at the point
of change of control.
Annual bonus
Resignation.
Eligibility forfeited under most circumstances,
e.g., dismissal for cause or resignation.
n/a
Death, injury or disability, redundancy,
retirement, or any other reasons the
Committee may determine.
Change of control.
Normal
payment date.
Immediately.
Any bonus payable will be pro-rated for
time with reference to the portion of the
performance period remaining at termination,
and performance, unless otherwise determined
at the discretion of the Committee.
Unless the Committee determines otherwise,
any bonus eligibility will be pro-rated
for time with reference to the proportion
of the performance period remaining at change
of control, and extent to which the Committee
determines that the performance conditions
have been met or are likely to be met at the
point of change of control.
For all leavers (with the exception of termination for cause), vested DFSS awards that are still subject to a holding period will normally
be released in full at the end of the holding period, though the Committee has discretion to determine otherwise, taking into account
the circumstances at the time.
Non-Executive Directors
The Company has entered into letters of appointment with its Non-Executive Directors (NEDs).
Summary details of terms and notice periods are included below.
NED
Mike Rogers
Justine Roberts
Andy Crossley
Michael Brierley
Karen Green
Jayaprakasa Rangaswami
Evelyn Bourke
Bill Roberts
Fiona Muldoon
Term
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
Initial date of appointment
1 February 2023
17 June 2016
27 February 2018
5 October 2018
14 December 2018
29 April 2020
30 April 2021
11 June 2021
2 October 2023
Commencement
of current contract
1 February 2023
17 June 2023
27 February 2024
5 October 2021
14 December 2021
29 April 2023
30 April 2021
11 June 2021
2 October 2023
Notice period
Three months
One month
One month
One month
One month
One month
One month
One month
One month
183
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Details of the 2024 Policy on NED fees are set out in the table below:
Purpose and link to strategy
Operation
Opportunity and performance metrics
To attract and retain NEDs
of the highest calibre
with experience relevant
to the Company
Fee levels are set by reference to NED fees at
companies of a similar size and complexity.
In the event that there is a material
misalignment with the market or a change
in the complexity, responsibility or time
commitment required to fulfil a NED role, the
Board has discretion to make an appropriate
adjustment to the fee level.
The maximum aggregate annual fee for
NEDs is capped at the limit provided for
in the Company’s Articles of Association.
Fees are reviewed annually.
The Group Chair fee is determined by the
Committee after consultation with the
Executive Directors. The NED fees are
determined by the Group Chair together
with the Executive Directors.
Additional fees are payable for acting as
Senior Independent Director or as Chair or
member of a Board Committee and may be
payable as appropriate in relation to other
additional responsibilities (e.g., attending
meetings overseas).
Fees are paid in a mix of cash and Company
shares for the Company Chair, and in
cash for other Non-Executive Directors.
The Board retains discretion to vary the mix
or determine that fees are paid entirely in
cash or Company shares.
There are no changes to the 2024 Policy on NED fees from the 2021 version.
Pay-for-Performance: Scenario Analysis
The following charts provide an estimate of the potential future reward opportunities for the Executive Directors, and the potential split
between the different elements of pay under different performance scenarios in a given year.
Illustrative Scenario Analysis
Group CEO
Minimum
100%
On-target
29%
27%
43%
Maximum
17%
Maximum with
share price growth
14%
Group CFO
Minimum
100%
32%
26%
51%
61%
On-target
30%
28%
42%
Maximum
17%
33%
50%
Maximum with
share price growth
14%
26%
60%
£0
£1,000,000
£2,000,000
£3,000,000
£4,000,000
£5,000,000
£6,000,000
£7,000,000
Key
Fixed remuneration
Annual Bonus
DFSS
The NEDs are not eligible to participate in the SIP, DFSS or Annual bonus scheme and do not receive any pension contributions.
The value of DFSS awards is calculated based on the average share price in the last three months of 2023 £25.69 and the number of DFSS
shares to be awarded in 2024 (95,000 and 55,000 shares respectively).
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
184
Corporate Governance
Directors’ Remuneration Policy
continued
The performance scenarios are based on the following assumptions:
Fixed remuneration
On-target remuneration
Maximum remuneration
Maximum remuneration with
50% share price appreciation
Comprising the 2024 base salary, benefits (based on the annualised 2023 single figure for the Group
CEO and CFO) and a 6% pension contribution (uncapped).
Fixed remuneration plus the value of the Annual Bonus and DFSS achieving on-target performance
of 50% of maximum.
Fixed remuneration plus the value of the Annual Bonus and DFSS achieving maximum performance.
Maximum remuneration increased to assume a 50% increase to the value of the shares granted
under the DFSS since the point of grant.
Approach to Remuneration Relating to New Executive Director Appointments
External Appointments
When appointing a new Executive Director, the Committee’s policy is to set the remuneration package for a new Executive Director in
accordance with the approved Remuneration Policy at the time of the appointment.
In determining the appropriate remuneration for a new Executive Director, the Committee will consider all relevant factors to ensure that
arrangements are in the best interests of the Company and its shareholders. Where an individual is appointed on an initial base salary that
is below market, any shortfall may be managed with phased increases over a period of time, subject to the individual’s performance and
development in the role. This may result in above-average salary increases during this period.
The Committee may also make an award to ‘buy out’ incentive arrangements forfeited on leaving a previous employer. In doing so, the
Committee will consider relevant factors including any performance conditions attached to the forfeited awards and the likelihood of
those conditions being met to ensure that the value of the buy-out award is no greater than the fair value of the awards it replaces.
The Committee may also avail itself of Listing Rule 9.4.2 R if appropriate for the buy-out of incentive arrangements (i.e., if the terms of
participation for the prospective Executive Director are similar to all, or substantially all employees who participate in the plan, then
approval by ordinary resolution of the shareholders of the listed Company in general meeting is not required).
Internal Appointments
Remuneration for new Executive Directors appointed by way of internal promotion will similarly be determined in line with the Policy for
external appointees, as detailed above. Where an individual has contractual commitments made prior to their promotion to the Board,
the Company will continue to honour these arrangements. Incentive opportunities for below-Board employees are typically no higher
than for Executive Directors, but measures may vary if necessary.
Other Directorships
Executive Directors are permitted to accept appointments as Non-Executive Directors of companies with the prior approval of the Group
Board. Approval will be given only where the appointment does not present a conflict of interest with the Group’s activities, and where
the wider exposure gained will be beneficial to the development of the individual.
Considerations of Conditions Elsewhere in the Group
The Committee considers the pay and employment conditions elsewhere in the Group when determining remuneration for
Executive Directors.
Considerations of Shareholder Views
When determining remuneration, the Committee takes into account best practice guidelines issued by institutional shareholder bodies.
The Committee is open to feedback from shareholders on the Remuneration Policy. It will continue to monitor trends and developments
in corporate governance and market practice to ensure the remuneration structure for our Executive Directors remains appropriate.
Considerations of Regulatory Requirements
The Committee regularly reviews the Remuneration Policy and structure in the context of Solvency II remuneration guidance, and EBA,
PRA, and FCA expectations regarding the supervision of insurance firms. The Group Chief Risk Officer periodically attends Committee
meetings as part of this process and provides support to the Committee in understanding any risk-related implications of remuneration
decisions. Whilst the Remuneration Policy includes several features which help ensure compliance with current regulatory guidance, the
Committee reserves the discretion to adjust the Remuneration Policy, and its execution, to take into account any developments in such
regulatory guidance.
185
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Annual Report on Remuneration
This section of the report provides details of how Admiral’s Remuneration Policy was implemented in 2023 and
how the Remuneration Committee intends to implement the proposed Remuneration Policy in 2024 (subject to
shareholder approval).
Remuneration Committee Membership in 2023
The Board sets the Group’s Remuneration Policy and, through the authority delegated to it by the Board, the Committee is responsible
for making recommendations to the Board on the implementation of the Remuneration Policy. Its remit includes recommending
the remuneration of the Group Board Chair and the Executive Directors; approving the remuneration of senior management; and
determining the composition of and awards made under the performance-related incentive schemes.
At the end of 2023 the Committee comprised Evelyn Bourke, Michael Brierley, Justine Roberts and Karen Green. The Committee had
seven scheduled meetings and it also held a number of ad hoc/late notice meetings to deal with specific issues in a timely manner.
The Group Chair, CEO, CFO and CRO are invited to meetings where the Committee considers it appropriate to obtain their advice on
Group strategy and performance and senior executive pay strategy. The Group CEO typically attends all meetings. No director is involved
in deciding their own remuneration outcome. The members of the Committee do not have any personal financial interests (other than
shareholdings), or any conflicts, that relate to the business of the Committee. The Committee members do not have any day-to-day
involvement in the running of the Group.
Committee activities
During the year ended 31 December 2023, in addition to its regular activities, the Committee also:
• Reviewed and proposed revisions to the Remuneration Policy in anticipation of the upcoming binding vote by shareholders at the AGM
in 2024;
• Reviewed the implementation of a set of group-wide non-financial performance measures for the DFSS;
• Reviewed the performance ranges for the financial measures for the 2023 DFSS; and
• Reviewed the design of annual incentives as part of the ongoing work on the Group’s reward strategy.
As mentioned in the Governance Report, during the year ended 31 December 2023, the Committee also performed its regular activities:
• Reviewed the DFSS vesting and bonus arrangements for Executive Directors, senior management and relevant staff (Material Risk
Takers) covered under Solvency II;
• Reviewed Admiral’s Gender Pay Gap reporting statistics;
• Reviewed risk events and their impact on variable pay;
• Undertook an evaluation of the Committee’s performance during the year;
• Reviewed the Committee’s terms of reference;
• Reviewed the Group’s Malus and Clawback Framework; and
• Reviewed external remuneration trends and market conditions.
Remuneration topics were discussed with employees at the Employee Consultation Group (ECG), which met four times over the year.
Key themes discussed at the ECG were: Executive Director compensation, Real Living Wage, the ongoing cost of living crisis, employee
benefits and changes to the HMRC dividend allowance.
On 1 March 2024, the Chair of the Remuneration Committee and Group Head of Reward met with the ECG to discuss the remuneration
for the Executive Directors and the proposed changes to the 2024 Directors’ Remuneration Policy. The detail of the Policy was be covered
in depth, with time set aside for members of the ECG to give feedback and ask any questions they felt were relevant. There was some
good discussion about how the remuneration for Executive Directors linked to wider colleague pay.
Shareholder engagement on the 2024 Directors’ Remuneration Policy
In October of 2023, we wrote to our top 35 shareholders, outlining the proposed changes to the Directors’ Remuneration Policy and
the rationale for the changes. This distribution covered around 70% of the shareholder base. Our brokers considered this level of
engagement to be very thorough. We consulted with our brokers on the list and overall coverage before issuing the letter.
The Committee Chair held follow up meetings with eight investors, received with written responses from two shareholders, and ‘no need
to meet or positive’ responses from a further five. A further meeting was held in February 2024 with one investor. Additionally, a letter
was issued to the four main proxy agencies, with meetings happening in January and February 2024.
The overall summary of the feedback from shareholders shows broad support for the policy changes which are being proposed.
There was a good deal of feedback focusing on the implementation of the policy changes, including ensuring that measures and targets
in the DFSS and new Annual Bonus Plan are relevant and stretching. Shareholders commented on the distinctive culture of Admiral with
its high level of share ownership and wanted assurance that the Policy would not lead to unfairness between Executive Directors and the
wider population. This has been taken into consideration.
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186186
Corporate Governance
Annual Report on Remuneration
continued
Committee effectiveness review
As part of the Committee’s annual review of its performance and processes, each Committee member and regular attendee completed
a questionnaire designed to assess the Committee’s performance, including the activities and general operation of the Committee.
The Committee discussed the results of the review at its meeting in December 2023 and concluded that, overall, the Committee
remained effective.
To help improve its performance over the coming year, the Committee highlighted the importance of discussing key issues in a timely
fashion and getting management engagement earlier to ensure sufficient time for management to change direction where needed or
implement a new plan. It was noted that Committee support had improved.
Advisors to the Committee
During the year, to enable the Committee to reach informed decisions, we obtained advice on market data and trends from independent
consultants Willis Towers Watson (WTW). WTW reported directly to the Committee Chair and are signatories to and abide by the Code of
Conduct for Remuneration Consultants (which can be found at www.remunerationconsultantsgroup.com). WTW also provided advice to
the Company on capital modelling, claims metrics, and pricing.
The fees paid to WTW for work supporting the Committee in 2023 (based on time and materials) totalled £75,818.
The Committee undertakes due diligence periodically to ensure that advisors remain independent of the Company and that the advice
provided is impartial and objective. The Committee is satisfied that the advice provided by WTW is independent.
Summary of Shareholder Voting at the 2023 AGM
The table below shows the results of the advisory vote on the 2022 Annual Report on Remuneration.
Annual Report on Remuneration Total number of votes
% of votes cast
For
225,445,845
88.50%
Against
29,282,756
11.50%
Total votes cast
254,728,601
Abstentions
4,420
Total Single Figure of Remuneration for Executive Directors (audited)
The table below sets out the total single figure remuneration received by each Executive Director for the years ended 31 December 2023
and 31 December 2022:
Executive Director
Milena Mondini
de Focatiis
Geraint Jones
2023
2022
2023
2022
1.
Base salary
£737,326
£715,850
£433,472
£416,800
2.
Benefits
£455
£480
£455
£480
3.
Pension
Total
fixed pay
£15,000 £752,781
£15,000 £731,330
£15,000 £448,927
£15,000 £432,280
The figures have been calculated as follows:
1. Base salary: amount earned for the year.
2. Benefits: the taxable value of annual benefits received in the year.
3. Pension: the value of the Company’s contribution during the year.
4. SIP: the face value at grant.
4.
SIP
5.
DFSS
6.
DFSS bonus
£3,605 £1,011,775 £296,017
£3,589 £1,139,007 £399,085
£589,791 £172,676
£3,605
£637,324 £260,516
£3,589
Total
variable pay
£1,311,397
£1,541,681
£766,072
£901,429
Total
remuneration
£2,064,178
£2,275,5117
£1,214,999
£1,333,709
5.
DFSS: the value at vesting of shares vesting on performance over the three-year periods ending 31 December 2023 and 31 December
2022. For the 2023 figures, given that vesting occurs after the 2023 Directors’ Remuneration Report is finalised, the figures are based
on the average share price in the last three months of 2023 of £25.69. The 2022 figures have been trued up based on the actual
share price on vesting of £22.62 for Milena Mondini de Focatiis and £23.92 for Geraint Jones. For 2023, unfavourable movements
of -£348,942 and -£203,408 are included in the DFSS value, attributable to a decrease in the share price over the vesting period for
Milena Mondini de Focatiis and Geraint Jones, respectively. For 2022, an increase of £9,567 of the DFSS value is attributable to share
price appreciation over the vesting period for Milena Mondini de Focatiis. For Geraint Jones, a decrease of £100,981 is attributable
to share price depreciation over the vesting period. For the purpose of clarity, it should be noted that the awards for the Executive
Directors were made at different points in 2020, which has led to the difference in these figures.
187
6.
DFSS bonus: the bonus is equivalent to dividends that were paid in respect of the performance year on all outstanding DFSS shares
awarded but not yet vested. The bonus is paid in two tranches annually:
i) for H1 2023: a bonus of £144,778 was paid to Milena Mondini de Focatiis, based on 270,000 unvested shares, a scorecard outcome
of 105.14% and the interim dividend of 51p per share; and a bonus of £84,454 was paid to Geraint Jones based on 157,500 unvested
shares and a scorecard outcome of 105.14% and the interim dividend of 51p per share.
ii) for H2 2023, due for payment in May 2024: a bonus of £148,330 is due to Milena Mondini de Focatiis, based on 270,000 unvested
shares, a scorecard outcome of 107.72% and the final dividend of 52p per share; and a bonus of £86,526 is due to Geraint Jones
based on 157,500 unvested shares and a scorecard outcome of 107.72 % and the final dividend of 52p per share.
The payments for H2 2023 are subject to completion of internal governance procedures.
7.
Milena Mondini de Focatiis received an Anniversary award of £2,500 during 2022 which is included in the total remuneration number.
Anniversary payments are made to all colleagues who reach significant milestones in their employment with the Group.
Total Single Figure of Remuneration for Non-Executive Directors (audited)
The table below sets out the total single figure remuneration received by each NED for the years ended 31 December 2023 and
31 December 2022.
Director
Annette Court1
Mike Rogers2
Karen Green
Jean Park3
Justine Roberts4
Andy Crossley5,6
Michael Brierley6
Jayaprakasa Rangaswami7
Evelyn Bourke
Bill Roberts8
Fiona Muldoon9
2023
2022
Total fees
Fees
£82,136
£270,042
£113,000
(£1,477)
£106,045
£188,000
£152,000
£85,955
£95,000
£103,352
£20,928
Taxable benefits10
£879
£889
£2,205
–
£1,253
£5,166
£4,806
£932
£3,605
£25,161
–
Fees
£346,084
–
£103,750
£153,000
£87,875
£170,667
£140,000
£93,583
£95,000
£75,000
–
Taxable benefits10
£1,739
–
£808
£130
£769
£1,918
£992
£528
£1,659
£8,135
–
1 The 2023 fee for Annette Court is £82,136 (a cash fee of £57,495 and a share fee of £24,641) and is reflective of her leave date of 27 April 2023.
2 Mike Rogers was appointed as the Group Chair on 27 April 2023.
3
Jean Park’s fees for 2023 are reflective of her retiring from the board on 20 January 2023. Additionally, there was an overpayment of fees in 2022, which were corrected and paid back in 2023,
leading to the negative fee showing for 2023.
Justine Roberts joined the Group Remuneration Committee on 31 January 2023. In addition, Justine was confirmed as Senior Independent Director on a permanent basis effective 31 January 2023,
having undertaken the role on an interim basis since 22 February 2022.
4
5 Andy Crossley was appointed Chair of the Group Risk Committee effective from 23 October 2023. This followed a period as interim Chair since 22 February 2022.
6 The fees for Andy Crossley and Michael Brierley include additional fees in relation to their positions as Chair of the EUI Limited Board of Directors and Admiral Financial Services Limited Board of
Directors, respectively.
Jayaprakasa Rangaswami left the Group Remuneration Committee as an interim member on 31 January 2023.
7
8 The fee for Bill Roberts includes an additional fee in relation to his position as a NED of the Elephant Board of Directors, which he was appointed to on 1 February 2023.
9 Fiona Muldoon was appointed as an independent Non-Executive Director and member of the Group Audit Committee on 2 October 2023.
10 Taxable benefits represent those expense reimbursements relating to travel, accommodation and subsistence in connection with the attendance at Board, Subsidiary and Committee meetings
during the year, which are deemed by HMRC to be taxable. The amounts in the table are ‘grossed-up’ to include the UK tax paid by the Company on behalf of the Non-Executive Directors.
Non-taxable expense reimbursements have not been included in the table.
Incentive Outcomes for Financial Year to 31 December 2023 (audited)
DFSS Awards Vesting on Performance to 31 December 2023
On 23 September 2021, Milena Mondini de Focatiis was granted an award under the DFSS of 90,000 shares with a value at the date
of award of £3,109,500 (based on a grant date share price of £34.55).
On 23 September 2021, Geraint Jones was granted an award under the DFSS of 52,500 shares with a value at the date of award
of £1,813,875 (based on a grant date share price of £34.55).
Vesting of the award was based 80% on the achievement of financial performance measures and 20% on a scorecard of
non-financial measures.
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Corporate Governance
Annual Report on Remuneration
continued
189
Financial performance outcomes
The performance measures applicable to these awards are, EPS growth, TSR vs. FTSE 350 (excluding investment companies), and ROE,
weighted equally and all measured over the three-year period 1 January 2021 to 31 December 2023.
Over this period there was solid return for our shareholders, with TSR slightly above median vs the FTSE350 benchmark, and with ROE
of 41.60%. This is in contrast to an EPS growth of -37.7%, which was impacted by the very high EPS for 2020, which was impacted by the
pandemic period. The combination of these shareholder returns, and EPS growth contributes to a vesting of 37.20% for the financial
measures. The Committee reviewed this vesting outcome and concluded that it was appropriate.
DFSS bonus for 2023
In line with the Remuneration Policy, the Group paid a bonus to all holders of DFSS shares in 2023, which was equivalent to the dividend
payable on all outstanding DFSS shares awarded but not yet vested. The 2023 Bonus for Executive Directors also includes a potential +/-
20% adjustment to the DFSS bonus based on performance of a set of non-financial performance metrics, which for 2023 was grouped
into three categories: Strategy, customer and ESG.
For the customer and ESG strategic pillars, relevant quantitative data was used to assess performance and an outcome was determined.
For the strategy, the Board members derived a collective view on the progress against the strategic priorities.
The table below details the Company’s performance against the performance range.
Details of the measures used in the scorecard and outcomes are summarised in the table below:
Actual outturn
-37.70%
Vesting Contribution
(% of maximum)
0.00%
Category
Strategy
Performance measure
EPS growth
Threshold
0.5% growth
Maximum
36% growth
Performance range
Median
Upper quartile
25%
55%
TSR vs. FTSE
350 (excluding
investment
companies)
Return on
Equity (ROE)
Vesting
Vesting schedule
10% for achieving
threshold with straight
line relationship to
100% for maximum
performance
25% for median, with
straight line relationship
to 100% for upper
quartile
25% for achieving
threshold with straight
line relationship to
100% for maximum
performance
56th percentile
45.20%
41.60%
66.40%
37.20%
Non-financial performance outcomes
The individual vesting contribution of the non-financial measures for Milena Mondini de Focatiis and Geraint Jones are set out in the table
below. These aggregated to an overall rating across the 3 years of 69.98% and 69.83% respectively and have a weighted outcome of
14.00% and 13.97%, respectively.
Further details of the scoring for 2023 can be seen on page 190.
Overall Vesting
The combined vesting outcomes for Milena Mondini de Focatiis and Geraint Jones can be seen in the below table.
DFSS Vesting Component
Financial performance measures:
EPS growth, TSR vs. FTSE 350
(excluding investment companies)
and Return on Equity (ROE)
Non-financial performance measures
Total
Award Weighting
Performance outcomes
Vesting (% of maximum)
Milena Mondini
de Focatiis
Geraint Jones
Milena Mondini
de Focatiis
Geraint Jones
Milena Mondini
de Focatiis
Geraint Jones
80.00%
20.00%
100.00%
37.20%
29.76%
69.98%
69.83%
14.00%
43.76%
13.97%
43.73%
The Committee reviewed the vesting outcomes and concluded that they were appropriate, and that no adjustments were required.
Based on performance and scorecard outcomes the total amount that will vest in September 2024 to Milena Mondini de Focatiis will
therefore be 43.76% (i.e., 39,384 shares), and the total amount that will vest to Geraint Jones will be 43.73% (i.e., 22,958 shares), subject to
their continued employment on the vesting date.
Vested DFSS awards are subject to clawback provisions. Events which may lead to the application of clawback are set out in the Group’s
Malus and Clawback Framework and include material financial misstatement, responsibility for conduct which results in significant losses,
material failure of risk management, misconduct, reputational damage or corporate failure.
Metrics
Overall scoring from the Board on scorecard of
measures around:
• Progress towards Admiral 2.0
• Diversification – existing non-motor product
development (both top line and KPIs), in
particular Household and Lending
• Diversification – development of new products
• Progress towards defining motor
mobility strategy
Customer Feedback (NPS)
Customer Outcomes (CRMI)
People (Trust Index)
Diversity (Female representation at Senior level)
Inclusion (Inclusion survey results)
Target
Maximum
H1
H2
Outcomes
(% out weighting for each category)
16.50%
33.00%
25.30%
8.50%
8.50%
9.00%
3.75%
3.75%
50.00%
100.00%
17.00%
17.00%
18.00%
7.50%
7.50%
100.00%
120.00%
9.98%
5.46%
9.44%
12.42%
9.00%
5.63%
7.50%
62.86%
105.14%
69.29%
107.72%
Customer
ESG
Total
Overall scorecard
multiplier
The Admiral Group Board makes an annual judgment based on its collective view of progress against the stated strategic measures.
The Board was satisfied that progress against strategic aims continued to be solid, and having reviewed business context and supporting
data, assessed this progress was worthy of 76.67% of maximum.
Customer outcome and feedback scoring is measured against entity set targets, with results assessed for each half year.
Customer outcomes for the UK business improved markedly in H2 2023 to 70% of maximum vs. 20% for H1 2023, as the pressure on
claims processing and staff numbers eased through the year. Customer feedback was generally steady through the year, with a slight fall
in outcomes for Admiral Money and Elephant between the half years; Admiral Seguros’ outcomes for H2 fell below threshold, with 0%
outcome, compared with 55% for H1.
Trust Index scores are measured relative to the benchmark from the Great Place To Work® (GPTW) survey annually, with outcomes
determined mechanically relative to benchmark. For 2023, the Group’s score was up 1% compared with 2022, moving to 85% from 84%.
However, the GPTW benchmark score also increased by 1% from 2022 to 87% for 2023. This means that the score remains 2% below the
benchmark, giving an outcome of 50% for the 2023 performance year.
The Inclusion survey results are scored on a similar basis to the Trust Index, relative to the GPTW benchmark. Scores improved for 2023 in
comparison to 2022, with all responses coming at or above the benchmark, meaning 100% outcome for this element.
The Diversity measure outcome based on mechanical scoring against set targets – is slightly down on last year due to headcount
movements, with a year-end position of 35.29%, which equates to an outcome of 75% of maximum.
The overall outcome of the scorecard was assessed as a 105.14% multiplier to the DFSS bonus paid for H1 2023 and a 107.72% multiplier
to the DFSS bonus for H2 2023 (to be paid in 2024) for Milena Mondini de Focatiis and Geraint Jones.
In addition, the Executive Directors’ DFSS bonus is subject to a further risk adjustment (downwards only) to take account of risk events
considered to have a material customer, regulatory or financial impact.
During the year, and in addition to the above, the Committee took into account relevant trigger events as part of the established risk
adjustment process, and determined it was not appropriate to apply a downwards adjustment on that basis.
DFSS bonus payments are subject to malus and clawback provisions.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
190190
Annual Report on Remuneration
continued
Scheme Interests Granted in 2023 (audited)
DFSS
On 28 September 2023, Milena Mondini de Focatiis was granted an award of 90,000 shares and Geraint Jones was granted an award of
52,500 shares under the DFSS. Using the share price on the date of the grant of £23.72, this is the equivalent to £2,134,800 or 290% of
Milena’s base salary and £1,245,300 or 287% of Geraint’s base salary respectively.
The three-year period over which performance will be measured is 1 January 2023 to 31 December 2025. The award is eligible to vest on
the third anniversary of the date of grant i.e., September 2025, subject to performance and to continued employment. Vested awards will
be subject to an additional two-year post-vest holding period.
The award will vest on EPS growth, TSR vs. FTSE 350 (excluding investment companies), ROE and a scorecard of strategic, customer
and other non-financial measures, inclusive of customer outcomes, ESG and strategic measures. There will also be the potential for
downwards adjustment subject to an assessment of risk events considered to have a material customer, regulatory or financial impact
over the course of the performance period. The performance conditions are summarised in the table below:
Award Element
Financial
Performance
Description
Performance measure
Earnings per share (EPS) EPS growth over
the performance
period
Performance range
Weighting
26.67%
Threshold
Growth
of 0%
Stretch
Growth
of 10%
Maximum
Growth
of 30%
Vesting
25% for reaching
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
Return on Equity (ROE) ROE over the
performance
period
Total Shareholder
Return (TSR)
Non-financial
Performance
Strategy
Strategic
Assessment
Customer Group NPS
ESG
Diversity
Inclusion
TSR ranked on
a relative basis
vs FTSE 350
comparator
group
The Board’s
assessment of
progress towards
strategic aims.
The outcome of
the Group NPS,
weighted by
entity customer
headcount.
The proportion
of women
in senior
management
roles.
The Group’s
Inclusion scores
from the GPTW
Survey, scored on
a basis relative to
the benchmark.
26.67%
25%
35%
45% 25% for reaching
26.67%
Median
N/A
Top
Quartile
Threshold 75% for
achieving Stretch and
100% for Maximum
performance.
25% for reaching
Threshold and
100% for Maximum
performance.
6.60%
N/A
N/A
N/A Vesting of between
0% and 100% based
on the outcome of the
Board’s assessment.
6.80%
35
48
55 25% for reaching
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
3.30%
30%
36%
40% 25% for reaching
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
3.30%
>10%
below
bench-
mark
N/A
At
bench-
mark
20% for reaching
Threshold, 40% for
>6% below benchmark
and 100% for Maximum
performance.
DFSS awards are subject to malus and clawback provisions, which are set out in the Group’s Malus and Clawback Framework.
191
Setting the 2023 DFSS Financial Performance Ranges
The financial performance targets for the 2022 DFSS scheme were changed more significantly than in previous years due to the
exceptional earnings per share achieved during 2021 and the impact of the Group’s diversification strategy on ROE. The Remuneration
Committee chair met with a number of shareholders to hear their views. While understanding the unique circumstances of 2020 and
2021, most shareholders preferred reversion to the target setting approach of the past. The proposed 2023 DFSS financial performance
targets are set out below:
Earnings Per Share
The EPS measure was changed to an absolute EPS target range for the 2022 DFSS scheme because a growth target was considered
unsuitable due to the exceptionally high EPS achieved during 2021. Following feedback from shareholders, the proposed target for the
2023 scheme has reverted to an EPS growth target.
Return on Equity
The 2023 scheme performance range has been set considering the Group’s strategic objective of long-term growth and diversification,
which is projected to increase equity and result in a flatter ROE over the next few years. Recognising shareholder feedback, the proposed
ROE targets for the 2023 scheme are more challenging than the 2022 scheme, with higher targets set for threshold, stretch and
maximum in the performance range, moving from 20-40% for 2022 to 25-45% for 2023.
Total Shareholder Return
TSR is assessed on relative performance and is therefore considered an appropriate measure of the Group’s return to shareholders.
Consequently, no changes to the measure were proposed for the 2023 scheme.
SIP
In March 2023, Milena Mondini de Focatiis and Geraint Jones were granted awards under the SIP of 95 shares with a face value of
£1,787.43, which will mature on 13 March 2026, subject to continued employment.
In August 2023 Milena Mondini de Focatiis and Geraint Jones were granted awards under the SIP of 77 shares with a face value of
£1,817.97, which will mature on 21 August 2026, subject to continued employment.
Exit Payments (audited)
No exit payments were made to an Executive Director during the year.
Payments to Past Directors (audited)
Following stepping down from the role of CEO on 31 December 2020, David Stevens has continued as an adviser to the Group in a part-
time capacity. During 2023, he earned a salary of £60,090.
He also sits as a Non-Executive Director on the Board of Admiral Financial Services Limited for which he receives no fee.
Implementation of Remuneration Policy for 2024
Executive Directors
Salary, Pension and Benefits
Salaries for the Executive Directors in 2024 have been determined in line with the proposed Remuneration Policy, subject to shareholder
approval. Milena Mondini de Focatiis’ salary was increased by 4.97% to £774,000 effective 1 January 2024 and Geraint Jones’ salary was
increased by 7.27% to £465,000 effective 1 January 2024.
Consideration was given to ensure these increases are fair relative to the proposed increases for employees across the Group for 2024.
The average pay review in 2024 is expected to be in the region of 5% as we continue to support our people through the impact of
the cost of living challenges. The benchmarking of the fixed elements of remuneration for Milena and Geraint indicated that their
salaries were significantly lower than the lower quartile of peer companies across the FTSE 100 and major UK and European insurers.
The proposed salary increases are designed to align their salaries more towards the lower quartile of peer salaries.
The Remuneration Committee notes the increase for Geraint Jones is above that which is expected for most colleagues. This increase
begins to address the competitiveness of his base pay relative to the lower quartile of the market. The Remuneration Committee intends
to increase his salary to the lower quartile of the market by the end of this policy period, by increments. The Remuneration Committee
will review his increase each year to ensure it is appropriate and moves his positioning as intended. This means that the increase for
Geraint may be ahead of those generally given to colleagues for the duration of the policy.
The Executive Directors will continue to participate in the Group Personal Pension Plan on a consistent basis with other employees, where
employee contributions are matched up to a maximum 6% of base salary. The Company will offer individuals a choice between pension
contributions and cash in lieu. Both Executive Directors will continue to receive benefits in line with the Policy. Both will benefit from the
removal of the cap of £15,000 on the absolute amount of contribution.
DFSS
The Committee intends to make awards under the DFSS to Milena Mondini de Focatiis and Geraint Jones in September 2024 of 95,000
and 55,000 shares, respectively. The Committee will confirm the size for each of the 2024 DFSS awards closer to the award date.
In determining whether the award size should differ from the above number of shares, the Committee will consider any large share price
change over the prior year, and in particular whether this is due to external factors out of management control. The actual 2024 DFSS
awards will be disclosed in the 2024 Annual Report on Remuneration.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 192192
Annual Report on Remuneration
continued
It is currently anticipated that the vesting of 2024 DFSS awards for Milena Mondini de Focatiis and Geraint Jones will continue to be
assessed across the three-year performance period using an 75% performance weighting on EPS growth, TSR (measured on a relative
basis, equally split between the FTSE100 and a subset of insurance peers with substantial general insurance segments) and ROE, and a
25% weighting on a scorecard of strategic, customer and other non-financial metrics. The measures and performance ranges for the
2024 DFSS are set out in the table below.
Award Element
Financial
Performance
Description
Performance measure
Earnings per share (EPS) EPS growth over
the performance
period
Return on Equity (ROE) ROE over the
performance
period
Total Shareholder
Return (TSR)
Non-financial
Performance
Strategy
Strategic
Assessment
Customer Group NPS
ESG
Diversity
Inclusion
TSR ranked on
a relative basis
vs FTSE 100 and
insurance peer
comparator
group
The Board’s
assessment of
progress towards
strategic aims.
The outcome of
the Group NPS,
weighted by
entity customer
headcount.
The proportion
of women
in senior
management
roles.
The Group’s
Inclusion scores
from the GPTW
Survey, scored on
a basis relative to
the benchmark.
Performance range
Weighting
25.00%
Threshold
0%
Stretch
35%
Maximum
Vesting
45% 25% for reaching
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
25.00%
30%
N/A%
45% 25% for reaching
25.00%
Median
N/A
Threshold, and 100% for
Maximum performance.
Top
Quartile
25% for reaching
Threshold and 100% for
Maximum performance.
8.25%
N/A
N/A
N/A Vesting of between 0%
and 100% based on the
outcome of the Board’s
assessment.
8.50%
35
48
55 25% for reaching
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
2.06%
30%
36%
40% 25% for reaching
2.06%
>10%
below
bench-
mark
N/A At bench-
mark
Threshold, 75% for
achieving Stretch and
100% for Maximum
performance.
25% for reaching
Threshold, 40% for >6%
below benchmark and
100% for Maximum
performance.
Carbon
emissions
tbc1
4.13%
tbc1
tbc1
tbc1 tbc1
1 Carbon emissions target to be confirmed, subject to work of base lining the Company’s carbon emissions as set out below.
The Committee intends that this set of financial measures applies to the DFSS awards made throughout this policy period, which is to say
the awards for 2024, 2025 and 2026.
It has been an aim of the Committee to include carbon emissions targets as part of the NFM scorecard to support the delivery of the
Group’s net zero targets. For the 2024 scheme, the non-financial measures will comprise, Group NPS, Diversity, Inclusion and carbon
emissions targets. This is subject to the work of base lining the Company’s carbon emissions which has been delayed due to the agency
having a back log.
There will be the potential for downwards adjustment subject to an assessment of risk events considered to have a material customer,
regulatory or financial impact over the course of the performance period.
193
Annual Bonus
Under the 2024 Policy, subject to shareholder approval, Milena Mondini de Focatiis and Geraint Jones will be eligible to participate in an
Annual Bonus in 2024. The bonus opportunity will be 0-200% of base pay for the Executive Directors, with an on-target award of 100%.
Performance will be based on the following measures and weightings:
Measure
Financial Measures (75% of total)
Profit
Turnover
Non-financial Measures (25% of total)
Trust Index (people)
Customer Outcomes (CRMI)
Total
Weighting
67.5%
7.5%
12.5%
12.5%
100%
The profit measure will be profit before tax. Turnover is the total value of the revenue generated by the Group. Both Profit and
Turnover values are reported in the ARA annually, and the values used to determine Annual Bonus outcomes will be consistent with the
reported figures.
Customer Outcomes comprise customer measures and associated outcomes from the Group entities for the performance year, in which
outcomes are scored relative to entity-set performance ranges, with mechanical outcomes based on performance for each month.
The Trust Index is the average of employee responses to the core survey questions in the Great Place To Work® (“GPTW”) survey. This is
scored relative to the benchmark of the world’s 25 best workplaces provided by GPTW.
The Remuneration Committee will follow a two-phase methodology for determining Executive Director Annual Bonus outcomes; the
formulaic outcome against the measures detailed above followed by a holistic review of the extent to which that formulaic outcome is
reflective of the overall performance of the Group.
Phase 1: Formulaic Review. At the end of the performance period, the final performance against each measure is assessed on a
standalone basis. Data for the measures is taken from the Group’s financial reports which are reviewed by the Audit Committee and
approved by the Board.
Phase 2: Holistic Review. The Committee will then consider the overall fairness of the formulaic Group scorecard outcome in the context
of the business performance in the prevailing market conditions, which can be assessed against a non-exhaustive basket of measures
such as:
• Executive Director personal performance
• Dividend and/or share price performance
• Impact on strategic delivery
• Risk appetite adherence
• Loss and/or combined ratio outcomes
• Financial stability of the Group
• Wider ESG performance
• Inclusion and diversity measures
• Delivery of technology milestones.
The Committee will be able to carefully determine a final bonus outcome for each Executive Director that is fair and appropriate for the
year’s performance and is in the best interests of shareholders.
A detailed summary of the factors used to determine bonus outcomes for the Executive Directors will be disclosed in the DRR following
the performance period.
In line with the position set out in the Policy, 40% of any bonus earned will be subject to deferral into Admiral Group shares for a period
of three years.
There will be the potential for downwards adjustment subject to an assessment of risk events considered to have a material customer,
regulatory or financial impact over the course of the performance period.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 194194
Annual Report on Remuneration
continued
Chair and Non-Executive Directors
Fees for the Board Chair and other Non-Executive Directors were reviewed in January 2024 having previously been last reviewed in 2023.
Increases were made, effective 1 January 2024, to reflect the increased time commitment of these roles.
Chair1
NED base fee
Additional fee for chairing:
• Audit Committee
• Group Risk Committee2
• Remuneration Committee
• Nomination and Governance Committee
Additional fee for membership of:
• Audit Committee
• Group Risk Committee
• Remuneration Committee
• Nomination and Governance Committee
Additional fee for being Senior Independent Director
2024 fee (p.a.)
£386,250
£73,500
2023 fee (p.a.)
£375,000
£70,000
£26,250
£45,150
£26,250
£10,500
£15,750
£15,750
£12,600
£8,400
£17,850
£25,000
£43,000
£25,000
£10,000
£15,000
£15,000
£12,000
£8,000
£17,000
1 The 2023 fee shown is for the new Chair, Mike Rogers. The Board Chair does not receive any additional fees (e.g., for committee membership) as these are included in the overall Chair fee.
2 The fee payable for 2024 for Chairing the Group Risk Committee continues to include an additional fee in recognition of the increased time commitment required due to the Admiral Internal
Model process. It comprises a base fee of £26,250 and an additional fee of £18,900.
New Group Chair Arrangements
It was announced on 31 January 2023 that Mike Rogers was to be appointed as Admiral Group Chair subject to regulatory approval
and shareholder approval at the Admiral AGM. His fee was set at £375,000. In June 2023, Mike Rogers entered into a Share Acquisition
Agreement with the Group to purchase an annual amount equal to 30% of the gross amount of the fee, which will continue on this
basis until he achieves a shareholding equal to 150% of his annual fee. This will be assessed annually, and the agreement contains a top
up mechanism; if the value of the purchased shares is less than 150% of the gross amount of the fee, the Chair will purchase additional
shares to maintain a shareholding of 150% of the gross fee.
CEO pay ratio
The table below sets out the pay ratios for the CEO for the periods ended 31 December 2022 and 31 December 2023.
Year
2023
2022
Method
Option A
Lower quartile
75:1
80:1
Median
64:1
69:1
Upper quartile
43:1
45:1
The lower quartile, median and upper quartile employees were determined using calculation methodology A which involved calculating
the actual full-time equivalent remuneration for all UK employees for 2023. From this analysis, three employees were then identified
as representing the 25th, 50th and 75th percentile of the UK employee population. Admiral chose this method as it is the preferred
approach of the Government and investor bodies and Admiral had the systems in place to apply this method. It is also consistent with the
approach used to calculate the ratios for 2018 to 2022.
The Committee has considered the pay data for the three employees identified and believes that it fairly reflects pay at the relevant
quartiles amongst our UK workforce. The three individuals identified were full time employees during the year. None received an
exceptional incentive award which would otherwise inflate their pay figures. No adjustments or assumptions were made by the
Committee with the total remuneration of these employees calculated in accordance with the methodology used to calculate the single
figure of the CEO. It should be noted that the lower quartile employee was in receipt of DFSS bonus and/or DFSS vesting in the year.
The employee pay levels for 2023 are detailed below:
Salary
Total Remuneration1
CEO
£737,326
£2,064,178
P25 (lower quartile)
£21,392
£27,382
P50 (median)
£26,164
£32,050
P75 (upper quartile)
£42,000
£48,397
1 The single figure of remuneration for the CEO includes actual salary and pension costs paid during 2023, in line with The Companies (Miscellaneous Reporting) regulations 2018. For other
employees, salary and pension costs are included on an FTE basis, in line with the legislation. While the basis of calculation differs between CEO and other employees, management considers this a
fair comparison of remuneration.
The pay ratio has fallen over the course of 2023. This is due to the slight fall in CEO pay in 2023, compared with 2022. The underlying data
for employee pay levels is broadly flat compared with 2022, despite an increase in population of c.9%, the majority of which will have
been at more junior levels of the workforce.
195
A significant proportion of Milena Mondini de Focatiis’ remuneration is dependent on the Company’s performance and therefore it may
vary more materially, resulting in movements in the CEO pay ratio from year to year. However, the reward policies and structures applying
to the CEO are broadly aligned with those of the wider workforce and therefore consistent performance is likely to lead to a broadly
consistent CEO pay ratio.
Relative Importance of Spend on Pay
The table below shows the percentage change in dividends and total employee remuneration spend from the financial year ended
31 December 2022 to the financial year ended 31 December 2023.
Distribution to shareholders
Employee remuneration
2023
£m
309
501
2022
£m
465
452
% change
-34%
11%
The Directors are proposing a final dividend for the year ended 31 December 2023 of 52 pence per share bringing the total dividend for
2023 to 103 pence per share (2022: 157 pence per share).
Pay for Performance
The following graph sets out a comparison of Total Shareholder Return (TSR) for Admiral Group plc shares with that of the FTSE 100 and
FTSE 350 indices, of which the Company is a constituent, over the ten-year period to 31 December 2023. The Directors consider these
to be the most appropriate indices against which the Company should be compared. TSR is defined as the percentage change over the
period, assuming reinvestment of income.
10 year TSR performance: Admiral vs. FTSE100 and FTSE350 indices
Growth in value of a hypothetical £100 holding over the 10 years to 31 December 2023
£450
£400
£350
£300
£250
£200
£150
£100
£50
£0
CEO
Incumbent
CEO single figure
of Remuneration
DFSS vesting
outcome
(% of maximum)
Incumbent
CFO single figure
of Remuneration
DFSS vesting
outcome
(% of maximum)
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Admiral
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
FTSE 100
FTSE 350
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Henry
Engelhardt
Henry
Engelhardt
Henry
Engelhardt1
David
Stevens2
David
Stevens
David
Stevens
David
Stevens
David
Stevens
Milena
Mondini de
Focatiis4
Milena
Mondini de
Focatiis
Milena
Mondini de
Focatiis
£393,260
£397,688
£148,776
£246,023
£395,019
£403,662
£413,724
£421,285 £2,082,1914 £2,275,5115 £2,064,178
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
98.57%
59.24%
43.76%7
CFO
2014
Kevin
Chidwick
Geraint
Jones3
2015
Geraint
Jones
2016
Geraint
Jones
2017
Geraint
Jones
2018
Geraint
Jones
2019
Geraint
Jones
2020
Geraint
Jones
2021
Geraint
Jones
2022
Geraint
Jones
2023
Geraint
Jones
£1,204,164
£363,551
£539,704
£599,139
£1,184,445
£1,461,813
£1,773,303
£2,329,513 £1,737,805 £1,333,7096 £1,214,999
70.00%
85.00%
69.00%
50.00%
and 0.00%
74.20%
87.60%
88.8%
98.5%
93.08%
59.21%
43.73%7
1 Henry Engelhardt stepped down from the Board on 13 May 2016. His 2016 remuneration includes salary and benefits for his service as CEO.
2 David Stevens was appointed as the CEO on 13 May 2016. His 2016 remuneration includes salary, pension and benefits for his service as CEO.
3 Geraint Jones was appointed to the Board as CFO on 13 August 2014. His 2014 remuneration includes salary, pension and benefits for his service as CFO, his full year DFSS and his full year
DFSS bonus.
4 Milena Mondini de Focatiis was appointed as the CEO on 1 January 2021. Her 2021 remuneration includes salary, pension and benefits for her service as CEO.
5 This figure has been trued up since the 2022 report for the value of the 2020 DFSS based on the actual share price on vest of £22.43.
6 This figure has been trued up since the 2022 report for the value of the 2020 DFSS based on the actual share price on vest of £27.71.
7 43.76% of Milena Mondini de Focatiis’ and 43.73% of Geraint Jones’ 2021 DFSS award will vest in September 2024, subject to their continued employment on the vesting date.
There are no annual bonus outcomes to report in the table as the Admiral DFSS bonus is not structured as a traditional annual bonus
scheme and consequently a vesting outcome (as a percentage of maximum) is meaningless. This will be different for the 2024 Annual
Report with the new structure of Annual Bonus
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 196196
Annual Report on Remuneration
continued
197
Annual change of each director’s pay compared to the annual change in average employee pay
The following table summarises the annual percentage change of each director’s remuneration compared to the annual percentage
change of the average remuneration of the company’s employees, calculated on a full-time equivalent basis.
1 Total includes SIP shares both matured and awarded.
2 Total reflects shares from the 2021 DFSS award (performance test has been applied, and award is due to vest in September 2024).
3 The final column in the above table relates to meeting the current Remuneration Policy requirement of 400% of salary, based on a share price of £26.84 at closing on 29th December 2023.
4 Milena Mondini de Focatiis has 5 years from her appointment as Executive Director (11 August 2020) to meet the guideline.
Financial year-ended 31 December 2023
Director’s remuneration
Executive Directors
Milena Mondini de Focatiis
Geraint Jones
Non-Executive Directors
Annette Court
Mike Rogers
Evelyn Bourke
Karen Green
Jean Park
Jayaprakasa Rangaswami
Justine Roberts
Andy Crossley
Michael Brierley
Bill Roberts
Fiona Muldoon
Percentage change in employees’ remuneration
2023 (% change)
Base salary/fees
Taxable benefits
DFSS bonus
3.00%
4.00%
(76.27%)
N/A
0.00%
8.92%
(100.97%)
(8.15%)
20.68%
10.16%
8.57%
37.80%
N/A
9.01%
(5.21%)
(5.21%)
(49.45%)
N/A
117.30%
172.90%
(100%)
76.52%
62.94%
169.33%
384.46%
209.30%
N/A
(5.31%)
(25.83%)
(33.72%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(43.58%)
The percentage increases for the Non-Executive Director taxable benefits relate to expenses for travel, accommodation and subsistence.
The percentage change in employee base pay is a view across the whole group and is inclusive of colleague internal movements and
promotions throughout 2023.
Dilution
The Company has previously used newly issued shares to fund the DFSS and SIP shares. The Company has controls in place to ensure that
shares awarded under the incentive schemes operated by the Company within any rolling ten-year period do not exceed 10% of the
number of ordinary shares in the capital of the Company in issue at the time of each award. It is currently anticipated that a combination
of attrition and actual vesting will result in dilution of less than 10%. As required by the rules of our share schemes, the Company will in
any event ensure that the actual dilution level does not exceed 10% in any rolling ten-year period by funding of any vested (and future)
share scheme awards as appropriate with market-purchased shares.
In 2024 the Company will change the way the employee share schemes are funded. Initially shares already assigned to the trust will be
used to fund the schemes and then the Company will move to a market purchase funding model (likely from 2026 onwards).
Interests held by Directors (audited)
The Company has adopted Executive Director shareholding guidelines whereby all Executive Directors are required to acquire and retain
a beneficial shareholding in the Company equal to at least 400% of base salary (excluding salary shares, where applicable), which can
be built up over a period of five years from the later of the introduction of the guidelines and the individual’s date of appointment.
Both Executive Directors meet the shareholding requirement.
As at 31 December 2023, the Directors held the following interests:
Shares held
Subject to
continued
employment only
39,3842
22,9582
Subject to
performance
conditions
180,000
105,000
Shareholding
requirement
(% of
2023 salary)
400%
400%
Current
shareholding
(% of
2023 salary)
>400%
>400%
Requirement
met?3
Yes
Yes
Director’s remuneration
Milena Mondini de Focatiis4
Geraint Jones
Mike Rogers
Evelyn Bourke
Jayaprakasa Rangaswami
Justine Roberts
Andy Crossley
Michael Brierley
Karen Green
Bill Roberts
Fiona Muldoon
Beneficially
owned outright5
108,1541
143,8411
4,813
7,459
–
–
4,984
4,287
–
9,245
–
There have been no changes in the Directors’ holdings in the share capital of the Company, as set out in the table above, between
31 December 2023 and the date of this Report1.
None of the Directors had an interest in the shares of any subsidiary undertaking of the Company or in any significant contracts of
the Group.
Executive Directors’ Interests in Shares under the DFSS and SIP and salary share awards (audited)
At start
Type
of year
Milena Mondini de Focatiis
85,000
DFSS
90,000
DFSS
DFSS
90,000
DFSS
Awarded
during year
Vested/
matured
during year
At end
of year
Price at
award (£)
Value at
31 December
2023
or maturity
(£)
Value at
award date
(£)
Final
vesting/
maturity
date
Date of
Award
–
–
50,354
–
–
90,000
–
90,000
90,000
90,000
£22.43 £1,906,550 £1,138,905 24/04/2020 24/04/2023
£34.55 £3,109,500 £2,415,600 23/09/2021 23/09/2024
£21.59 £1,943,100 £2,415,600 22/09/2022 22/09/2025
£23.79 £2,141,100 £2,415,600 28/09/2023 28/09/2026
SIP
SIP
SIP
SIP
SIP
SIP
SIP
SIP
Geraint Jones
DFSS
DFSS
DFSS
DFSS
88
68
61
50
72
81
–
–
–
–
–
–
–
–
95
77
45,000
52,500
52,500
–
–
–
52,500
Salary Shares
Salary Shares
2,500
2,500
SIP
SIP
SIP
SIP
SIP
SIP
SIP
SIP
88
68
61
50
72
81
–
–
–
–
–
–
–
–
–
–
95
77
88
68
–
–
–
–
–
–
26,644
–
–
2,500
2,500
–
–
–
–
–
–
–
–
–
–
61
50
72
81
95
77
£20.58
£26.40
£29.44
£36.11
£24.81
£22.25
£18.82
£23.61
£1,811
£1,795
£1,796
£1,806
£1,786
£1,802
£1,787
£1,818
£1,683 13/03/2020 13/03/2023
£1,612 02/09/2020 02/09/2023
£1,637 12/03/2021 12/03/2024
£1,342 01/09/2021 01/09/2024
£1,932 11/03/2022 11/03/2025
£2,174 24/08/2022 24/08/2025
£2,550 13/03/2023 13/03/2026
£2,067 21/08/2023 21/08/2026
–
52,500
52,500
52,500
£27.71 £1,246,950
£637,324 24/09/2020 24/09/2023
£34.55 £1,813,875 £1,409,100 23/09/2021 23/09/2024
£21.59 £1,133,475 £1,409,100 22/09/2022 22/09/2025
£23.79 £1,248,975 £1,409,100 28/09/2023 28/09/2026
–
–
88
68
61
50
72
81
95
77
£20.58
£26.40
£51,450
£66,000
£46,265 13/03/2020 13/03/2023
£59,537 02/09/2020 02/09/2023
£20.58
£26.40
£29.44
£36.11
£24.81
£22.25
£18.82
£23.61
£1,811
£1,795
£1,796
£1,806
£1,786
£1,802
£1,787
£1,818
£1,683 13/03/2020 13/03/2023
£1,612 02/09/2020 02/09/2023
£1,637 12/03/2021 12/03/2024
£1,342 01/09/2021 01/09/2024
£1,932 11/03/2022 11/03/2025
£2,174 24/08/2022 24/08/2025
£2,550 13/03/2023 13/03/2026
£2,067 21/08/2023 21/08/2026
1 The value at maturity relates only to shares vested.
2 For SIP and Salary Shares, the price at award reflects the average closing share price over the five days prior to the award date.
The closing price of Admiral shares on 29 December 2023 was £26.84 per share.
By order of the Board,
Evelyn Bourke
Chair of the Remuneration Committee
6 March 2024
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 198198
Directors’ Report
199
The Directors present their Annual Report and audited Financial Statements for the year ended
31 December 2023.
Group results and dividends
The profit for the year, after tax but before dividends, amounted to £337.2 million (2022: £285.3 million, restated following the adoption
of IFRS 17). The Directors declared and paid dividends of £307.1 million during 2023 (2022: £658.3 million). Refer to note 12b for
further details.
The Directors have proposed a final dividend of £156 million (52 pence per share). Subject to shareholders’ approval at the 2024 Annual
General Meeting (AGM), the final dividend will be paid on 7 June 2024 to shareholders on the register at the close of business on
10 May 2024.
Further information on the Group’s dividend policy is located in note 3 on page 236 and on page 37 of the Strategic Report.
Research and development
Details of costs incurred in respect of research and development can be found in note 11c on page 297.
Political donations
No political donations were made during the year.
Interest capitalised
No interest was capitalised by the Group during the year.
Significant contracts of material interest to shareholders
The Group considers its co-insurance and reinsurance contracts to be significant and of material interest to shareholders. A number of the
Group’s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to recover losses incurred
to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group. No other contractual
arrangements are considered to be significant to the running of the Group’s business.
Financial instruments
The objectives and policies for managing risks in relation to financial instruments held by the Group are set out in note 2 to the
Financial Statements.
Directors and their interests
The present Directors of the Company are shown on page 118 of this Report, whilst Directors’ interests in the share capital of the
Company are set out in the Remuneration Report on page 196. A list of Directors in the financial period to 31 December 2023 is shown on
page 142.
Going concern
Under Provision 30 of the 2018 UK Corporate Governance Code, the Board confirms that it considers the going concern basis of
accounting appropriate. In considering this requirement, the Directors have taken into account the factors below.
In particular, as part of this assessment the Board considered updated projections of performance and profitability a number of times
throughout the year, with some key highlights including:
• The Group’s profit projections, including:
– Changes in premium rates and projected policy volumes across the Group’s insurance businesses
– The impacts of the continued elevated inflationary environment on the cost of settling claims across all of the Group’s
insurance businesses
– The return of motor claims frequency towards pre-pandemic levels
– Projected trends in other revenue generated by the Group’s insurance business from fees and the sale of ancillary products
– Projected contributions to profit from businesses other than the UK Car insurance business
– Expected trends in unemployment in the context of credit risks and the growth of the Group’s consumer lending business
– The More Than acquisition due to complete in the first half of 2024
– Assessment of wider market risk and changes in investment performance given the changing interest rates toward the end of 2023.
• The Group’s solvency position, which has been closely monitored through periods of market volatility. The Group continues to maintain
a strong solvency position above target levels
• The adequacy of the Group’s liquidity position after considering all of the factors noted above
• The results of business plan scenarios and stress tests on the projected profitability, solvency and liquidity positions including the
impact of severe downside scenarios that assume severe adverse economic, credit and trading stresses
• The regulatory environment, focusing on regulatory guidance issued by the FCA and the PRA in the UK and regular communications
between management and regulators
• A review of the Company’s principal risks and uncertainties and the assessment of emerging risks, including climate related risks.
Following consideration of all of the above, the Directors have reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report, and that it is therefore
appropriate to adopt the going concern basis in preparing the consolidated financial statements.
Further information is shown in the Viability Statement on page 109.
Share capital, AGM and related matters
Major shareholders
Other than as stated below, as far as the Company is aware, there are no persons with significant direct or indirect holdings in the
Company. Information provided to the Company pursuant to Rule 5 of the FCA’s Disclosure and Transparency Rules (DTRs) is published on
a Regulatory Information Service and on the Company’s website.
The Company received notifications in accordance with the FCA’s DTRs of the following notifiable interests in the voting rights in the
Company’s issued share capital:
Shareholder
Mawer Investment Management Ltd.
Henry Engelhardt & Diane Briere de I’Isle
BlackRock Inc.
Moondance Foundation
Rothschild and Co Wealth Management UK Limited
Vanguard Group Holdings
FMR LLC
David & Heather Stevens
Münchener Rückversicherungs- Gesellschaft AG
As at 31 December 2023
Number of Shares
21,727,558
20,277,027
17,849,752
15,400,000
15,322,698
12,560,052
11,711,392
8,422,950
5,297,781
% voting rights
7.2%
6.7%
5.8%
5.1%
5.0%
4.1%
3.9%
2.8%
1.7%
The percentage of voting rights detailed above were calculated at the time the relevant disclosures were made in accordance with the
DTRs. The DTRs require notification when the percentage voting rights (through shares and financial instruments) held by a shareholder
reaches, exceeds or falls below an applicable threshold. The information provided below was correct at the date of notification; however,
the date the notification was received may not have been within the current financial year. It should be noted that these holdings are
likely to have changed since the Company was notified. However, notification of any change is not required until the next notifiable
threshold is crossed.
Notifications received by the Company in accordance with the FCA’s DTRs in the period from 31 December 2023 to 6 March 2024
were as follows:
Shareholder
Rothschild and Co Wealth Management UK Limited
Rothschild and Co Wealth Management UK Limited
Rothschild and Co Wealth Management UK Limited
Rothschild and Co Wealth Management UK Limited
Rothschild and Co Wealth Management UK Limited
Rothschild and Co Wealth Management UK Limited
Date of notification
3 January 2024
5 January 2024
26 January 2024
22 February 2024
28 February 2024
6 March 2024
Number of shares
as at date of
notification
15,310,942
15,316,355
15,296,742
15,320,057
15,315,212
15,321,078
% of voting rights
as at the date of
notification
4.99%
5.00%
4.99%
5.00%
4.99%
5.00%
There are no people who hold shares carrying special rights with regard to control of the Company.
Further information on the rights attaching to shares under the employee share schemes are provided in the Remuneration Report.
Shares held in Employee Benefit Trust (EBT)
The EBT does not use its voting rights in respect of the shares it holds in the EBT at general meetings, however, it may choose to do so if
recommended by the Company via a letter of wishes. If any offer is made to shareholders to acquire their shares, the trustee will not be
obliged to accept or reject the offer in respect of any shares which are at that time subject to subsisting awards, but will have regard to the
interests of the award holders and will have power to consult them to obtain their views on the offer. Subject to the above, the trustee may
take action with respect to any offer it thinks fair. The trustee has waived its right to dividends on the shares held in the trust.
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 200200
Directors’ Report
continued
201
Additional information for shareholders
The following provides the additional information required for shareholders in accordance with the Takeovers Directive and the
respective UK law.
The Board is of the view that it is in the best interests of the Group to attract and retain the services of the most able and experienced
Directors by offering competitive terms of engagement, including the granting of such indemnities. Neither the Deed Poll of Indemnity
nor insurance cover would provide any coverage in the event that a Director is proved to have acted fraudulently or dishonestly.
At 31 December 2023, the Company’s issued share capital comprised a single class of shares referred to as ordinary shares. Details of the
share capital and shares issued during the year can be found in note 12d. The rights and obligations attached to the Company’s ordinary
shares are set out in the Articles of Association of the Company, copies of which can be obtained from Companies House.
Annual General Meeting (AGM)
It is proposed that the next AGM be held at Tŷ Admiral, David Street, Cardiff, CF10 2EH on Thursday 25 April 2024, notice of which will be
available to shareholders alongside, or at a date near to the publication of the Annual Report.
If a poll is called at a general meeting, every member present in person or by proxy and entitled to vote shall have one vote for every ordinary
share held. The notice of the general meeting specifies deadlines for exercising voting rights either by proxy notice or present in person or
by proxy in relation to resolutions to be passed at general meeting. All proxy votes are counted and the numbers for, against or withheld in
relation to each resolution are announced at the Annual General Meeting and published on the Company’s website after the meeting.
There are no restrictions on the transfer of ordinary shares in the Company other than:
• Certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws)
• Pursuant to the Listing Rules of the FCA whereby certain employees and Directors of the Company require the approval of the
Company to deal in the Company’s securities.
The Company has not purchased any of its own shares during the period.
There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or otherwise) that occur because of a takeover bid.
There are a number of agreements that alter or terminate upon a change of control of the Company following a takeover bid, such as
commercial contracts (entered into in the normal course of business). None are considered to be significant in terms of their impact on
the business of the Group as a whole.
Powers of the Company Directors
The Directors are responsible for managing the business of the Company and may exercise all powers of the Company subject to
the provisions of relevant statutes, to any directions given by special resolution and to the Company’s Memorandum and Articles.
The Articles, for example, contain specific provisions and restrictions concerning the Company’s power to borrow money. Powers relating
to the issuing of new shares and buyback of shares are also included in the Articles and such authorities are renewed by shareholders at
the Annual General Meeting each year.
Power to issue shares
At the last Annual General Meeting, held on 27 April 2023, authority was given to the Directors to allot unissued relevant securities in the
Company up to a maximum nominal amount of £202,157 representing the Investment Association’s Guidelines limit of approximately
two thirds of the issued share capital as at 17 March 2023. This authority expires on the date of the Annual General Meeting to be held on
25 April 2024 and the Directors will seek to renew this authority for the following year.
A further special resolution passed at that meeting granted authority to the Directors to allot equity securities in the Company (up to
a maximum of 5% of the issued share capital of the Company) for cash, without regard to the pre-emption provisions of the Companies
Act 2006. This authority also expires on the date of the Annual General Meeting to be held on 25 April 2024 and the Directors will seek to
renew this authority for the following year.
The Board is aware of the principles published by the Pre-Emption Group in November 2022, and their template resolutions published on
4 November 2022, allowing a Company the ability to seek authority over a further 10% of the issued ordinary share capital on a non-pre-
emptive basis subject to certain conditions. The Board has set out its proposal, in line with the Pre-Emption Group principles, regarding its
requested authority to allot shares in the Notice of Meeting for the 2024 AGM.
Appointments of Directors
The Company’s Articles of Association (the Articles) give the Directors power to appoint and replace Directors. Under the Terms of
Reference of the Group Nomination and Governance Committee, any appointment must be recommended by the Group Nomination
and Governance Committee for approval by the Board of Directors. The Articles provide that all Directors will retire and offer themselves
for re-election at each Annual General Meeting, in accordance with the UK Corporate Governance Code and the Company’s current
practice. Therefore, all Directors will be submitting themselves for either election or re-election by shareholders at the forthcoming AGM.
Articles of Association
The Articles may only be amended by special resolution of the shareholders.
Directors’ indemnities and insurance
Directors and Officers insurance cover is in place for all Directors to provide cover against certain acts or omissions on behalf of the
Company. A Deed Poll of Indemnity was executed in October 2015, indemnifying each of the Directors, and Company Secretary, in
relation to certain losses and liabilities that they might incur in the course of acting as Directors of the Company. The Deed Poll of
Indemnity is categorised as qualifying third party provisions as defined by Section 234 of the Companies Act 2006 and remains in force
for all past and present Directors of the Company.
Reporting, accountability and audit
UK Corporate Governance Code
Admiral is subject to the UK Corporate Governance Code (the Code), published by the Financial Reporting Council (FRC) in July 2018 and
available on their website, www.frc.org.uk. The Company’s Annual Report and Accounts, taken as a whole, addresses the requirements
of the 2018 Code.
The Code was applicable for the Group during the year under review, and the Group has applied the principles and complied with the
provisions of the Code except with regard to non-compliance with provision 19 for part of the year from 1 January 2023 to 27 April
2023, from this date to the 31 December 2023 the Company was in full compliance with the requirements of the Code, as set out in the
Corporate Governance Report on page 113.
Admiral has reviewed the changes to the revised Code which the FRC published on 22 January 2024 and intends to be effective for
companies with financial reporting periods beginning on or after 1 January 2025. Admiral intends to be fully compliant with the revised
Code from 1 January 2025 and will disclose the measures introduced to ensure compliance with the new Code in the 2025 Annual Report
and Accounts to be published in 2026.
The Directors confirm that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
The Board is ultimately responsible for the Group’s system of risk management and internal control and, through the Audit Committee,
has reviewed the effectiveness of the Group’s internal control and risk management arrangements relating to the financial reporting
process and the principal risks facing the business. The Board is satisfied that the Group’s internal control and risk management
framework is prudent and effective and that, through the Audit Committee and Group Risk Committee, risk can be assessed, managed
and assurance given that all material controls are reviewed and monitored.
Information on the composition and operation of the Board and its Committees is located in the following sections:
• Corporate Governance Report on page 113 in respect of the Board
• Nomination and Governance Committee Report on page 146
• Audit Committee Report on pages 161
• Group Risk Committee Report on page 168
• Remuneration Committee Report on page 185.
The Group’s gender diversity information for the financial year, together with an explanation of the policies related to diversity, are set
out in the Strategic Report on page 62 and in the Nomination and Governance Committee Report on page 154.
Branches
The Group has several branches located in Canada, India, France and Italy, through its subsidiary structure. Further details of the
Company’s subsidiaries, associated undertakings and branches are contained in note 12e.
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law
they are required to prepare the Group Financial Statements in accordance with United Kingdom adopted international accounting
standards and applicable law and have elected to prepare the parent Company financial statements in accordance with UK accounting
standards and applicable law, including FRS 101 Reduced Disclosure Framework.
Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and
Parent Company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgements and accounting estimates that are reasonable and prudent
• For the Group financial statements, state whether they have been prepared in accordance with IFRS as adopted by the UK
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 202202
Directors’ Report
continued
• For the Parent Company financial statements, state whether applicable UK accounting standards, including FRS 101 Reduced
Disclosure Framework, have been followed, subject to any material departures disclosed and explained in the Parent Company
financial statements
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to
ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Responsibility statement
The Directors confirm that to the best of their knowledge:
• The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a
whole; and
• The Directors’ Report and the Strategic Report include a fair review of the development and performance of the business and the
position of the Company, and the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties.
Disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company’s auditor is unaware; and each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of
that information.
Auditor
Following the Board’s approval of the Audit Committee’s recommendation to reappoint the Company’s auditor, Deloitte LLP has
indicated willingness to continue in office and resolutions to reappoint it and to authorise the Directors to fix its remuneration will be
proposed at the AGM.
Index of disclosures
Information included in the Strategic Report: As permitted by legislation, some matters required to be included in the Directors’ Report
have instead been included in the Strategic Report as the Board considers them to be of strategic importance. These are identified with
an asterix (*) in the table below.
Information/disclosure
Agreement for loss of office or employment on takeover
Allotment of shares for cash pursuant to Group employee share schemes*
Amendment of the Articles of Association
Annual General Meeting (AGM)
Appointment and replacement of Directors
Audit Committee Report
Business review
Business model
Directors in office during the year
Significant agreements impacted by a change of control
Changes in borrowings
Charitable donations
Climate related disclosures, including GHG emissions and energy consumption
Corporate Governance Report
Culture
Pages
181, 200
299
200
201
200, 146
161
32
08
118, 142
200
235, 275
21, 66
71
113
132
Information/disclosure
Details of long-term incentive schemes*
Directors’ insurance and indemnities
Directors’ inductions and training
Directors’ interests in shares
Directors’ Responsibilities Statement
Directors’ service contracts
Disclosure of information to the Auditor
Diversity disclosures
Dividends
Engagement with suppliers, customers and others in a business relationship with the Company*
Employee engagement
Employees with disabilities
Fair, balanced and understandable
Financial risk management
Financial instruments
Future developments of the business
Going Concern Statement
Group Risk Committee
Independent Auditors’ Report
Interest capitalised by the Group*
Nomination and Governance Committee Report
Non-Financial Information Statement
Political donations and expenditure
Post-balance sheet events
Powers for the Company to issue or buy back its shares
Powers of Directors
Principal risks and uncertainties
Related undertakings
Reappointment of Auditor
Remuneration Committee Report
Rights attaching to shares
Risk management and internal control
s172 Statement
Share capital
Shareholder engagement
Shareholder waiver of dividends and future dividends*
Significant related party agreements*
Significant shareholders
Statement of compliance with the UK Corporate Governance Code
Strategic Report
Sustainability Report
Viability Statement
Voting rights
*
Information required to be disclosed in the Annual Report under Listing Rule 9.8.4R is marked with an asterisk (*).
Approved by the Board of Directors and signed on its behalf by
Dan Caunt
Company Secretary
6 March 2024
Geraint Jones
Chief Financial Officer
6 March 2024
203
Pages
172
200
146
196
201
181
202
154
198, 299
87
62, 89
62
201
228
198, 268
22
198, 306
168
205
205
146
96
198
301
200
200
98
300
185
185
199, 298
98, 161, 201
87
199, 298
90, 136
199, 299
200, 301, 312
199
125, 201
14
56
109
200
Corporate GovernanceCorporate GovernanceAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
204204
205
FINANCIAL
STATEMENTS
In this section
205 Independent Auditor’s Report
216 Consolidated Income Statement
217 Consolidated Statement of Comprehensive Income
218 Consolidated Statement of Financial Position
219 Consolidated Cashflow Statement
220 Consolidated Statement of Changes in Equity
221 Notes to the Consolidated Financial Statements
303 Appendix to the Group Financial Statements (unaudited)
305 Parent Company Financial Statements
306 Notes to the Parent Company Financial Statements
Additional Information
316 Glossary
Independent Auditor’s Report
to the members of Admiral Group plc
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
• the financial statements of Admiral Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair view
of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the Consolidated and Parent Company Income Statements;
• the Consolidated and Parent Company Statements of Comprehensive Income;
• the Consolidated and Parent Company Statements of Financial Position;
• the Consolidated Cash Flow Statement;
• the Consolidated and Parent Company Statements of Changes in Equity;
• the related notes 1 to 13 to the Group financial statements, excluding the capital adequacy disclosures in note 3.2.3 calculated in
accordance with the Solvency II regime which are marked as unaudited; and
• the related notes 1 to 14 to the Parent Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
United Kingdom adopted international accounting standards. The financial reporting framework that has been applied in the preparation
of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of
our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the Group for the year are disclosed in note 9c to the financial statements. We confirm that we have not provided any
non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 206206
Independent Auditor’s Report
to the members of Admiral Group plc
continued
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Valuation of UK motor large bodily injury reserves within the liability for incurred claims;
• Inflation assumptions applied to UK motor bodily injury claims within the liability for incurred claims; and
• Initial adoption of IFRS 17 Insurance Contracts.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
Significant changes
in our approach
The materiality that we used for the Group financial statements was £22.1 million which was determined
on the basis of 5% of profit before tax (‘PBT’).
We identified five reporting components which we determined should be subject to full scope audits
this year.
Specific audit procedures were completed in respect of five further components which, although not
financially significant, did present some specific audit risks which needed to be addressed.
The components within the scope of our audit procedures account for 98% of the Group’s profit before tax,
99% of the Group’s revenue and 99% of the Group’s net assets.
IFRS 17 became effective on 1 January 2023, thus we have also identified the impact of the Group’s
adoption of IFRS 17 on the restated comparative information presented for the year ended 31 December
2022 as an additional key audit matter, as this is a new and complex accounting standard which has
required considerable judgment and interpretation in its implementation.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• We obtained an understanding of the relevant controls relating to the Board’s going concern assessment process;
• We inspected the Group ORSA (‘Own Risk and Solvency Assessment’) to support our understanding of the key risks faced by the Group,
its ability to continue as a going concern, and the longer-term viability of the Group;
• We evaluated management’s going concern assessment in light of the current macroeconomic uncertainties;
• We considered the available cash and cash equivalents balance at year-end and assessed how this is forecast to fluctuate over a period
of at least 12 months from the date of signing the financial statements in line with management’s forecast performance. This analysis
included assessing the amount of headroom in the forecasts considering cash and regulatory liquidity requirements;
• We assessed management’s reverse stress testing over the projected profitability, solvency and liquidity positions and the likelihood of
the various scenarios that could adversely impact upon the Group’s liquidity and solvency headroom; and
• We obtained and inspected correspondence between the Group and its regulators, as well as reviewed the Group Risk Committee
meeting minutes, to identify any items of interest which could potentially indicate either non-compliance with regulation or potential
litigation or regulatory action held against the Group.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group's and Parent Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
207
5. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
5.1. Valuation of UK motor large bodily injury reserves within the liability for incurred claims
Key audit
matter description
The Group’s gross liability for incurred claims totalled £3,452m as at 31 December 2023 (31 December
2022: £3,174m). Judgments made in determining the valuation of claims reserves are by far the most
significant in terms of their impact on the Group’s financial position. Setting these claims reserves is
an inherently subjective exercise and small changes in underlying assumptions may have a material
impact on the overall year-end result reported.
Specifically, our significant areas of focus are the Group’s selection of the frequency and severity
assumptions for large bodily injury claims arising in the UK motor insurance business. These particular
claims result in higher individual claims reserves and are more judgmental, in terms of the
development of the ultimate losses, due to the longer-term nature of the Group’s exposure (compared
to property damage claims). Therefore, we determine this as a key audit matter.
Refer to page 164 in the Audit Committee report where this is included as a significant issue and note
3 and note 5f in the financial statements which refer to this matter.
How the scope of our
audit responded to the
key audit matter
We obtained an understanding, and tested the relevant controls governing the selection of the
frequency and severity actuarial assumptions identified for large bodily injury claims in the UK
motor insurance business, as well as the wider process supporting the valuation of the liability for
incurred claims.
We obtained and inspected the reports from management and involved our internal actuarial
specialists to support our assessment of management’s frequency and severity assumptions for UK
motor insurance business.
We benchmarked the frequency assumptions against available industry data and considered the
comparison in the context of the risk profile of the Group’s portfolio and the year-on-year changes in
these assumptions.
We undertook a graphical analysis of incurred development patterns to assess and challenge the
severity assumptions. We benchmarked the average cost per claim assumptions against available
third-party industry data in the context of this incurred development analysis.
Based on the procedures described above, we concluded that the selection of the frequency and
severity assumptions for large bodily injury claims arising in the UK motor insurance business within
the gross liability for incurred claims is appropriate.
Key observations
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 208208
Independent Auditor’s Report
to the members of Admiral Group plc
continued
5.2. Inflation assumptions applied to UK motor bodily injury claims within the liability for incurred claims
5.3. Initial adoption of IFRS 17 Insurance Contracts
209
Key audit
matter description
How the scope of our
audit responded to the
key audit matter
Given the ongoing uncertainty associated with the UK’s current and future inflationary environment,
the impact of future inflation assumptions requires the application of significant judgment which
has a material impact on the liability for incurred claims. In the current macroeconomic environment,
there is a greater level of uncertainty associated with projecting future assumptions than in previous
periods owing to the uncertainty in forecast future inflation and the extent to which this will impact
claims inflation.
The most significant impact of such inflation assumptions relates to bodily injury claims given the
relatively low implicit inflation in historical data trends and the time it takes for such claims to develop
and settle. Therefore, the effect of such inflationary pressures will not be observable in the claims
data for some time, unlike for damage claims where the impact of inflation is already arising due
to inflationary trends in historical data, their faster development, and is more closely linked to the
Consumer Price Index (‘CPI’).
Our audit work to respond to the specific risks associated with inflationary assumptions in the UK
motor bodily injury claims reserves required significant input from our actuarial specialists and was the
focus of a significant amount of audit effort therefore, we considered this a key audit matter.
Refer to page 165 in the Audit Committee report where this is included as a significant issue and note
3 and note 5f in the financial statements which refer to this matter.
We obtained an understanding of and tested relevant controls relating to the key inflation
assumptions identified.
We obtained and inspected the reports from both management and with involvement of our actuarial
specialists we assessed the key inflation assumptions.
We benchmarked management’s inflation assumptions against available industry data and considered
the results of this comparison.
We inspected and challenged the methodology applied in determining the impact of excess inflation
on the year-end liability for incurred claims, including challenging the future inflation assumptions
with reference to current and future expectations of market wage inflation.
Key observations
Based on the procedures described above, we concluded that the inflation assumptions applied to UK
motor bodily injury claims reserves are appropriate.
Key audit
matter description
How the scope of our
audit responded to the
key audit matter
With effect from 1 January 2023, the Group transitioned to IFRS 17: Insurance Contracts which replaced
the existing standard for insurance contracts, IFRS 4. The new standard establishes the principles
for the recognition, measurement, presentation and disclosure of insurance contracts which are
significantly different to those required under IFRS 4. The Group’s financial statements for the year
ended 31 December 2023 are the Group’s first set of financial statements to include the adoption
of the new standard. As a result, comparative financial information has been restated from 1 January
2022, with the first-time adoption of IFRS 17 resulting in a decrease in equity of £125.6 million upon
transition as shown in the Consolidated Statement of Changes in Equity.
The application of IFRS 17 to the Group’s insurance contracts requires significant management
judgment in developing the valuation methodology, defining the related accounting policies and
implementing those policies appropriately within the relevant calculation models. The judgments,
policy choices and elections made have the potential to significantly impact the financial results of the
Group and its key performance indicators.
We have concluded that the impact of the adoption of IFRS 17 on the restated 2022 comparative
financial information forms a key audit matter as this is a new and complex accounting standard which
has required considerable judgment and interpretation in its implementation. Furthermore, the new
standard has introduced a number of significant changes, including new requirements regarding the
recognition and measurement of insurance contracts and related account balances and classes of
transactions. In order to meet the requirements of the new standard, significant changes have also
been made to the systems, processes and controls with effect from 1 January 2023. This resulted in an
increased extent of audit effort, including the involvement of our internal actuarial and IT specialists.
Refer to page 165 in the Audit Committee report where this is included as a significant issue and note
1 in the financial statements which sets out the qualitative and quantitative IFRS 17 information,
including the relevant recognition and measurement requirements of the Standards, and the
accounting policies applied on its adoption.
To respond to the key audit matter we have performed the following:
• Obtained an understanding of and tested the relevant controls governing the restated 2022
comparative financial information and, in particular, those controls over the assumptions and
methodologies applied in the new IFRS 17 models in valuing the liability for incurred claims;
• Evaluated the appropriateness of key technical accounting decisions, judgments, assumptions
and elections made in determining the impacts to assess compliance with the requirements of
the standard;
• With the involvement of our internal actuarial specialists we performed procedures to assess the
Group’s implementation of the defined methodology and IFRS 17 calculation models;
• We evaluated the data and other information required for the IFRS 17 calculations, including the
data inputs to the calculation of the fulfilment cashflows and the risk adjustment within the liability
for incurred claims; and
• We tested the new disclosures and the disclosures related to the transition impact and reconciled
the disclosures to underlying accounting records and supporting data.
Key observations
Based on the procedures described above, we are satisfied that the Group’s insurance contracts are
appropriately recognised under IFRS 17.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 210210
Independent Auditor’s Report
to the members of Admiral Group plc
continued
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work
and in evaluating the results of our work.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent Company financial statements
Materiality
£22.1 million (2022: £23.4 million)
£4.4 million (2022: £4.2 million)
Basis for determining
materiality
Rationale for the
benchmark applied
5% of profit before tax
(2022: 5% of profit before tax).
We consider profit before tax to be the critical
benchmark of the performance of the Group and
consider this benchmark to be suitable having
compared to other benchmarks. Our materiality
equates to 1% of insurance revenue and 2%
of equity (2022: 1% of insurance revenue and
2% of equity).
3% of two-year average of net assets
(2022: 3% of two-year average of net assets).
The Parent Company primarily exists as the
holding company which carries investments
in Group subsidiaries and is the issuer of listed
securities. We consider that net assets is the
critical benchmark for the Parent Company.
The measure uses a two-year average of net
assets which we consider appropriate given the
inherent volatility associated with the timing of
dividend payments.
PBT
£442.8m
PBT
Group materiality
Group materiality
£22.1m
Component
materiality range
£3.2m to £17.6m
Audit Committee
reporting threshold
£1.1m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Parent Company financial statements
Performance materiality
70% (2022: 70%) of Group materiality
70% (2022: 70%) of Parent Company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
• our risk assessment, including our assessment of the Group’s overall control environment and that
we consider it appropriate to rely on controls over a number of business processes; and
• our past experience of the audit, which has indicated a low number of uncorrected misstatements
identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.1 million
(2022: £1.1 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the
financial statements.
211
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The five (2022: five) significant components of the Group which were identified in our audit planning are Admiral Insurance (Gibraltar)
Limited, Admiral Insurance Company Limited, EUI Limited, Admiral Europe Compañía de Seguros, and the Parent Company, Admiral
Group plc.
Each of these significant components was subjected to a full-scope audit, completed to individual component materiality levels
which ranged from £3.2 million to £17.6 million (2022: £2.9 million to £22.2 million) dependent upon the relative significance of each
individual component.
We have completed specific audit procedures, designed to address specific audit risks, for five (2022: eight) further components.
The components within the scope of our audit procedures account for 98% (2022: 98%) of the Group’s profit before tax, 99%
(2022: 99%) of the Group’s revenue and 99% (2022: 99%) of the Group’s net assets.
For the remaining components which were not subject to full-scope audits or specified audit procedures, we performed analysis
at an aggregated Group level to re-assess our evaluation that there were no significant risks of material misstatement in any of
these components.
Finally, we performed audit procedures over the consolidation process by testing the material consolidation adjustments made by
management in calculating their consolidated financial statements.
Revenue
Profit before tax
Net assets
9% 1%
4%
2%
4%
1%
90%
94%
95%
Full audit scope
Full audit scope
Full audit scope
Specified audit procedures
Specified audit procedures
Specified audit procedures
Review at group level
Review at group level
Review at group level
7.2. Our consideration of the control environment
We obtained an understanding of and tested the relevant controls within the Group, including controls over the following business
processes: financial reporting, insurance revenue, other revenue, insurance service expenses, liability for incurred claims, liability for
remaining coverage, reinsurance and coinsurance, cash and investments. We also identified the key IT systems in the Group that were
relevant to the audit, and involved our internal IT specialists to support our testing of general IT controls over these systems, including
the policy administration system, claims administration systems and the data warehouse.
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the impact of climate change on the Group’s operations and subsequent impact on its financial
statements. The Group sets out its assessment of the potential impact on page 107 of the Emerging Risks section.
In conjunction with our climate reporting specialists, we have held discussions with the Group to understand management’s:
• process for identifying affected operations, including the governance and controls over this process, and the subsequent effect on the
financial reporting of the Group; and
• long-term strategy to respond to climate-related risks as they emerge including the effect on the Group’s forecasts.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 212212
Independent Auditor’s Report
to the members of Admiral Group plc
continued
In addition, our audit work also involved:
• challenging the completeness of the physical and transition risks identified based on our understanding of the Group, and considered
in the Group’s climate risk assessment and the conclusion that there is no material impact of climate change risk on the current year
financial reporting;
• assessing the Group’s qualitative analysis which supports the Group’s conclusion that there is no material financial statement impact of
climate risk on expected credit losses;
• assessing disclosures in the Annual Report against the requirements of the TCFD framework, paragraph 8(a) of Listing Rule 9.8.6R, as
well as the mandatory climate-related financial disclosure requirements (“CFD”) ; and
• evaluating the appropriateness of disclosures included in the financial statements in Note 2.
We have not been engaged to provide assurance over the accuracy of TCFD disclosures set out on page 73 of the annual report. As part
of our procedures, we are required to read these disclosures and to consider whether they are materially inconsistent with the financial
statements or our knowledge obtained during the course of our audit. We did not identify any material inconsistencies as a result of
these procedures.
7.4. Working with other auditors
We engaged local component auditors, being Deloitte member firms in Spain and the US, to perform the audit work over entities
residing in these respective territories. We also engaged component auditors in the Deloitte UK firm to perform the audit work over
the Admiral Money segment of the Group. We directed and supervised the work of Deloitte Spain and Deloitte UK, including through
in-person visits and through remote communication and review of their work.
For the US auditors we concluded it was not necessary to undertake in-person visits to this component, rather we directed and
supervised the work of the component auditor by having frequent phone calls with the component audit team, participating in video
conferences and reviewing key audit documentation remotely.
8. Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
213
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;
• results of our enquiries of management, internal audit, the directors and the Audit Committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
• the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including tax, actuarial, financial instruments, IT, climate, and industry specialists regarding how and where fraud might
occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas: valuation of UK motor large bodily injury claims reserves within
the liability for incurred claims and inflation assumptions applied to UK motor bodily injury claims within the liability for incurred
claims. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those
laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements.
The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, Solvency II regulation and
relevant tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the Group’s
operating licence, and the Financial Conduct Authority and the Prudential Regulation Authority regulations.
11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation of UK motor large bodily injury reserves within the liability for incurred
claims and inflation assumptions applied to UK motor bodily injury claims within the liability for incurred claims as key audit matters
related to the potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also describes
the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to the risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
HMRC, the Financial Conduct Authority and the Prudential Regulation Authority; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgments made in making accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including
internal specialists and significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 214214
215
Independent Auditor’s Report
to the members of Admiral Group plc
continued
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 198;
• the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 109;
• the directors' statement on fair, balanced and understandable set out on page 201;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 98;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 98; and
• the section describing the work of the Audit Committee set out on page 161.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not
been made or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by shareholders’ approval at the Annual General Meeting on
27 April 2023 to audit the financial statements for the year ending 31 December 2023 and subsequent financial periods. The period of
total uninterrupted engagement including previous renewals and reappointments of the firm is eight years, covering the years ending
31 December 2016 to 31 December 2023.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA
in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format Annual
Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Adam Addis
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
6 March 2024
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 216216
Consolidated Income Statement
For the year ended 31 December 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
217
Profit for the period
Other Comprehensive Income
Items that are or may be reclassified to profit or loss
Movements in fair value reserve
Deferred tax charge in relation to movement in fair value reserve
Movements in insurance finance reserve
Deferred tax in relation to movement in insurance finance reserve
Exchange differences on translation of foreign operations
Movement in hedging reserve
Deferred tax charge in relation to movement in hedging reserve
Other Comprehensive Income for the period, net of income tax
Total comprehensive income for the period
Total comprehensive income for the period attributable to:
Equity holders of the parent
Non-controlling interests
Year ended
31 December 2023
£m
337.2
Restated1
31 December 2022
£m
285.3
98.1
(5.7)
(78.9)
9.7
3.7
(18.1)
4.5
13.3
350.5
351.3
(0.8)
350.5
(255.6)
13.0
177.8
(22.8)
(4.3)
25.1
(7.0)
(73.8)
211.5
212.6
(1.1)
211.5
1. 2022 comparative figures have been restated following the adoption of IFRS 17 Insurance Contracts. For further information see note 2 to the financial statements.
Insurance revenue
Insurance service expenses
Insurance service result before reinsurance
Net expense from reinsurance contracts held
Insurance service result
Investment return
Finance expenses from insurance contracts issued
Finance income from reinsurance contracts held
Net insurance finance expenses
Net insurance and investment result
Interest income from financial services
Interest expense related to financial services
Net interest income from financial services
Other revenue and profit commission
Other operating expenses
Other operating expenses recoverable from co-insurers
Expected credit losses
Other income and expenses
Operating profit
Finance costs
Finance costs recoverable from co- and reinsurers
Net finance costs
Profit before tax
Taxation expense
Profit after tax
Profit after tax attributable to:
Equity holders of the parent
Non-controlling interests (NCI)
Earnings per share
Basic
Diluted
Dividends declared and paid (total)
Dividends declared and paid (per share)
Year ended
31 December 2023
£m
3,486.1
(3,093.2)
392.9
(87.1)
305.8
122.9
(94.5)
28.9
(65.6)
363.1
94.9
(26.8)
68.1
205.7
(250.8)
107.8
(31.0)
31.7
462.9
(20.5)
0.4
(20.1)
442.8
(105.6)
337.2
Restated1
31 December 2022
£m
2,956.9
(2,737.2)
219.7
(38.4)
181.3
64.6
(52.0)
13.6
(38.4)
207.5
58.7
(12.6)
46.1
256.4
(204.6)
86.7
(18.9)
119.6
373.2
(13.5)
1.5
(12.0)
361.2
(75.9)
285.3
338.0
(0.8)
337.2
111.2p
110.8p
307.1
103.0p
286.5
(1.2)
285.3
95.4p
95.0p
658.3
223.0p
Note
5
5
5
6
5
5
7
7
8
9
9
6
6
6
10
12
12
12
12
1 2022 comparative figures have been restated following the adoption of IFRS 17 Insurance Contracts. For further information see note 2 to the financial statements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 218218
219
Consolidated Statement of Financial Position
For the year ended 31 December 2023
Consolidated Cashflow Statement
For the year ended 31 December 2023
ASSETS
Property and equipment
Intangible assets
Deferred income tax
Corporation tax asset
Reinsurance contract assets
Loans and advances to customers
Other receivables
Financial investments
Cash and cash equivalents
Total assets
EQUITY
Share capital
Share premium account
Other reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
LIABILITIES
Insurance contracts liabilities
Subordinated and other financial liabilities
Trade and other payables
Lease liabilities
Corporation tax liabilities
Total liabilities
Total equity and total liabilities
As at
31 December 2023
£m
Note
Restated1
31 December 2022
£m
Restated1
1 January 2022
£m
11
11
10
5
7
6
6
6
12
12
5
6
6, 11
6
90.1
242.9
46.1
20.4
1,191.9
879.4
409.9
3,862.4
353.1
7,096.2
0.3
13.1
(40.5)
1,018.9
991.8
1.0
992.8
4,581.7
1,129.8
305.8
81.2
4.9
6,103.4
7,096.2
89.8
217.6
28.4
9.1
1,015.4
823.9
316.4
3,411.2
297.0
6,208.8
0.3
13.1
(50.2)
922.6
885.8
1.2
887.0
4,025.4
939.1
254.9
88.5
13.9
5,321.8
6,208.8
103.2
151.8
20.7
10.2
987.2
556.8
391.5
3,742.6
372.7
6,336.7
0.3
13.1
23.7
1,243.5
1,280.6
2.3
1,282.9
3,926.4
670.9
351.2
105.3
–
5,053.8
6,336.7
1. 2022 comparative figures have been restated following the adoption of IFRS 17 Insurance Contracts. For further information see note 2 to the financial statements.
The accompanying notes form part of these financial statements. These financial statements were approved by the Board of Directors on
6 March 2024 and were signed on its behalf by:
Geraint Jones
Chief Financial Officer
Admiral Group plc
Company Number: 03849958
Profit after tax
Adjustments for non-cash items:
– Depreciation of property, plant and equipment and right-of-use assets
– Impairment/ disposal of property, plant and equipment and right-of-use assets
– Amortisation and impairment of intangible assets
– Movement in expected credit loss provision
– Share scheme charges
– Interest expense on funding for loans and advances to customers
– Investment return
– Finance costs, including unwinding of discounts on lease liabilities
– Taxation expense
Change in gross insurance contract liabilities
Change in reinsurance assets
Change in insurance and other receivables
Change in gross loans and advances to customers
Change in trade and other payables, including tax and social security
Cashflows from operating activities, before movements in investments
Purchases of financial instruments
Proceeds on disposal/ maturity of financial instruments
Interest and investment income received
Cashflows from operating activities, net of movements in investments
Taxation payments
Net cashflow from operating activities
Cashflows from investing activities:
Purchases of property, equipment and software
Investments in Associates
Net cash used in investing activities
Cashflows from financing activities:
Proceeds on issue of loan backed securities
Proceeds from other financial liabilities
Finance costs paid, including interest expense paid on funding for loans
Repayment of lease liabilities
Equity dividends paid
Net cash used in financing activities
Net increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Effects of changes in foreign exchange rates
Cash and cash equivalents at end of period
Year ended
Note
31 December 2023
£m
337.2
Restated1
31 December 2022
£m
285.3
18.2
(4.0)
40.5
15.7
63.3
26.2
(119.3)
20.5
105.6
451.3
(141.8)
(94.7)
(73.6)
52.4
697.5
(3,538.4)
3,176.1
76.8
412.0
(133.0)
279.0
(75.9)
–
(75.9)
44.9
136.2
(35.1)
(10.7)
(307.1)
(171.8)
31.3
297.0
24.8
353.1
18.2
(1.2)
23.7
11.7
57.3
12.6
(64.6)
13.4
75.9
372.8
(124.2)
75.1
(280.6)
(96.3)
379.1
(3,198.0)
3,328.3
58.7
568.1
(91.2)
476.9
(98.6)
(2.4)
(101.0)
267.8
–
(25.3)
(9.2)
(658.3)
(425.0)
(49.1)
372.7
(26.6)
297.0
11
6
10
5
5
7
11
12
6
1. 2022 comparative figures have been restated following the adoption of IFRS 17 Insurance Contracts. For further information see note 2 to the financial statements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
220220
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share
capital
£m
Share
premium
£m
Fair value
reserve
£m
Hedging
reserve
£m
Note
Foreign
exchange
reserve
£m
Insurance1
finance
reserve
£m
Retained1
profit
and loss
£m
Non-
controlling
interests
£m
Total1
£m
Total
equity1
£m
Attributable to the owners of the Company
0.3
13.1
36.7
3.0
4.3
– 1,348.8 1,406.2
2.3 1,408.5
At 1 January 2022
previously reported
Impact of initial application
of IFRS 171
At 1 January 2022 restated1
Profit/(loss) for the period1
Other Comprehensive Income1
Total comprehensive
income for the period1
Transactions with
equity holders
Dividends
Share scheme credit
Deferred tax credit on
share scheme credit
Total transaction with
equity holders
As at 31 December 20221
At 1 January 2023
Profit/(loss) for the period
Other Comprehensive Income
Total comprehensive
income for the period
Transactions with
equity holders
Dividends
Share scheme credit
Deferred tax credit on
share scheme credit
Transfer to loss on disposal
of assets held for sale
Total transactions with
equity holders
As at 31 December 2023
–
0.3
–
–
–
–
–
–
–
0.3
0.3
–
–
–
–
–
–
–
12
12
–
13.1
–
–
–
36.7
–
(242.6)
–
3.0
–
18.1
0.2
4.5
–
(4.4)
(20.5)
(125.6)
(105.3)
(20.5) 1,243.5 1,280.6
286.5
286.5
(73.9)
–
–
155.0
–
(125.6)
2.3 1,282.9
285.3
(1.2)
(73.8)
0.1
–
(242.6)
18.1
(4.4)
155.0
286.5
212.6
(1.1)
211.5
–
–
–
–
–
–
–
–
–
–
13.1
13.1
–
–
–
(205.9)
(205.9)
–
92.4
–
21.1
21.1
–
(13.6)
–
–
–
–
0.1
0.1
–
3.7
–
–
–
(658.3)
57.3
(658.3)
57.3
(6.4)
(6.4)
–
134.5
134.5
–
(69.2)
(607.4)
922.6
922.6
338.0
–
(607.4)
885.8
885.8
338.0
13.3
–
–
–
(658.3)
57.3
(6.4)
–
1.2
1.2
(0.8)
–
(607.4)
887.0
887.0
337.2
13.3
92.4
(13.6)
3.7
(69.2)
338.0
351.3
(0.8)
350.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.6)
(3.6)
0.2
–
–
–
–
(307.1)
63.3
(307.1)
63.3
2.1
2.1
–
(3.6)
–
(241.7)
65.3 1,018.9
(245.3)
991.8
–
–
–
0.6
0.6
1.0
(307.1)
63.3
2.1
(3.0)
(244.7)
992.8
–
0.3
–
13.1
–
(113.5)
–
7.5
1. 2022 comparative figures have been restated following the adoption of IFRS 17 Insurance Contracts. For further information see note 2 to the financial statements.
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
221
General information
Admiral Group plc is a public limited Company incorporated in England and Wales. Its registered office is at Tŷ Admiral, David Street,
Cardiff, CF10 2EH and its shares are listed on the London Stock Exchange. The nature of Admiral Group operations and its principal
activities is set out in the Business model section on page 8.
1. Basis of preparation
The consolidated financial statements have been prepared and approved by the Directors in accordance with United Kingdom adopted
international accounting standards in conformity with the requirements of the Companies Act 2006. The Company has elected to
prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101).
The accounting policies set out in the notes to the financial statements have, unless otherwise stated, been applied consistently to all
periods presented in these Group financial statements.
The financial statements are prepared on the historical cost basis, except for the revaluation of financial assets classified as fair value through
profit or loss or as fair value through Other Comprehensive Income, and insurance and reinsurance contract assets and liabilities which
are measured at their fulfilment value in accordance with IFRS 17 Insurance Contracts. The Group and Company financial statements are
presented in pounds sterling, rounded to the nearest £0.1 million.
Cashflows from operating activities before movements in investments comprise all cashflows arising from the Group’s insurance and
reinsurance activities, and from loans and advances issued to customers. Cashflows from financing activities include the cashflows on issues
of loan backed securities, lease liabilities and other financial liabilities.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and can affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date
on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date control ceases. Losses applicable to the non-controlling interests in a subsidiary are
allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
The Group has securitised certain loans and advances to customers by the transfer of the loans to special purpose entities (’SPEs’)
controlled by the Group. Securitisation enables a subsequent issuance of debt by the SPEs to investors who gain the security of the
underlying assets as collateral. These SPEs are fully consolidated into the Group financial statements under IFRS 10 Consolidated Financial
Statements, as the Group controls the entity in line with the above definition.
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not
readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
year in which the estimate is reviewed. To the extent that a change in an accounting estimate gives rise to changes in assets and liabilities,
the movement is recognised by adjusting the carrying amount of the related asset or liability in the period in which the change occurs.
Further information regarding the Group’s critical accounting judgements and estimates is provided in note 2 to the financial statements.
Going concern
The consolidated financial statements have been prepared on a going concern basis. In considering this requirement, the directors have
taken into account the following:
• The Group’s profit projections, including:
– Changes in premium rates and projected policy volumes across the Group’s insurance businesses
– The impacts of the continued elevated inflationary environment on the cost of settling claims across all of the Group’s
insurance businesses
– The return of motor claims frequency towards pre-pandemic levels
– Projected trends in other revenue generated by the Group’s insurance business from fees and the sale of ancillary products
– Projected contributions to profit from businesses other than the UK Car insurance business
– Expected trends in unemployment in the context of credit risks and the growth of the Group’s consumer lending business
– The More Than acquisition due to complete in the first half of 2024
– Assessment of wider market risk and changes in investment performance given the changing interest rates toward the end of 2023.
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 222222
223
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
1. Basis of preparation continued
• The Group’s solvency position, which has been closely monitored through periods of market volatility. The Group continues to maintain
a strong solvency position above target levels
Presentation and disclosure
For presentation in the Statement of Financial Position, the Group aggregates insurance and reinsurance contracts issued and reinsurance
contracts held respectively, and presents separately:
• The adequacy of the Group’s liquidity position after considering all the factors noted above
• Portfolios of insurance contracts issued that are assets
• The results of business plan scenarios and stress tests on the projected profitability, solvency and liquidity positions including the
• Portfolios of insurance contracts issued that are liabilities
impact of severe downside scenarios that assume severe adverse economic, credit and trading stresses
• The regulatory environment, focusing on regulatory guidance issued by the FCA and the PRA in the UK and regular communications
between management and regulators
• A review of the Company’s principal risks and uncertainties and the assessment of emerging risks, including climate related risks.
Following consideration of all of the above, the Directors have reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report, and that it is therefore
appropriate to adopt the going concern basis in preparing the consolidated financial statements.
Further information regarding the Company’s business activities, together with the factors likely to affect its future development,
performance and position, is set out in the Strategic Report. Further information regarding the financial position of the Company,
its cashflows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, note 2 to the financial
statements include the Group’s insurance and financial risk management objectives, details of its financial instruments and its exposures
to credit risk and liquidity risk; and its objectives, policies and processes for managing its capital.
Adoption of new and revised standards
The Group has adopted the following IFRSs and interpretations during the year, which have been issued and endorsed:
• IFRS 17 Insurance Contracts (effective 1 January 2023)
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective
1 January 2023)
• Amendments to IAS 1 Presentation of Financial Statements and Practice Statement 2: Disclosures of Accounting policies (effective
1 January 2023)
• Portfolios of reinsurance contracts held that are assets
• Portfolios of reinsurance contracts held that are liabilities.
The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements.
The line item descriptions in the Statement of Profit or Loss and Other Comprehensive Income have been changed significantly
compared with last year. Previously, the Group reported the following line items:
• Gross written premiums
• Net written premiums
• Changes in unearned premium reserves
• Gross insurance claims
• Net insurance claims
• Net operating expenses.
Instead, IFRS 17 requires separate presentation of:
• Insurance revenue
• Insurance service expenses
• Income or expenses from reinsurance contracts held
• Insurance finance income or expenses.
The Group provides disaggregated qualitative and quantitative information about:
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective
• Amounts recognised in its financial statements from insurance contracts issued and reinsurance contracts held
1 January 2023).
• Amendments to IAS 12 Income Taxes: International tax reform - Pillar two model rules (effective 1 January 2023).
The application of the amendments listed above has not had a material impact on the Group’s results, financial position and cashflows.
Further information on the impact of the transition to IFRS 17 is provided below.
IFRS 17 adoption
IFRS 17, the new insurance contracts standard, replaces IFRS 4 Insurance Contracts, from 1 January 2023.
As a result, the opening balance sheet (1 January 2022) and prior year comparatives (FY 2022) have been restated under IFRS 17, applying
the transitional provisions in Appendix C to IFRS 17. The nature of the changes in accounting policies can be summarised as follows:
Changes to classification and measurement.
The adoption of IFRS 17 did not change the classification of the Group’s insurance contracts.
The Group was previously permitted under IFRS 4 to continue accounting using its previous (UK GAAP) accounting policies. However, IFRS
17 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by
the Group.
Under IFRS 17, the Group’s insurance contracts issued and reinsurance contracts held have all been assessed as eligible to be measured
by applying the premium allocation approach (‘PAA’). The PAA simplifies the measurement of insurance contracts in comparison with the
general model in IFRS 17.
• Significant judgements, and changes in those judgements, when applying the standard.
The new accounting policies and choices adopted in the implementation of IFRS 17 are disclosed in the notes to these
financial statements.
Transition approach
The full retrospective approach was applied to the insurance contracts issued and reinsurance contracts held that were in force at the
transition date.
The transition approach was determined at a group of insurance contracts level. Accordingly, the Group has recognised and measured
each group of insurance contracts in this category as if IFRS 17 had always applied; derecognised any existing balances that would not
exist had IFRS 17 always applied; and recognised any resulting net difference in equity.
Impact of Transition on Equity
The total impact of the transition was a reduction in equity of £125.6 million, as shown in the Consolidated Statement of Changes
in Equity. The Statement of Financial Position presents the restated balance sheet as at the transition date of 1 January 2022, with
supporting notes providing further detail as required.
The key changes driving the adverse impact on transition are:
• An adverse impact arising from the Group’s accounting policy choice to expense acquisition costs, which results in a write off of the
Group’s gross deferred acquisition cost asset
The measurement principles of the PAA differ from the ‘earned premium approach’ used under IFRS 4 in the following key areas:
• A reduction in quota share reinsurance assets primarily as a result of the change in timing in recognition of ceded quota share expense
• The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance services provided
• The Group has chosen to expense its insurance acquisition cashflows as incurred
• Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial risk when a
group of contracts is onerous in order to calculate a loss component
• Measurement of the liability for incurred claims (previously claims outstanding) is determined on a discounted probability-weighted
expected value basis, and includes an explicit risk adjustment for non-financial risk.
• Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held minus ceded earned
premium) is adjusted to include a loss-recovery component to reflect the expected recovery of onerous contract losses where such
contracts reinsure onerous direct contracts.
recoveries, which under IFRS 17 are realised in line with the earning of premium, rather than aligned to when the gross expenses
are incurred
• An adverse impact due to the deferral of revenue in relation to underwritten ancillary products, which was previously recognised
immediately as commission income
• An offsetting favourable impact due to change in the Group’s claims liabilities, net of reinsurance, as a result of the requirements for
the liability and asset for incurred claims to be calculated using a probability weighted, discounted best estimate plus risk adjustment
for non-financial risk
• The tax treatment of the transition impact follows the accounting treatment, with no transitional relief available. The tax impact on
transition has been calculated at an entity level, based on the tax rates in place in 2023, when the tax transition impacts are realised.
Deferred tax assets in relation to carried forward losses are recognised only to the extent that it is probable future taxable profit will be
available against which the assets can be utilised, in accordance with the Group’s accounting policy for taxation.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 224224
225
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
1. Basis of preparation continued
Summary of Impact of Transition on FY 2022 restated result
£m
Analysis of profit
UK Insurance
International Insurance
International Insurance – European Motor
International Insurance – US Motor
International Insurance – Other
Admiral Money
Other
Group profit before tax
31 December 2022
IFRS 17
IFRS 4
Change
509.7
(56.2)
(16.5)
(36.4)
(3.3)
2.1
(94.4)
361.2
615.9
(53.8)
(1.6)
(48.9)
(3.3)
2.1
(95.2)
469.0
(106.2)
(2.4)
(14.9)
12.5
–
–
0.8
(107.8)
The 2022 profit before tax on an IFRS 17 basis is lower than that reported under IFRS 4. The following table sets out the key differences
for the UK and international insurance profits reported under IFRS 17 compared to IFRS 4:
£m
IFRS 4 reported profit
Timing of reserve releases
Discounting
Timing of Quota share reinsurance recoveries
Other
IFRS 17 reported profit before tax
UK
615.9
(93.3)
15.4
(41.2)
12.9
509.7
International
(53.8)
(9.9)
9.5
(2.9)
0.9
(56.2)
The difference between IFRS 4 and IFRS 17 reported profit primarily arises as a result of differences in the reserve strength or risk
adjustment position over the course of 2022 under each standard. Under IFRS 4, Admiral moved down to the 95th percentile over the
course of 2022. Under IFRS 17, Admiral moved down to the 95th percentile at the transition date of 1 January 2022, and remained at that
percentile during 2022. This results in lower reserve releases under IFRS 17 in 2022, and therefore lower profit.
The discounting impact shown above is the impact of the discounting of the gross, net of XoL claims cost and finance expenses
recognised in the period. In UK Insurance, whilst there is a favourable impact of discounting of the claims incurred of circa £52 million at
YE 2022, this is offset by the unwind of discounting of prior years, reducing the overall discounting benefit to £15 million when compared
to IFRS 4 claims costs. It should be noted that whilst the higher discount curves seen in 2022 result in lower claims reserves, the Group’s
accounting policy decision to take the impact of changes in yield curve on outstanding claims reserves to Other Comprehensive Income
means that this is not a material driver of IFRS 17 profit in 2022.
In addition, the majority of the discounting benefit on gross claims net of excess of loss reinsurance is offset by the significant adverse
movement on quota share recoveries. This is significant given that, due to quota share contracts having been largely commuted on
earlier underwriting years, there is no significant offsetting finance income (representing the unwind of discounting within the quota
share result).
Other movements include a number of largely offsetting differences in the timing of recognition of acquisition expenses, quota share
reinsurance profit commission recoveries, and movements in the onerous loss component.
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards that
have been issued but are not yet effective:
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (effective 1 January 2025)
• Amendments to IAS 7 Statement of Cashflows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements
(effective 1 January 2024)
• Amendments to IAS 1 Presentation of Financial Statements: Classification of liabilities as Current or Non-current
(effective 1 January 2024)
• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024).
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements
of the Group in future periods.
Acquisition of More Than home and pet personal lines from RSA
During December 2023 the Group signed an agreement to acquire the UK direct Home and Pet personal lines insurance operations of
RSA Insurance Group Limited (“RSA”). The acquisition is expected to complete during the first half of 2024. The consideration payable at
completion is £82.5 million, with a further potential payment of £32.5 million depending on the number of policies successfully migrated
to the Group. The acquisition will not include liabilities relating to existing policies, which will remain with RSA. There is no impact on the
results reported in these financial statements as a result of the transaction.
2. Critical accounting judgements and estimates
In applying the Group’s accounting policies as described in the notes to the financial statements, the Directors are required to make
judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant, including where
appropriate, weather-related factors. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
2.1 Critical accounting judgements
The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the
Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts
recognised in financial statements.
Premium allocation approach (‘PAA’)
The Group applies the PAA to all of its insurance and reinsurance contracts.
The coverage period of insurance contracts is typically one year or less, including insurance contract services arising from all premiums
within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to be material.
The Group’s insurance contracts are therefore automatically eligible for the PAA.
However, the Group’s reinsurance contracts are not automatically eligible for the PAA given that the coverage period is greater than one
year. The Group has modelled the expected cashflows and reasonably possible future scenarios for its reinsurance contracts, and as a
result expects that the measurement of the asset for remaining coverage for the group containing those contracts under the PAA does
not differ materially from the measurement that would be produced applying the general model. Its reinsurance contracts are therefore
eligible for the PAA.
The modelling of the cashflows associated with the Group’s reinsurance contracts, and reasonably possible future scenarios, is a key area
of judgement that impacts the PAA eligibility assessment and the resulting measurement of and presentation of reinsurance contracts in
these financial statements.
Classification of the Group’s contracts with reinsurers as reinsurance contracts
A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms and conditions
of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance contracts (both
excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that all contracts transfer
significant insurance risk and have therefore been classified and accounted for as reinsurance contracts within these financial statements.
Unit of account: combination of insurance contracts and separation of distinct components
The lowest unit of account in IFRS 17 is the contract and there is a presumption that a contract with the legal form of a single contract
would generally be considered a single contract in substance. However, there might be certain facts and circumstances where legal
form does not reflect the substance of the arrangement and separation of the contract is required, or alternatively circumstances when
contracts should be combined, such as when a set of insurance contracts with the same or a related counterparty may achieve, or be
designed to achieve, an overall commercial effect.
Overriding the legal contract to reflect substance is not a policy choice; it is a significant judgement requiring careful consideration of all
relevant facts and circumstances. The following considerations, as set out by the IFRS 17 Transition Resource Group, are deemed relevant
in assessing whether the contracts should be separated, or alternatively, combined:
• whether there is interdependency between the different risks covered
• whether components lapse together, and
• whether components can be priced and sold separately.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
226226
227
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
2. Critical accounting judgements and estimates continued
In addition, any cashflows related to promises to transfer distinct goods or services, other than insurance contract services, that are
within the host insurance contract are separated and recognised by applying IFRS 15. In determining whether there are such distinct
components, the following is considered:
• whether the policyholder can benefit from the good or service on its own or together with other resources available to
the policyholder
• whether the cashflows and risks associated with the good or service are highly interrelated with the cashflows and risks associated
with the insurance components in the contract
• whether the Group provides a significant service in integrating the good or service with the insurance components.
After separating any such distinct components, IFRS 17 is applied to all remaining components of the (host) insurance contract.
The Group has determined that, in applying these requirements to its insurance contracts:
• The individual insurance policies contained in a ’multi-cover policy’ are treated as separate contracts, given that the components can
be priced and sold separately, there is little interdependency between the risks covered, and the components can lapse separately
• The cashflows associated with administration fees (for changes to the underlying insurance policy), and instalment income (being
the additional fees payable by a policyholder associated with paying for an insurance contract over 12 months, rather than in one
up-front payment), are non-distinct given that the policyholder cannot benefit from these services separately and the services are
highly interrelated with the core insurance policy. These cashflows are therefore treated as insurance revenue under IFRS 17. However,
for the component of the insurance policy that is underwritten outside the Group by a third party insurer, the Group is performing an
agency service on behalf of the third party insurer, and therefore this component is treated as a separate component of revenue and
accounted for under IFRS 15
• The cashflows associated with ancillary or ’add on’ products (which are sold within the same set of contracts as the core product), are
separated from the core product in cases where the policyholder can benefit from the product on its own, and where the cashflows are
not highly interrelated with the insurance components in the contract or the Group does not provide a significant service in integrating
the products.
In addition, the Group’s quota share reinsurance contracts contain profit commission arrangements. Under these arrangements, there
is a minimum guaranteed amount that the Group, as the policyholder, will always receive – either in the form of profit commission, or
as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been
assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment
components which are not accounted for separately. Given that the receipt and payment of these non-distinct investment components
do not relate to the provision of insurance services, the amounts are excluded from the net reinsurance expenses in the Group’s Income
Statement (i.e. both ceded reinsurance premiums and ceded recoveries are presented net of the minimum guaranteed amount that the
Group will always receive).
Presentation of reinsurance ‘funds withheld’ contracts
The Group has a number of quota share reinsurance contracts that have funds withheld features, whereby the quota share proportion of
ceded premiums and related recoveries are retained by the Group, and settled on a net basis at commutation. The only initial cashflows
during the coverage period are therefore the payment of any reinsurer margin.
Under IFRS 17, the reinsurance assets related to these funds withheld contracts are presented on a cashflow basis i.e. the full proportional
share of ceded premiums and recoveries is not presented in either the Income Statement or the Statement of Financial Position.
Consolidation of the Group’s special purpose entities (‘SPEs’)
The Group has set up a number of SPEs in relation to the Admiral Money business, whereby the Group securitises certain loans by the
transfer of the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who thereby
gain the security of the underlying assets as collateral.
The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated into the
Group’s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has control of the
SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs.
The SPEs have therefore been fully consolidated in the Group’s financial statements.
2.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are
discussed below.
Best estimate of future cashflows to fulfil insurance contracts
The ultimate cost of outstanding claims that have been incurred prior to the balance sheet date and that remain unsettled at the
balance sheet date, for material lines of business, is estimated by internal actuarial teams using a range of standard actuarial claims
projection techniques, (such as incurred and paid chain ladder techniques, Bornhuetter-Ferguson methods and initial expected
assumptions) to allow an actuarial assessment of their potential outcome. This includes an allowance for unreported claims.
The projection of the overall claims reserve is subject to comparison against equivalent outputs produced by an independent external
actuarial specialist for material lines of business.
Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example bodily
injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key sources of
estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting claims provisions.
Internal and external factors may affect the cost of settling claims in ways that wouldn’t be allowed for by standard actuarial techniques;
where this occurs adjustments to the technique, assumptions or result may be applied. Examples of these factors include:
• Changes in the reporting patterns of claims impacting the frequency of bodily injury and damage claims
• Emerging inflationary trends on the average cost of bodily injury and damage claims
• The likelihood of bodily injury claims settling as Periodic Payment Orders
• Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs
• Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates.
Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to reflect one-off
occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation,
judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order
to arrive at the estimated ultimate cost of claims that present the probability weighted expected value outcome from the range of
possible outcomes, taking account of all the uncertainties involved.
The Group also has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation
reimbursements are offset against ultimate claims costs. Other key circumstances affecting the reliability of assumptions include delays
in settlement.
Outputs of the actuarial projections include ultimate average cost per claim and claim frequency by accident year, implied claims
inflation metrics and ultimate loss ratios and burn costs by accident year and underwriting year. These metrics are reviewed and
challenged as part of the process for making allowance for the uncertainties noted.
Methods used to measure the risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of
cashflows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation for
uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a way that
reflects the Group’s degree of risk aversion. The Group estimates an adjustment for non-financial risk separately from all other estimates.
Applying a confidence level technique (value at risk (“VaR”), the Group estimates the probability distribution of the present value of the
future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of
the value at risk at the target confidence level over the expected present value of the future cashflows.
The Group’s risk adjustment is set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. The level and
estimate of risk adjustment required at reporting date is made in a way that reflect the Group’s degree of risk aversion, taking into account
both internal factors (such as data quality and trends; diversification across portfolios) and external factors (such as inflation and potential
changes in Ogden rate) that are relevant at that point in time.
To determine the risk adjustment for non-financial risk for reinsurance contracts, the Group applies these techniques both gross and net
of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the difference between the two results.
The net of excess of loss risk adjustment is allocated to quota share reinsurance contracts on a proportional basis.
The risk adjustment is calculated at the issuing entity level. Diversification benefit is included across portfolios within the entity, to reflect
the diversification in contracts sold across entities.
The risk adjustment is then allocated down to each portfolio of contracts within the entity using a spread VaR methodology to inform the
allocation, to ensure coherence of the gross and excess of loss reinsurance results for risk adjustment across the portfolios within an entity.
Allocations of the risk adjustment to each underwriting year (annual cohort) of contracts within a portfolio is performed manually, based on a
systematic approach using management judgement. This typically involves allocating a higher proportion of the risk adjustment to the more
recent underwriting years that are less developed and therefore more uncertain, compared to the proportion of risk adjustment allocated to
older, more developed years.
Where a risk adjustment is required for the liability for remaining coverage due to facts and circumstances indicating that contracts are
onerous, this is derived using the risk adjustment for the earned portion of the reserves, adjusted for the unearned claims reserves to reflect
the difference in exposure/size of reserves and difference in drivers of risk in the reserves.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 228228
229
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
2. Critical accounting judgements and estimates continued
Calculation of expected credit loss provision
The Group is required to calculate an expected credit loss (‘ECL’) allowance in respect of the carrying value of the Admiral Money loan
book in line with the requirements of IFRS 9. Due to the size of the loan book, the calculation of the ECL is deemed to be a critical
accounting judgement and includes key sources of estimation uncertainty.
Management applies judgement in:
• Determining the appropriate modelling solution for measuring the ECL
• Calibrating and selecting appropriate assumptions
• Setting the criteria for what constitutes a significant increase in credit risk
• Identification of key scenarios to include and determining the credit loss in these instances.
The key areas of estimation uncertainty are in the calculation of the probability of default (‘PD’) in the base scenario for stage 1 and 2
assets, and the determination, impact assessment and weighting of the forward-looking scenarios.
Refer to the analysis in note 7 to the financial statements for further detail on the Group’s ECL methodology applied in the period.
3. Insurance and financial risk
The Group’s activities expose it primarily to insurance risk, and financial risks of credit, spread, interest rate, liquidity and foreign exchange
risk. The Board of Directors is ultimately responsible for the management of insurance risk and financial risks, although it has delegated
the detailed oversight of supervising risk management and internal control to the Group Risk Committee.
There are several key elements to the risk management environment throughout the Group. These are detailed in full in the Corporate
Governance Statement. Specific considerations for the risks arising from insurance and financial risk are detailed below.
3.1 Insurance risk
The Group’s primary business is the issuance of insurance contracts that transfer risk from policyholders to the Group and its co-
insurance partners.
Insurance risk involves uncertainty over the occurrence, amount or timing of claims arising on insurance contracts issued.
It is primarily comprised of Reserve risk; the risk that the value of insurance liabilities established is insufficient to cover the ultimate cost
of claims incurred at the balance sheet date, and premium risk; the risk that the claims experience on business written but not earned is
higher than allowed for in the premiums charged to policyholders.
The Board has ultimate responsibility for the management of insurance risk although as set out above, it has delegated the detailed
oversight of risk management to the Group Risk Committee. The Group also has a Group Reserving Committee as well as local Reserving
Committees which are comprised of senior managers within the finance, claims, pricing and actuarial functions in the respective
businesses. The Reserving Committees primarily recommend the approach for claims reserving but also review the systems and controls
in place to support accurate reserving and consider material reserving issues such as large bodily injury claims frequency and severity, the
impact of changes in the claims systems and the external environment.
The Board implements certain policies to mitigate and control the level of insurance risk accepted by the Group. These include
pricing policies and claims management and administration processes, in addition to reserving policies and entering into
reinsurance arrangements.
3.1.1 Reserve risk
Reserve risk arises from:
• The uncertain nature of claims, in particular the development of large bodily injury claims
• Unexpected future impact of socioeconomic trends or regulatory changes, for example changes to the Ogden discount rate
• Data issues and changes to the claims reporting process
• Failure to recognise claims trends in the market including a slow-down in the processing of recoveries and liabilities with third party
insurers which increases the estimation risk of these amounts
• Changes in underwriting and business written so that past trends are not necessarily a predictor of the future.
Understatement of reserves may result in not being able to pay claims when they fall due. Alternatively, overstatement of reserves can
lead to a surplus of funds being retained resulting in opportunity cost; for example, lost investment return or insufficient resource to
pursue strategic projects and develop the business.
Reserve risk is mitigated through a series of processes and controls. The key processes are as follows:
• Regular management and internal actuarial review of individual and aggregate case claim reserves, including regular reporting of
management information and exception reporting of significant movements
• Regular management and internal actuarial review of large claims, including claims settled or potentially settled by PPOs for which the
uncertainty is increased by factors such as the lifetime of the claimant and movements in the indexation for the cost of future care of
the claimant
• Bi-annual external actuarial review of best estimate claims reserves using a variety of recognised actuarial techniques
• Internal actuarial analysis of reserve uncertainty through qualitative analysis, scenario testing and a range of stochastic
reserving techniques
• Ad hoc external reviews of reserving related processes and assumptions
• The application of a risk adjustment aligned with Group risk appetite.
As described in note 2, critical accounting judgements and estimates, the Group includes the risk adjustment for non-financial risk within
its measurement of insurance contracts and reinsurance contract assets, using a confidence level technique, with the risk adjustment
being set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis.
Whilst the underlying methods to calibrate the reserve risk distribution from which the percentile is selected are consistent year on year,
a number of developments in the reserve risk modelling in 2023 result in a slightly less volatile distribution than at the end of 2022.
The reserves including risk adjustment at 31 December 2023 equated to a 93rd percentile confidence level position (2022: 95th
percentile) to the nearest whole percentile. The reduction in the confidence level from 2022 is reflective of the Group’s assessment of
uncertainty and the level of adverse risks associated with both internal and external factors, and in particular the Group’s continued
diversification across portfolios.
3.1.2 Premium risk
As noted above, the Group defines premium risk as the risk that claims cost on business written but not yet earned is higher than allowed
for in the premiums charged to policyholders. This also includes catastrophe risk, the risk of incurring significant losses as a result of the
occurrence of manmade catastrophe, or natural weather events.
Key processes and controls operating to mitigate premium risk are as follows:
• Experienced and focused senior management and teams in relevant business areas including pricing and claims management
• A data-driven and analytical approach to regular monitoring of claims and underwriting performance
• Observations of weather events trends to understand climate impacts on frequency and severity
• Capability to identify and resolve underperformance promptly through changes to key performance drivers, in particular pricing.
3.1.3 Reinsurance risk
The Group purchases reinsurance as part of its risk mitigation programme. Reinsurance held is placed on both an excess of loss basis,
designed to protect the Group against very large individual claims and catastrophe losses, and a proportional basis i.e. quota–share
reinsurance which is taken out to reduce the overall exposure of the Group to its insurance contracts.
Reinsurance risk is the risk of placement of ineffective reinsurance arrangements, or the economic risk of reduced availability of
reinsurance arrangements in future periods.
The Group mitigates these risks by ensuring that it has a diverse range of financially secure reinsurance partners, including a long-term
relationship with Munich Re and a number of other large reinsurers.
Amounts recoverable from reinsurers are estimated in a manner consistent with underlying insurance contract liabilities and in
accordance with the reinsurance contract terms. Although the Group has reinsurance arrangements, it is not relieved of its direct
obligations to its policyholders and thus a credit exposure exists with respect to reinsurance held, to the extent that any reinsurer is
unable to meet its obligations.
Information regarding reinsurance credit risk is provided in note 3.2.1.
3.1.4 Concentration of insurance risk
The Directors do not believe there are significant concentrations of insurance risk. This is because the risks are spread across a large
number of policies across a wide regional base. The International Car Insurance, UK Household, UK Travel and UK Pet businesses further
contribute to the diversification of the Group’s insurance risk.
The Group’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the
Group substantially dependent upon any single reinsurance contract.
The tables in note 5f(i) show the concentration of net insurance contract liabilities by product type and geographic area.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 230230
231
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
3. Insurance and financial risk continued
3.1.5 Sensitivity analysis
The following sensitivity analysis shows the impact on profit for reasonably possible movements in key assumptions with all other
assumptions held constant. The correlation of assumptions will have a significant effect in determining the ultimate impacts, but to
demonstrate the impact due to changes in each assumption, assumptions have been changed on an individual basis. It should be noted
that movements in these assumptions are non-linear.
The sensitivities are shown for UK motor only, being the line of business where such sensitivities could have a material impact at a
Group level. The sensitivities are shown on a gross and net of quota share reinsurance basis to illustrate the impacts on shareholder
profit and equity before and after risk mitigation from quota share reinsurance. The sensitivities (both gross and net) include the
impacts of movements in co-insurance profit commission, given that underwriting year loss ratios including risk adjustment, are a direct
input to the calculation of profit commission. Refer to note 8 to these financial statements for the accounting policy for co-insurance
profit commission.
Ogden discount rate
The sensitivities reflect the impact on profit before tax and equity in 2023 for changes to the Ogden discount rate from the current rate
of minus 0.25%, with all other assumptions (including the absolute value of risk adjustment) remaining unchanged.
£m
Ogden discount rate increase by 125 bps to +1.00%
Ogden discount rate increase by 75 bps to +0.50%
Ogden discount rate increase by 25 bps to 0.00%
Ogden discount rate decrease by 75 bps to -1.00%
2023
Impact on profit
before tax gross of
reinsurance
133.9
82.8
29.2
(104.4)
Impact on profit
before tax net of
reinsurance
95.3
57.4
20.0
(70.2)
Impact on
equity gross of
reinsurance
110.6
68.3
24.0
(86.3)
Impact on
equity net of
reinsurance
77.0
46.3
16.1
(56.6)
The sensitivities do not reflect the full ultimate impacts of changes in the Ogden rate as some of the impact will flow into future
financial periods.
In addition, should the Ogden discount rate change in future periods, the impacts on profit before tax and equity are likely to be larger
than those set out above, as a result of including the impacts on claims arising in relation to premium written and earned beyond
31 December 2023.
Risk adjustment
The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023 for changes in the selection of the UK
motor risk adjustment confidence level at 31 December 2023, with all other assumptions remaining unchanged.
£m
Risk adjustment increase to 95th percentile
Risk adjustment decrease to 90th percentile
Risk adjustment decrease to 85th percentile
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
(54.4)
45.6
108.8
(25.6)
24.1
57.6
Impact on
equity gross of
reinsurance
(45.6)
38.3
91.2
Impact on
equity net of
reinsurance
(20.3)
19.3
46.0
Undiscounted loss ratios, including risk adjustment
The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023, of a change in the booked loss ratios for
individual underwriting years (UWY) as at 31 December 2023, with all other assumptions remaining unchanged.
£m
Increase of 1%: gross of reinsurance
Increase of 3%: gross of reinsurance
Increase of 5%: gross of reinsurance
Decrease of 1%: gross of reinsurance
Decrease of 3%: gross of reinsurance
Decrease of 5%: gross of reinsurance
Increase of 1%: net of reinsurance
Increase of 3%: net of reinsurance
Increase of 5%: net of reinsurance
Decrease of 1%: net of reinsurance
Decrease of 3%: net of reinsurance
Decrease of 5%: net of reinsurance
2023
UWY 2020 impact on:
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
PBT
(19.8)
(59.3)
(98.9)
19.8
59.3
98.9
(19.8)
(59.3)
(98.9)
19.8
59.3
98.9
Equity
(15.2)
(45.7)
(76.1)
15.2
45.7
76.1
(15.2)
(45.7)
(76.1)
15.2
45.7
76.1
PBT
(13.9)
(41.7)
(69.5)
13.9
41.7
69.5
(6.4)
(19.1)
(29.0)
7.0
27.3
49.0
Equity
(11.1)
(33.4)
(55.6)
11.1
33.4
55.6
(5.0)
(15.1)
(22.8)
5.5
21.7
39.0
PBT
(14.5)
(43.4)
(72.3)
14.5
43.4
72.3
(4.4)
(13.1)
(21.8)
4.4
13.1
24.1
Equity
(12.6)
(37.7)
(62.9)
12.6
37.7
62.9
(3.6)
(10.8)
(18.0)
3.6
10.8
20.0
PBT
(9.6)
(28.7)
(47.8)
9.6
28.7
47.8
(3.5)
(10.4)
(17.3)
3.4
10.4
19.6
Equity
(8.4)
(25.3)
(42.2)
8.4
25.3
42.2
(2.8)
(8.5)
(14.2)
2.8
8.5
16.3
*2. ‘Booked’ loss ratios are undiscounted underwriting year loss ratios, including risk adjustment.
3.2. Financial risk
The Group’s activities expose it primarily to financial risks of credit, spread, interest rate, liquidity and foreign exchange risk. The detailed
oversight of supervising risk management and internal control has been delegated to the Group Risk Committee.
There is also an Investment Committee that makes recommendations to the Group and subsidiary Boards on investment strategy, and
overseas the Group’s investments, as well as advising on liquidity funding and foreign exchange management.
3.2.1 Credit risk
The Group defines credit risk as the risk of financial loss if another party fails to perform its obligations. The key areas of exposure to
credit risk for the Group result through its reinsurance programme, investments, bank deposits, loans and advances to customers and
policyholder receivables.
The Directors consider credit quality and counterparty exposure frequently and in significant detail. The Directors consider that the
policies and procedures in place to manage credit exposure continue to be appropriate for the Group’s risk appetite and, during 2023,
and historically, no material credit losses have been experienced by the Group.
Financial investments and cash
Credit and counterparty risk is managed by the Group by investing in high quality money market funds, and setting suitable parameters
for asset managers to adhere to when purchasing debt securities. Cash balances and deposits are placed only with highly rated
credit institutions.
The Group primarily invests the following asset types:
• Debt securities are held within segregated mandates and investment funds. This includes government debt, private debt and asset
backed securities. The guidelines of the investments ensure management of credit risk. Generally, the duration of the securities is
relatively short and similar to the duration of the on book claims liabilities
• Liquidity funds, which in turn invest in a mixture of short-dated fixed and variable rate securities, such as cash deposits, certificates of
deposits, floating rate notes and other commercial paper
• Deposits held with well rated institutions and which are short in duration (under three years). These are classified as held at amortised
cost. Therefore, neither the carrying value of the asset, nor the interest return will be impacted by fluctuations in interest rates.
The detailed holdings are reviewed regularly by the Investment Committee.
Reinsurance assets
To mitigate the risk arising from exposure to reinsurers (in the form of reinsurance recoveries), the Group only conducts business with
companies of appropriate financial strength ratings. In addition, many reinsurance contracts are operated on a funds withheld basis,
which substantially reduces credit risk, as the Group retains the cash received from policyholders.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 232232
233
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
3. Insurance and financial risks continued
Loans and advances to customers
The risk appetite for the lending business is set to ensure that the risk taken is commensurate with the expected returns.
Management has defined an amber and a red loan loss limit, representing points at which action is required. These limits have been
defined by management to reflect the business maturity, the business’ ambitions and the economic climate. Risk appetite is assessed at
least annually, while the limits are continuously monitored. See note 7 for further information.
Other receivables
A further principal form of credit risk is in respect of amounts due from policyholders, largely due to the potential for default by
instalment payers. The impact of this is mitigated by the large customer base and low average level of balance recoverable. There is also
mitigation by the operation of numerous high- and low-level controls in this area, including payment on policy acceptance as opposed to
inception and automated cancellation procedures for policies whereby payment has not been received.
The amount of bad debt expense relating to policyholder debt charged to the Income Statement in 2023 and 2022 is insignificant.
Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness of all
counterparties prior to them being accepted.
All other assets are assessed as low credit risk under IFRS 9, with no significant amounts past due or impaired. No further disclosure is
provided due to this having an immaterial impact on the financial statements.
Credit exposure and quality analysis
The table below provides information regarding the credit risk exposure of the Group.
31 December 2023
AA
£m
A
£m
BBB and
Sub-BBB
£m
Not rated*1
£m
Total
£m
Financial investments measured
at FVTPL
Money market and other funds
Equity Investments (designated FVTPL)
Derivative financial instruments
Investment in associate
Financial investments
classified as FVOCI
Corporate and private debt securities
Government debt securities
Equity Investments (designated FVOCI)
Financial assets measured
at amortised cost
Deposits with credit institutions
Total financial investments
Cash and cash equivalents
Reinsurance contract assets
Other receivables
Loans and advances to customers
(note 7)*2
Total exposure
AAA
£m
194.9
–
–
–
414.2
57.2
–
–
666.3
–
–
236.1
–
–
–
235.7
455.3
–
–
927.1
12.2
913.8
355.7
–
–
–
955.3
5.2
–
116.7
1,432.9
318.2
277.4
71.2
–
–
–
468.1
1.9
–
–
541.2
22.6
0.7
30.9
12.4
17.6
1.0
210.0
–
23.0
–
294.9
0.1
–
75.0
879.4
1,249.4
888.8
12.4
17.6
1.0
2,283.3
519.6
23.0
116.7
3,862.4
353.1
1,191.9
75.0
879.4
6,361.8
666.3
1,853.1
2,028.5
564.5
Financial investments measured at FVTPL
Money market and other funds
Equity Investments (designated FVTPL)
Derivative financial instruments
Investment in associate
Financial investments classified as FVOCI
Corporate and private debt securities
Government debt securities
Equity Investments (designated FVOCI)
Financial assets measured
at amortised cost
Deposits with credit institutions
Total financial investments
Cash and cash equivalents
Reinsurance contract assets
Trade and other receivables
Loans and advances to customers
(note 7)*2
Total exposure
31 December 2022
AAA
£m
66.3
–
–
–
258.3
266.7
–
–
591.3
–
–
–
–
591.3
AA
£m
344.2
–
–
–
188.5
209.3
–
–
742.0
23.5
586.6
–
–
1,352.1
A
£m
328.3
–
–
–
845.6
1.7
–
101.3
1,276.9
254.1
423.4
–
–
1,954.4
BBB and
Sub-BBB
£m
Not rated*1
£m
89.8
–
–
–
451.5
2.1
–
–
543.4
19.2
1.1
–
–
563.7
66.7
6.4
33.0
2.4
123.9
–
25.1
0.1
257.6
0.2
4.3
87.6
823.9
1,173.6
Total
£m
895.3
6.4
33.0
2.4
1,867.8
479.8
25.1
101.4
3,411.2
297.0
1,015.4
87.6
823.9
5,635.1
*1. £26.8 million (2022: £59.4 million) of the unrated exposure stems from money market funds, which are rated AAA/AA, but the underlying securities are not. The remaining unrated exposure is a
mixture of private debt £210.0 million (2022: £123.9 million) and other holdings £57.1 million (2022: £71.8 million).
*2. Loans and advances to customers are assets generated within the Group and hence not externally rated. See note 7 for management’s internal assessment of credit risk.
There were no further significant financial assets that were past due at the close of either 2023 or 2022.
3.2.1.2 Credit Spread risk
Spread risk is the risk of losses arising from changes in the spread between corporate bond yields and the risk-free yield curve.
These losses may not be realized as bonds are typically held to maturity.
Sensitivity to credit spread risk
The impact on equity of 100 and 200 basis point increases in credit spreads on financial investments and cash at the relevant valuation
date, is as follows:
Reduction in equity – 100bps
Reduction in equity – 200bps
31 December 2023
£m
(75.4)
(150.8)
31 December 2022
£m
(64.4)
(128.7)
The impact on the Income Statement from movements in credit spreads at the valuation date is immaterial.
No sensitivity analysis has been presented in relation to the impact on insurance liabilities and reinsurance assets in respect of changes
in credit spreads, as it has been assumed that there is no direct impact on the illiquidity premium as a result of a movement in
credit spreads.
Also see note 7 for further information on sensitivity in respect of credit risk in relation to loans and advances to customers.
3.2.2 Interest rate risk
The Group considers interest rate risk to be the risk that unfavourable movements in interest rates could adversely impact on the capital
values of financial assets and liabilities.
Interest rate risk on financial instruments arises primarily from the Group’s investments in debt securities. These investments are
exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates.
In addition, the value of insurance contract liabilities and reinsurance contracts assets recognised within the financial statements are
impacted by changes in interest rates, given that these are discounted using a risk-free interest rate, plus illiquidity premium.
The Group manages interest rate risk by closely matching, where possible, the durations of insurance contracts with fixed and guaranteed
terms and the supporting financial assets. The Group monitors its interest rate risk exposure through periodic reviews of asset and
liability positions. Additionally, estimates of cashflows and the impact of interest rate fluctuations are modelled and reviewed every
six months.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 234234
235
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
3. Insurance and financial risks continued
Loans and advances to customers
The Group’s consumer loan portfolio consists of fixed rate loans, which are funded at a floating variable rate. The Group has interest
rate swap arrangements in place to eliminate the majority of the interest rate risk variability in the cashflows payable on the loan
backed securities.
Hedge accounting
Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at
the balance sheet date is recognised through Other Comprehensive Income.
This results in a hedging reserve in relation to the interest rate swap.
Financial liabilities
Following the repurchase of the subordinated loan notes and the issuance of new subordinated loan notes, the Group holds two
financial liabilities in the form of a £55.1 million subordinated loan note with a ten year maturity and fixed rate coupon of 5.5% with a
redemption date of 25 July 2024 and a £250.0 million subordinated loan note with a ten year maturity and fixed rate coupon of 8.5% with
a redemption date of 6 January 2034. The liabilities are valued at amortised cost and therefore neither the carrying value of the deposits,
nor the interest payable, will be impacted by fluctuations in interest rates.
Other financial assets and liabilities
There is no significant exposure to interest rate risk for other financial assets and liabilities due to these being held at amortised cost.
Sensitivity to interest rate risk
The impact on profit and loss (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and
decreases in interest rates on insurance contract liabilities and reinsurance contract assets, is as follows:
£m
Increase of 100 basis points
Decrease of 100 basis points
Increase of 200 basis points
Decrease of 200 basis points
31 December 2023
Impact on profit
before tax gross of
reinsurance
22.2
(24.3)
42.7
(51.2)
Impact on profit
before tax net of
reinsurance
15.4
(17.0)
29.5
(36.2)
Impact on profit
before tax gross of
reinsurance
60.1
(68.4)
113.9
(148.5)
Impact on profit
before tax net of
reinsurance
49.7
(57.4)
93.8
(125.9)
The impact on profit before tax of a 100 basis and 200 basis point move in relation to investments and cash is not significant, at
£15.2 million and £30.4 million respectively. The impact on equity is more significant, at £81.7 million and £163.4 million respectively, as a
result of the gains and losses on the majority of the financial investment portfolio being reflected in Other Comprehensive Income.
Sensitivities for the 2022 comparative period are not significantly different to those provided above.
Changes in interest rates mainly affect the Income Statement and equity as follows:
Income statement
• Interest revenue and other finance costs on floating-rate financial instruments (assuming that interest rates had varied by 100 basis
points during the year)
• Changes in the fair value of derivatives and fixed-rate financial instruments measured at FVTPL
• Changes in the discounted fulfilment cashflows of onerous contracts
• Insurance claims expenses, reinsurance claims recoveries and finance income or expenses recognised in profit or loss, as a result of
discounting future cashflows at a revised current rate (assuming that interest rates had varied by 100 basis points during the year).
Equity
• Changes in the fair value of fixed-rate financial assets measured at FVOCI
• Insurance finance income and expenses recognised in OCI as a result of discounting future cashflows at a revised current rate
• The effect on profit or loss as above, net of tax.
The Group’s Solvency II balance sheet, which includes technical provisions discounted using Bank of England and EIOPA yield curves
reflects a low sensitivity to interest rates as a result of well-matched durations of assets and liabilities.
3.2.3 Liquidity risk
Liquidity risk is defined as the risk that the Group does not have sufficient available financial resources to enable it to meet its obligations
as they fall due, or can only secure them at excessive cost.
The Group holds appropriate liquidity buffers at the Parent Company and subsidiary levels.
Further, as noted above, a significant portion of insurance funds are invested in investment funds with same day liquidity, meaning that
a large proportion of the Group’s cash and investments are readily available.
Insurance and reinsurance contracts
The following table analyses the undiscounted, best estimate cashflows of the Group’s claims liabilities under its insurance and
reinsurance contracts, which reflects the dates on which the cashflows are expected to occur. Liabilities and assets for remaining
coverage are excluded from this analysis.
Insurance contract liabilities
31 December 2023
UK Motor
UK Non-motor insurance
International
31 December 2022
UK Motor
UK Non-motor insurance
International
Reinsurance contract assets
31 December 2023
UK Motor
UK Non-motor insurance
International
31 December 2022
UK Motor
UK Non-motor insurance
International
Financial liabilities
At December 2023
Financial liabilities
Subordinated notes*1
Loan backed securities
Other borrowings
Trade and other payables
Lease liabilities*1
Total financial liabilities
*1. Maturity analysis has been performed on a cash-settled basis.
At December 2022
Financial liabilities
Subordinated notes*1
Loan backed securities
Other borrowings
Trade and other payables
Lease liabilities*1
Total financial liabilities
< 1 year
£m
667.1
152.1
277.1
609.5
105.2
263.7
< 1 year
£m
37.5
115.2
255.5
31.4
79.7
257.3
< 1 year
£m
79.4
258.9
55.0
303.8
14.9
712.0
< 1 year
£m
11.0
241.0
20.0
254.9
10.2
537.1
1 –3 years
£m
3 –5 years
£m
> 5 years
£m
691.2
38.8
163.1
643.2
31.7
120.7
428.8
7.8
51.9
384.6
9.8
52.4
791.9
0.5
123.5
679.3
1.3
110.0
1 –3 years
£m
3 –5 years
£m
> 5 years
£m
56.6
40.8
90.0
65.3
17.3
79.9
58.4
7.9
41.2
33.0
4.6
35.6
271.5
0.6
120.0
235.6
0.6
78.7
1 –3 years
£m
3 –5 years
£m
> 5 years
£m
42.5
341.6
–
1.9
15.1
401.1
42.5
128.3
–
0.1
11.5
182.4
366.9
30.8
–
–
50.5
448.2
1 –3 years
£m
3 –5 years
£m
> 5 years
£m
211.0
326.0
–
–
18.4
555.4
–
125.5
–
–
16.6
142.1
–
22.2
–
–
57.7
79.9
*1. Maturity analysis has been performed on a cash-settled basis.
A breakdown of the Group’s other borrowings, trade payables and other payables is shown in note 11. The majority of trade and other
payables will mature within three to six months of the balance sheet date.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 236236
237
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
3. Insurance and financial risks continued
Financial assets
The following table analyses the carrying value of financial investments and cash and cash equivalents by contractual maturity, which can
fund the repayment of liabilities as they crystallise, as well as the Group’s other financial assets recognised under IFRS 9. The Group has
disclosed a maturity analysis for financial assets that it holds as part of managing liquidity risk because it considers that this information
is necessary to enable users of financial statements to evaluate the nature and extent of its liquidity risk.
At December 2023
Financial investments
Money market funds
Derivative financial instruments
Deposits with credit institutions
Debt securities
Total financial investments
Cash and cash equivalents
Total financial investments and cash
Insurance, trade and other receivables
Loans and advances to customers
Total financial assets
At December 2022
Financial investments
Money market funds
Derivative financial instruments
Deposits with credit institutions
Debt securities
Total financial investments
Cash and cash equivalents
Total financial investments and cash
Insurance, trade and other receivables
Loans and advances to customers
Total financial assets
< 1 year
£m
1 –3 years
£m
3 –5 years
£m
> 5 years
£m
888.8
19.1
116.7
336.7
1,361.3
353.1
1,714.4
347.7
251.4
2,313.5
< 1 year
£m
895.3
19.9
101.4
431.4
1,448.0
297.0
1,745.0
275.2
235.1
2,255.3
–
(0.6)
–
1,000.6
1,000.0
–
1,000.0
–
439.4
1,439.4
1 –3 years
£m
–
13.1
–
717.3
730.4
–
730.4
–
401.1
1,131.5
–
(0.9)
–
754.2
753.3
–
753.3
–
167.1
920.4
–
–
–
711.4
711.4
–
711.4
–
21.5
732.9
3 –5 years
£m
> 5 years
£m
–
–
–
626.6
626.6
–
626.6
–
159.2
785.8
–
–
–
572.3
572.3
–
572.3
–
28.5
600.8
The Group’s Directors believe that the cashflows arising from these assets will be consistent with this profile. Liquidity risk is not,
therefore, considered to be significant.
3.2.4 Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation of
overseas assets and liabilities.
The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international operations
means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential gains or losses.
Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as regulatory capital in
foreign currencies remain exposed.
The Group’s exposure to net assets and profits in currencies other than the reporting currency is immaterial other than for US dollars and
euros. The Group’s exposure to net assets held in dollars at the balance sheet date was £3.9 million (2022: £23.6 million); the exposure to
net assets held in euros was £76.8 million (2022: £69.3 million).
If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group’s profit before tax for the year would
increase/decrease by £2.0 million (2022: £3.9 million).
If the sterling rates with euros had strengthened/weakened by 10%, the Group’s profit before tax for the year would increase/decrease
by £1.3 million (2022: £2.3 million).
3.2.5 Objectives, policies and procedures for managing capital
The Group’s capital management policy defines the Board oversight, risk appetite and tier structure of the Group’s capital in addition to
management actions that may be taken in respect of capital, such as dividend payments.
The Group aims to operate a capital-efficient business model by transferring a significant proportion of underwriting risk to co-insurance
and reinsurance partners. This in turn reduces the amount of capital the Group needs to retain to operate and grow and allows the Group
to distribute the majority of its earnings as dividends.
The Board has determined that it will hold capital as follows:
• Sufficient Solvency II Own Funds to meet all of the Group’s Solvency II capital requirements (over a 1 year and ultimate time horizon)
• An additional contingency to cover unforeseen events and losses that could realistically arise. This risk appetite buffer is assessed via
stress testing performed on an annual basis and is calibrated in relation to the one-year regulatory SCR.
The Group’s current risk appetite buffer is 50% above the regulatory SCR.
The Group’s dividend policy is to:
• Pay a normal dividend equal to 65% of post-tax profits for the period
• Pay a special dividend calculated with reference to distributable reserves and surplus capital held above the risk appetite buffer.
This policy gives the Directors flexibility in managing the Group’s capital.
As noted above, the Group’s regulatory capital position is calculated under the Solvency II Framework. The Solvency Capital Requirement
(SCR) is based on the Solvency II Standard Formula, with a capital-add-on to reflect limitations in the Standard Formula with respect to
Admiral’s risk profile (predominately in respect of profit commission arrangements in co-and reinsurance agreements and risks relating to
Periodic Payment Order (PPO) claims).
Solvency ratio (unaudited)
At the date of this report, the Group’s regulatory solvency ratio, calculated using a capital add-on that has not been subject to regulatory
approval, is 200% (2022: 180%). This includes the recognition of the 2023 final dividend of 52.0 pence per share (2022: 52.0 pence per share).
The Group’s 2023 Solvency and Financial Condition Report (SFCR) will, when published, disclose a solvency ratio that is calculated at
the balance sheet date rather than annual report date, using the capital add-on that was most recently subject to regulatory approval.
The estimated and unaudited SFCR solvency ratio is 183%, with the reconciliation between this ratio and the 200% noted above being
as follows:
Regulatory solvency ratio (estimated and unaudited)
Solvency ratio as reported above
Change in valuation date*1
Other (including impact of updated, unapproved capital add-on)
Solvency ratio to be reported (SFCR)
31 December 2023
£m
31 December 2022
£m
200%
(11%)
(6%)
183%
180%
(11%)
(20%)
149%
*1. The solvency ratio reported above includes additional own funds generated post year-end up to the date of this report.
The Group has complied with its regulatory capital requirements throughout the period.
Subsidiaries
The Group manages the capital of its subsidiaries to ensure that all entities within the Group are able to continue as going concerns and
also to ensure that regulated entities meet regulatory requirements with an appropriate risk appetite buffer. Excess capital above these
levels within subsidiaries is paid up to the Group Parent Company in the form of dividends on a regular basis.
4. Operating segments
4a. Accounting policies
(i) Group consolidation
The consolidated financial statements comprise the results and balances of the Company and all entities controlled by the Company,
being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2023 and comparative figures for
the year ended 31 December 2022. The financial statements of the Company’s subsidiaries and its SPEs are consolidated in the Group
financial statements.
The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited.
An SPE is fully consolidated into the Group financial statements under IFRS 10, where the Group has control over the SPE.
The Parent Company financial statements present information about the Company as a separate entity and not about its Group.
In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are not
reported as related party transactions in the consolidated financial statements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 238238
239
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
4. Operating segments continued
(ii) Foreign currency translation
Items included in the financial records of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in pounds
sterling, the Group’s presentational currency, rounded to the nearest £0.1 million.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.
Non-monetary items measured at cost are translated at their historic rate and non-monetary items held at fair value are translated using
the foreign exchange rate on the date that the fair value was established.
The financial statements of foreign operations whose functional currency is not pounds sterling are translated into the Group
presentation currency (pound sterling) as follows:
• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
• Income and expenses for each Income Statement are translated at an average exchange rate (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the date of the transaction)
• All resulting exchange differences are recognised in Other Comprehensive Income and in a separate component of equity except to
the extent that the translation differences are attributable to non-controlling interests.
On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular operation is recognised in the
Income Statement.
4b. Segment reporting
The Group has four reportable segments, as described below. These segments represent the principal split of business that is regularly
reported to the Group’s Board of Directors, which is considered to be the Group’s chief operating decision maker in line with IFRS 8
Operating Segments.
UK Insurance
The segment consists of the underwriting of Motor, Household, Pet and Travel insurance and other products that supplement these
insurance policies within the UK. It also includes the generation of revenue from additional products and fees from underwriting
insurance in the UK. The Directors consider the results of these activities to be reportable as one segment as the activities carried out
in generating the revenue are not independent of each other and are performed as one business. This mirrors the approach taken in
management reporting.
International Insurance
The segment consists of the underwriting of car and home insurance and the generation of revenue from additional products and fees
from underwriting car insurance outside of the UK. It specifically covers the Group operations Admiral Seguros in Spain, ConTe in Italy,
L’olivier Assurance in France and Elephant Auto in the US. None of these operations are reportable on an individual basis, based on the
threshold requirements in IFRS 8.
Admiral Money
The segment relates to the Admiral Money business launched in 2017, which provides unsecured personal loans and car finance products
in the UK, primarily through the comparison channel, credit scoring applications and direct channels.
Other
The ‘Other’ segment is designed to be comprised of all other operating segments that are not separately reported to the Group’s Board
of Directors and do not meet the threshold requirements for individual reporting. It includes the results of Admiral Pioneer, and compare.
com prior to its disposal on 27 March 2023.
Taxes are not allocated across the segments and, as with the corporate activities, are included in the reconciliation to the Consolidated
Income Statement and Consolidated Statement of Financial Position.
An analysis of the Group’s revenue and results for the year ended 31 December 2023, by reportable segment, is shown below.
The accounting policies of the reportable segments are materially consistent with those presented in the notes to the financial
statements for the Group.
Year ended 31 December 2023
UK Insurance
£m
3,776.0
2,596.8
2,517.3
(559.6)
(1,560.2)
(18.4)
4.3
383.4
55.2
–
157.9
596.5
International
Insurance
£m
894.9
842.6
811.8
(249.4)
(565.2)
(22.1)
0.6
(24.3)
4.3
–
2.0
(18.0)
Admiral
Money
£m
92.1
–
–
–
–
–
–
–
–
66.4
(56.2)
10.2
Other
£m
48.5
46.7
44.4
(27.9)
(33.1)
0.1
–
(16.5)
0.3
0.2
(12.4)
(28.4)
Eliminations*3
£m
–
–
–
–
–
–
–
–
(3.2)
1.5
–
(1.7)
Turnover*1
Insurance revenue
Insurance revenue net of XoL
Insurance expenses
Insurance claims net of XoL
Quota share reinsurance result
Net movement in onerous loss component
Underwriting result
Net investment income*2
Net interest income from financial services
Net other revenue and operating expenses
Segment profit/(loss) before tax*4
Other central revenue and expenses,
including share scheme charges*4
Investment and interest income
Finance costs
Consolidated profit before tax
Taxation expense
Consolidated profit after tax
Revenue and results for the corresponding reportable segments for the year ended 31 December 2022 are shown below.
Year ended 31 December 2022
UK Insurance
£m
2,784.3
2,174.2
2,115.7
(475.7)
(1,466.6)
104.5
International
Insurance
£m
795.9
750.0
732.0
(254.6)
(547.1)
13.9
5.1
283.0
18.6
(1.0)
(56.8)
1.1
–
–
208.1
509.7
(0.5)
(56.2)
Admiral
Money
£m
59.0
–
–
–
–
–
–
–
–
44.6
(42.5)
2.1
Other
£m
41.7
32.7
31.3
(24.8)
(17.5)
(1.0)
–
(12.0)
0.1
–
(5.6)
(17.5)
Eliminations*3
£m
(0.3)
–
–
–
–
–
–
–
(2.2)
1.5
–
(0.7)
Turnover*1
Insurance revenue
Insurance revenue net of XoL
Insurance expenses
Insurance claims net of XoL
Quota share reinsurance result
Net movement in onerous loss
component
Underwriting result
Net investment income*2
Net interest income from
financial services
Net other revenue and
operating expenses
Segment profit/(loss) before tax*4
Other central revenue and expenses,
including share scheme charges*4
Investment and interest income
Finance costs
Consolidated profit before tax
Taxation expense
Consolidated profit after tax
Total
£m
4,811.5
3,486.1
3,373.5
(836.9)
(2,158.5)
(40.4)
4.9
342.6
56.6
68.1
91.3
558.6
(101.8)
4.6
(18.6)
442.8
(105.6)
337.2
Total
£m
3,680.6
2,956.9
2,879.0
(755.1)
(2,031.2)
117.4
4.1
214.2
17.6
46.1
159.5
437.4
(74.9)
10.1
(11.4)
361.2
(75.9)
285.3
*1. Turnover is an Alternative Performance Measure presented before intra-group eliminations. Refer to the glossary and note 13 for further information.
*2. Net investment income is reported net of impairment of financial assets, in line with management reporting.
*3. Eliminations are in respect of the intra-group trading between the Group’s comparison and UK and International Insurance entities and intra-group interest charges related to the UK Insurance and
Admiral Money segment.
*4. Segment results are presented net of gross share scheme charges, and any quota share reinsurance recoveries; these net share scheme charges are presented within ‘Other central revenue and
expenses, including share scheme charges’ in line with internal management reporting.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 240240
241
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
4. Operating segments continued
Segment revenues
The UK and International Insurance reportable segments derive all insurance revenue from external policyholders. Revenue within these
segments is not derived from an individual policyholder that represents 10% or more of the Group’s total revenue.
Revenues from external customers for products and services are consistent with the split of reportable segment revenues.
Information about geographical locations
All material revenues from external customers, and net assets attributed to a foreign country, are shown within the International
Insurance reportable segment shown on the previous pages.
Segment assets and liabilities
The identifiable segment assets and liabilities at 31 December 2023 are as follows:
Reportable segment assets
Reportable segment liabilities
Reportable segment net assets
Unallocated assets and liabilities
Consolidated net assets
Year ended 31 December 2023
UK Insurance
£m
5,128.1
(3,981.6)
1,146.5
International
Insurance
£m
1,045.8
(958.3)
87.5
Admiral
Money
£m
980.1
(969.2)
10.9
Other
£m
256.5
(419.7)
(163.2)
Eliminations
£m
(610.8)
610.8
–
Total
£m
6,799.7
(5,718.0)
1,081.7
(88.9)
992.8
Unallocated assets and liabilities consist of other central assets and liabilities, plus deferred and current corporation tax balances.
These assets and liabilities are not regularly reviewed by the Board of Directors in the reportable segment format.
Eliminations represent inter-segment funding, balances included in insurance and other receivables and deemed loan receivables in
respect of securitised loan receivables.
The segment assets and liabilities at 31 December 2022 are as follows:
Reportable segment assets
Reportable segment liabilities
Reportable segment net assets
Unallocated assets and liabilities
Consolidated net assets
Year ended 31 December 2022 (restated)
UK Insurance
£m
4,579.0
(3,508.4)
1,070.6
International
Insurance
£m
955.3
(863.4)
91.9
Admiral
Money
£m
929.1
(902.0)
27.1
Other
£m
218.0
(485.2)
(267.2)
Eliminations
£m
(682.7)
682.7
–
Total
£m
5,998.7
(5,076.3)
922.4
(35.4)
887.0
5. Insurance service result
a) Accounting policies
(i) Insurance, Reinsurance and Co-insurance contracts classification
Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from
another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event)
adversely affects the policyholder.
Insurance contracts
The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its
policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after
an insured event with benefits payable if the insured event did not occur.
Reinsurance contracts
The Group also enters into both excess of loss (‘XoL’) and quota share reinsurance contracts. A contract is only accounted for as a
reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by
management based on the terms and conditions of the contracts.
Co-insurance contracts
Co-insurance arrangements are contracts entered into by the Group’s intermediaries, under which insurance risks are shared on a
proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion
of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the
claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating
to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement.
Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly
attributable costs in fulfilling the insurance contracts.
(ii) Level of aggregation
IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group
is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are
managed together.
The Group’s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household
etc), and geography (UK, Italy, Spain, France and the US).
IFRS 17 requires a further division of the portfolios into a ‘group’ of contracts (being the lowest unit of account) based on expected
profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation
of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and
supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand-
alone contracts.
Following the application of the IFRS 17 level of aggregation requirements, each of the Group’s portfolios (which are determined by
geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at
inception into three categories:
a) A group of contracts that are onerous at initial recognition, if any
b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
c) A group of the remaining contracts in the portfolio.
The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically
constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics.
To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable
information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and
circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant
possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group
considers facts and circumstances to identify whether a group of contracts are onerous based on:
• Pricing information
• Results of similar contracts it has recognised
• Environmental factors, e.g. a change in market experience or regulations.
The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to
onerous contracts refer to contracts on which there is a net gain on initial recognition.
Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group’s
reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate
the contracts by type of reinsurance (e.g. quota share or XoL) and product.
These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially
recognised and measured. Such groups are not subsequently reconsidered.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 242242
243
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
(iii) Recognition, modification and derecognition
Groups of insurance contracts issued are recognised from the earliest of the following:
• The beginning of the coverage period
• The date when the first payment from the policyholder is due or actually received, if there is no due date
• For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous.
A group of reinsurance contracts held is entered into from the earlier of:
• The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group
of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially
recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held
• The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance
contract held in the group of reinsurance contracts held at or before that date.
The Group derecognises an insurance or reinsurance contract when it is:
• Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or
• The contract is modified such that the modification results in a change in the measurement model or the applicable standard for
measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in
a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the
contract as an adjustment to the relevant liability for remaining coverage.
(iv) Contract boundary
The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract
in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that
exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has
a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance
contract services ends when:
• The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits
that fully reflects those risks, or
• Both of the following criteria are satisfied:
i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a
result, can set a price or level of benefits that fully reflects the risk of that portfolio
ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods
after the reassessment date.
A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised.
Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to
the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included.
For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations
of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the
Group has a substantive right to receive services from the reinsurer.
(v) Presentation
The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that
are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of
reinsurance contracts held that are liabilities.
The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other
Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance
income or expenses.
The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts
issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the
financial statements.
The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion.
It includes the entire change as part of the insurance service result.
(vi) Measurement
Accounting policy choices
Area
Premium allocation
approach (‘PAA’)
eligibility
IFRS 17 options
Subject to specified criteria, the PAA can be adopted
as a simplified approach to the IFRS 17 general model.
Insurance acquisition
cashflows for insurance
contracts issued
Liability for Remaining
Coverage (‘LRC’),
adjusted for financial
risk and time value
of money
Liability for Incurred
Claims (‘LIC’), adjusted
or time value of money
Where the coverage period of all contracts within
a group is not longer than one year, insurance
acquisition cashflows can either be expensed as
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Where there is no significant financing component
in relation to the LRC, or where the time between
providing each part of the services and the related
premium due date is no more than a year, an entity is
not required to make an adjustment for accretion of
interest on the LRC.
For PAA groups, where claims or directly attributable
insurance expenses are expected to be paid within
a year of the date that the claim is incurred, it is
not required to adjust these amounts for the time
value of money.
Insurance finance
income and expense
Interim reporting
There is an option to disaggregate part of the
movement in the LIC resulting from changes
in discount rates, and present this in Other
Comprehensive Income (‘OCI’).
Where an entity is required to apply IAS 34 (as for the
Group) there is an option as to whether to choose a
year-to-date” basis or a “period to date” basis for
financial reporting.
Adopted approach
Coverage period for the Group’s insurance
contracts assumed is one year or less and so
qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
The Group’s insurance contracts are all one year
or less. The Group has therefore taken the option
to expense acquisition costs as incurred.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group’s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
The impact on LIC of changes in discount rates will
be captured within OCI, in line with the accounting
for assets backing the insurance claims liabilities.
The Group has opted to apply the option to use
year-to-date accounting for interim reporting.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 244244
245
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Fulfilment cashflows within the contract boundary
The fulfilment cashflows (‘FCF’) are the current estimates of the future cashflows within the contract boundary of a group of contracts
that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the
uncertainty of those amounts. The estimates of future cashflows:
• Are based on a probability weighted mean of the full range of possible outcomes
• Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for
market variables
• Reflect conditions existing at the measurement date.
In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available
without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and
other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group’s view
of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable
market prices.
An explicit risk adjustment for non-financial risk is estimated separately from the other estimates.
For the Group’s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for
non-financial risk is only estimated and included within the measurement of the liability for incurred claims.
Risk of the Group’s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement
of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses
and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer.
The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups
of contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance
contracts held and such estimates for the groups of underlying insurance contracts.
Discount rates
A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as
the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and
the relevant liability cashflows (known as an illiquidity premium).
A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield
curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the
EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years.
For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms
that aren’t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between
the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield
curves, which supports consistency over time.
Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing
internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement.
The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability
for incurred claims at the end of the current and prior periods:
UK Insurance
International (European motor)
1 year
5.4%
4.0%
3 years
4.3%
3.1%
5 years
4.0%
3.0%
10 years
3.9%
3.0%
1 year
5.1%
3.8%
3 years
5.0%
3.9%
5 years
4.7%
3.8%
10 years
4.4%
3.7%
31 December 2023
31 December 2022
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant
changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be
performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption.
Insurance revenue
The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component)
allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of
the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage
of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance
service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time.
If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change
in accounting estimate.
The Group’s insurance revenue is comprised of the following component parts:
• Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on
the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance
contract that is presented as part of insurance revenue as set out below.
• Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within
the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying
insurance policy, as set out in note 2 to the financial statements.
• Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance
obligation is the change in a customer’s policy and given that the obligation related to activities that are required to fulfil the insurance
contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows,
i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis.
IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13
for further information regarding the disaggregation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance
coverage under the co-insurance arrangements where the Group bears no risks.
Insurance service expenses
The following elements are included in insurance service expenses:
• Incurred claims and benefits excluding investment components
• Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme
expenses that are attributable to insurance services
• Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims)
• Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components).
Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance
contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance
contracts, such as some product development and training costs, are recognised in other operating expenses as incurred.
The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses,
as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group’s
insurance contracts.
Reinsurance net expense/income
The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income
or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer
and an allocation of the premiums paid that together give a net amount equal to that single amount.
As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer’s
proportional share of the expenses that are incurred in fulfilling the insurance contracts.
These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the
expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower
premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a “minimum recovery” from
the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not
settled “net” with premium, the minimum recovery is treated as a non-distinct investment component.
As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that
are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions
from the allocation of reinsurance premiums presented in the notes to the financial statements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 246246
247
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Insurance finance income and expense
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from:
(a) The effect of the time value of money and changes in the time value of money
(b) The effect of financial risk and changes in financial risk.
The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income
Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the
value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches
between the accounting for financial assets and insurance assets and liabilities. The Group’s financial assets backing the insurance
portfolios are predominantly measured at Fair Value through Other Comprehensive Income (‘FVOCI’).
Insurance contracts: Liability for remaining coverage
Initial measurement
For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: :
• The premiums, if any, received at initial recognition
• Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before
the group of insurance contracts is recognised.
The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts,
but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding
insurance premium tax liability is presented within the liability for remaining coverage until paid.
There is no allowance for time value of money as the premiums are received within one year of the coverage period.
Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped
from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount
of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for
remaining coverage for such onerous group depicting the losses recognised.
Subsequent measurement
The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as:
• The liability for remaining coverage at the beginning of the period; plus
• Premiums received in the period, minus
• The amount recognised as insurance revenue for the services provided in the period, minus
• Payments to the tax authorities in respect of premium receipts.
The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to £nil.
Insurance contracts: Liability for incurred claims
The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related
to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the
risk adjustment).
Reinsurance contracts held
Initial measurement
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that
it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued.
Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous
underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining
coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component
by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance
contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method
to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the
case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the
carrying amount of the asset for remaining coverage.
The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with
reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required.
Subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and
has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in
the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from
reinsurance contracts held within the Income Statement.
Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in
line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not
exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity
expects to recover from the group of reinsurance contracts held.
The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities
related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a
result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash
settlement is recognised in the Consolidated Income Statement.
5b. Insurance revenue
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
Insurance revenue related movement in liability
for remaining coverage
31 December 2023
UK Motor
£m
UK Non-motor
£m
Int. Insurance
£m
Other
£m
Total Group
£m
2,250.2
346.6
842.6
46.7
3,486.1
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
Insurance revenue related movement in liability
for remaining coverage
31 December 2022 (restated)
UK Motor
£m
UK Non-motor
£m
Int. Insurance
£m
Other
£m
Total Group
£m
1,909.7
264.5
750.0
32.7
2,956.9
The Group’s share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company
Limited, Admiral Europe Compañia Seguros (‘AECS’) and Elephant Insurance Company. The majority of contracts are short term in
duration, lasting for between 6 and 12 months.
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
Incurred claims
Claims incurred in the period
Changes to liabilities for incurred claims
Total incurred claims
Movement in onerous contracts
Directly attributable expenses
Administration expenses
Acquisition expenses
Insurance expenses
Share scheme expenses
Total insurance expenses and share scheme expenses
Total insurance service expenses
31 December 2023
UK Motor
£m
UK Non-motor
£m
Int. Insurance
£m
Other
£m
Total Group
£m
1,755.5
(406.9)
1,348.6
(18.6)
377.8
73.4
451.2
43.2
494.4
1,824.4
255.0
(9.1)
245.9
(2.4)
73.5
34.8
108.3
2.4
110.7
354.2
618.2
(21.3)
596.9
(2.4)
184.0
65.4
249.4
8.9
258.3
852.8
36.4
(3.3)
33.1
–
19.0
8.9
27.9
0.8
28.7
61.8
2,665.1
(440.6)
2,224.5
(23.4)
654.3
182.5
836.8
55.3
892.1
3,093.2
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 248248
249
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
Incurred claims
Claims incurred in the period
Changes to liabilities for incurred claims
Total incurred claims
Movement in onerous contracts
Directly attributable expenses
Administration expenses
Acquisition expenses
Insurance expenses
Share scheme expenses
Total insurance expenses and share scheme expenses
Total insurance service expenses
31 December 2022 (restated)
UK Motor
£m
UK Non-motor
£m
Int. Insurance
£m
Other
£m
Total Group
£m
1,620.4
(437.2)
1,183.2
(19.1)
327.7
61.9
389.6
39.4
429.0
1,593.1
214.8
(16.9)
197.9
0.4
54.6
31.5
86.1
4.2
90.3
288.6
516.0
37.2
553.2
(3.9)
182.5
72.1
254.6
9.4
264.0
813.3
21.1
(3.6)
17.5
–
16.0
8.7
24.7
–
24.7
42.2
2,372.3
(420.5)
1,951.8
(22.6)
580.8
174.2
755.0
53.0
808.0
2,737.2
5d. Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2023
are shown below.
Allocation of reinsurance premiums
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
Changes to liabilities for incurred claims
Net expense from reinsurance contracts excluding
movement in onerous loss component
Other reinsurance recoveries including movement in loss
recovery component
Net expenses/(income) from reinsurance contracts held
31 December 2023
UK Motor
£m
93.6
UK Non-motor
£m
49.5
Int. Insurance
£m
190.0
Other
£m
2.2
Total Group
£m
335.3
(173.8)
135.1
54.9
14.5
69.4
(52.0)
(1.4)
(3.9)
2.2
(1.7)
(270.3)
95.9
15.6
1.7
17.3
–
(0.1)
2.1
–
2.1
(496.1)
229.5
68.7
18.4
87.1
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2022
are shown below.
Allocation of reinsurance premiums
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
Changes to liabilities for incurred claims
Net expense from reinsurance contracts excluding
movement in onerous loss component
Other reinsurance recoveries including movement in loss
recovery component
Net expenses/(income) from reinsurance contracts held
31 December 2022 (restated)
UK Motor
£m
69.8
UK Non-motor
£m
44.4
Int. Insurance
£m
161.3
Other
£m
1.4
Total Group
£m
276.9
(182.8)
136.7
23.7
13.9
37.6
(43.5)
0.8
1.7
(0.3)
1.4
(232.6)
64.2
(7.1)
4.9
(2.2)
0.2
–
1.6
–
1.6
(458.7)
201.7
19.9
18.5
38.4
5e. Finance (expenses)/income from insurance contracts held and reinsurance contracts issued
31 December 2023
£m
31 December 2022
£m
Amounts recognised through the Income Statement
Insurance finance expenses from insurance contracts issued
Finance expenses from insurance contracts issued
Insurance finance income from reinsurance contracts held
Finance income from reinsurance contracts issued
Net finance expense from insurance / reinsurance contracts issued
Amounts recognised in Other Comprehensive Income
(Losses)/gains due to changes in discount rates – insurance contracts
Gains/ (losses) due to changes in discount rates – reinsurance contracts
Total gains before tax recognised in Other Comprehensive Income
5f. Insurance Liabilities and Reinsurance assets
(i) Analysis of recognised amounts
Insurance contracts issued
UK Motor
UK Non-Motor
International Motor
Other
Total insurance contracts issued
Reinsurance contracts held
UK Motor
UK Non-Motor
International Motor
Other
Total reinsurance contracts held
Net
UK Motor
UK Non-Motor
International Motor
Other
Total insurance contracts issued
Assets
£m
–
–
–
–
–
519.9
191.6
481.8
–
1,193.3
–
–
–
–
–
2023
Liabilities
£m
3,315.7
353.7
862.5
49.8
4,581.7
–
–
–
(1.4)
(1.4)
2,795.8
162.1
380.7
51.2
3,389.8
Net
£m
Assets
£m
3,315.7
353.7
862.5
49.8
4,581.7
519.9
191.6
481.8
(1.4)
1,191.9
2,795.8
162.1
380.7
51.2
3,389.8
–
–
–
–
–
457.5
126.5
432.2
–
1,016.2
–
–
–
–
–
(94.5)
(94.5)
28.9
28.9
(65.6)
(128.1)
49.2
(78.9)
2022
Liabilities
£m
2,953.3
267.7
776.7
27.7
4,025.4
–
–
–
(0.8)
(0.8)
2,495.8
141.2
344.5
28.5
3,010.0
(52.0)
(52.0)
13.6
13.6
(38.4)
274.0
(96.2)
177.8
Net
£m
2,953.3
267.7
776.7
27.7
4,025.4
457.5
126.5
432.2
(0.8)
1,015.4
2,495.8
141.2
344.5
28.5
3,010.0
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 250250
251
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
(ii) Roll-forward of net asset or liability for insurance contracts issued
UK Motor
The following tables reconcile the opening and closing balances of the LRC and LIC for UK Motor.
2023
Liability for remaining coverage
Liability for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in
profit or loss
Insurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
–
(534.1)
(534.1)
2,250.2
Loss
component
–
(8.1)
(8.1)
–
Total
–
(542.2)
(542.2)
2,250.2
Present value of
future cashflows
–
(1,984.5)
(1,984.5)
–
Risk adj. for non-
financial risk
–
(426.6)
(426.6)
–
Total
–
(2,411.1)
(2,411.1)
–
Total
–
(2,953.3)
(2,953.3)
2,250.2
–
–
–
–
–
–
(2,105.1)
(144.8)
(2,249.9)
(2,249.9)
140.1
266.8
406.9
406.9
–
2,250.2
18.6
18.6
18.6
2,268.8
–
(1,965.0)
–
122.0
–
(1,843.0)
18.6
425.8
–
–
2,250.2
–
(4.1)
(9.4)
5.1
–
(4.1)
(9.4)
(59.0)
(60.5)
(12.3)
(71.3)
(75.4)
(27.0)
(87.5)
(96.9)
2,255.3
–
(2,084.5)
–
82.7
–
(2,001.8)
–
253.5
–
(2,482.1)
–
(2,482.1)
–
–
–
(2,482.1)
–
–
(2,482.1)
(766.0)
–
(766.0)
–
–
–
(3.0)
–
(3.0)
–
–
(2,482.1)
(769.0)
–
(769.0)
1,866.2
–
1,866.2
(2,202.8)
–
(2,202.8)
–
–
–
(343.9)
–
(343.9)
1,866.2
–
1,866.2
(2,546.7)
–
(2,546.7)
1,866.2
–
(615.9)
(3,315.7)
–
(3,315.7)
2022
Liability for remaining coverage
Liability for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in
profit or loss
Insurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
–
(473.1)
(473.1)
1,909.7
Loss
component
–
(28.8)
(28.8)
–
Total
–
(501.9)
(501.9)
1,909.7
Present value of
future cashflows
–
(1,993.7)
(1,993.7)
–
Risk adj. for non-
financial risk
–
(507.8)
(507.8)
–
Total
–
(2,501.5)
(2,501.5)
–
Total
–
(3,003.4)
(3,003.4)
1,909.7
–
–
–
–
–
–
(1,836.9)
(212.5)
(2,049.4)
(2,049.4)
175.6
261.6
437.2
437.2
–
1,909.7
19.1
19.1
19.1
1,928.8
–
(1,661.3)
–
49.1
–
(1,612.2)
19.1
316.6
–
–
1,909.7
–
(1.8)
3.4
20.7
–
(1.8)
3.4
(36.5)
(8.4)
(44.9)
(46.7)
191.9
40.5
232.4
235.8
1,930.4
–
(1,505.9)
(1.7)
81.2
–
(1,424.7)
(1.7)
505.7
(1.7)
(2,000.8)
–
(2,000.8)
–
–
–
(2,000.8)
–
30.1
(1,970.7)
(534.1)
–
(534.1)
–
–
–
(8.1)
–
(8.1)
–
30.1
(1,970.7)
(542.2)
–
(542.2)
1,516.8
–
1,516.8
(1,984.5)
–
(1,984.5)
–
–
–
(426.6)
–
(426.6)
1,516.8
–
1,516.8
(2,411.1)
–
(2,411,1)
1,516.8
30.1
(453.9)
(2,953.3)
–
(2,953.3)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
252252
253
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
UK Non-Motor
The following tables reconcile the opening and closing balances of the LRC and LIC for other UK insurance (UK Household, Pet and Travel).
2023
Liability for remaining coverage
Liability for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in profit
or loss
Insurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
–
(100.9)
(100.9)
346.6
Loss
component
–
(0.1)
(0.1)
–
Total
–
(101.0)
(101.0)
346.6
Present value of
future cashflows
–
(141.2)
(141.2)
–
Risk adj. for non-
financial risk
–
(25.5)
(25.5)
–
Total
–
(166.7)
(166.7)
–
Total
–
(267.7)
(267.7)
346.6
–
–
–
346.6
–
–
346.6
–
(381.9)
–
–
(381.9)
(136.2)
–
(136.2)
–
–
2.4
2.4
–
–
–
2.4
349.0
–
(2.3)
(2.3)
0.1
–
–
–
–
–
–
–
–
346.7
–
(381.9)
–
–
(381.9)
(136.2)
–
(136.2)
(363.6)
(2.1)
(365.7)
(365.7)
4.3
–
(359.3)
(5.4)
(1.4)
(366.1)
–
–
313.7
–
313.7
(193.6)
–
(193.6)
4.8
–
2.7
(0.9)
(0.2)
1.6
–
–
–
–
–
(23.9)
–
(23.9)
9.1
–
(356.6)
(6.3)
(1.6)
9.1
2.4
(7.6)
(6.3)
(3.9)
(364.5)
–
(17.8)
–
–
(381.9)
313.7
–
313.7
(217.5)
–
(217.5)
313.7
–
(68.2)
(353.7)
–
(353.7)
2022
Liability for remaining coverage
Liability for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in profit
or loss
Insurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
–
(125.6)
(125.6)
264.5
Loss
component
–
–
–
–
Total
–
(125.6)
(125.6)
264.5
Present value of
future cashflows
–
(74.2)
(74.2)
–
Risk adj. for non-
financial risk
–
(16.0)
(16.0)
–
Total
–
(90.2)
(90.2)
–
Total
–
(215.8)
(215.8)
264.5
–
–
–
264.5
–
–
264.5
–
–
–
(0.4)
(0.4)
(0.4)
0.7
(0.1)
–
–
–
(0.4)
264.1
(0.4)
0.7
264.4
–
(281.4)
(23.7)
(305.1)
(305.1)
2.5
–
(278.9)
(2.0)
1.4
(279.5)
–
14.4
–
(9.3)
(0.4)
0.2
(9.5)
–
16.9
16.9
–
(288.2)
(0.4)
(24.1)
(2.4)
(2.8)
1.6
2.3
(289.0)
–
(24.6)
–
(239.8)
–
(239.8)
–
–
–
(239.8)
–
–
(239.8)
(100.9)
–
(100.9)
–
–
–
(0.1)
–
(0.1)
–
–
(239.8)
(101.0)
–
(101.0)
212.5
–
212.5
(141.2)
–
(141.2)
–
–
–
(25.5)
–
(25.5)
212.5
–
212.5
(166.7)
–
(166.7)
212.5
–
(27.3)
(267.7)
–
(267.7)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 254254
255
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
International Insurance
The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss
component
–
(200.7)
(200.7)
842.6
Loss
component
–
(4.7)
(4.7)
–
Total
–
(205.4)
(205.4)
842.6
Present value of
future cashflows
–
(495.2)
(495.2)
–
Risk adj. for non-
financial risk
–
(76.1)
(76.1)
–
Total
–
(571.3)
(571.3)
–
Total
–
(776.7)
(776.7)
842.6
(835.7)
(40.8)
(876.5)
(876.5)
(22.6)
43.9
21.3
21.3
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in
profit or loss
Insurance finance income/
(expense) recognised in OCI
Foreign exchange impact
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
£ million
Opening assets
Opening liabilities
Net opening balance
Insurance revenue
Insurance service expenses
Incurred claims and insurance
service expenses
Changes to liabilities for
incurred claims
Losses and reversals of losses
on onerous contracts
Insurance service result
Insurance finance income/
(expense) recognised in
profit or loss
Insurance finance income/
(expense) recognised in OCI
–
–
–
842.6
–
–
2.3
844.9
–
–
–
2.4
2.4
–
(0.7)
0.1
1.8
–
–
–
2.4
845.0
–
(0.7)
2.4
846.7
–
–
(858.3)
(8.2)
(12.7)
15.7
(863.5)
–
(862.3)
–
(862.3)
–
–
–
(862.3)
(218.1)
–
(218.1)
–
–
–
(2.9)
–
(2.9)
–
–
(862.3)
(221.0)
–
(221.0)
793.2
–
793.2
(565.5)
–
(565.5)
–
3.1
(1.7)
(3.4)
2.0
–
0.1
–
–
–
–
(76.0)
–
(76.0)
–
(855.2)
2.4
(10.2)
(9.9)
(9.9)
(16.1)
17.7
(863.5)
0.1
(16.8)
20.1
(16.8)
0.1
–
(862.3)
793.2
–
793.2
(641.5)
–
(641.5)
Total
–
(480.2)
(480.2)
–
793.2
–
(69.1)
(862.5)
–
(862.5)
Total
–
(653.2)
(653.2)
750.0
–
–
–
750.0
–
–
–
–
3.9
3.9
(0.1)
0.2
–
–
(794.8)
(12.4)
(807.2)
(807.2)
(3.8)
(4.7)
(8.5)
(8.5)
3.9
753.9
–
(798.6)
–
(17.1)
–
(815.7)
3.9
(61.8)
(0.1)
0.2
(2.2)
27.4
(0.3)
3.8
(2.5)
(2.6)
31.2
31.4
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss
component
–
(164.6)
(164.6)
750.0
Loss
component
–
(8.4)
(8.4)
–
Total
–
(173.0)
(173.0)
750.0
Present value of
future cashflows
–
(421.8)
(421.8)
–
Risk adj. for non-
financial risk
–
(58.4)
(58.4)
–
2022
£ million
Foreign exchange impact
Total changes in
comprehensive income
Other changes
Cashflows
Premiums received
Claims and other insurance
service expenses paid
Other movements
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Liability for remaining coverage
Liability for incurred claims
Excluding loss
component
Loss
component
(6.9)
743.1
–
(0.3)
3.7
–
Total
(7.2)
746.8
–
Present value of
future cashflows
Risk adj. for non-
financial risk
(32.2)
(4.1)
Total
(36.3)
(805.6)
–
(17.7)
–
(823.3)
–
Total
(43.5)
(76.5)
–
(779.2)
–
(779.2)
–
–
–
(779.2)
–
–
(779.2)
(200.7)
–
(200.7)
–
–
–
(4.7)
–
(4.7)
–
–
(779.2)
(205.4)
–
(205.4)
732.2
–
732.2
(495.2)
–
(495.2)
–
–
–
(76.1)
–
(76.1)
732.2
–
732.2
(571.3)
–
(571.3)
732.2
–
(47.0)
(776.7)
–
(776.7)
(iii) Roll-forward of net asset or liability for reinsurance contracts held
UK Motor
The following tables reconcile the opening and closing balances of the ARC and AIC for UK Motor.
2023
Asset for remaining coverage
Asset for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in profit
or loss
Reinsurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Cashflows
Premiums paid
Claims recoveries
Recoveries as a result of
commutations
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
20.2
–
20.2
Loss-recovery
component
6.3
–
6.3
Total
26.5
–
26.5
Present value of
future cashflows
255.4
–
255.4
Risk adj. for non-
financial risk
175.6
–
175.6
Total
431.0
–
431.0
Total
457.5
–
457.5
(93.6)
–
–
–
–
–
–
(93.6)
–
–
–
(93.6)
–
–
96.7
77.1
173.8
173.8
(43.1)
(92.0)
(135.1)
(135.1)
(14.5)
(14.5)
–
–
–
(14.5)
(93.6)
(14.5)
(108.1)
53.6
(14.9)
38.7
(69.4)
–
–
3.2
7.3
3.2
7.3
(93.6)
(4.0)
(97.6)
94.2
–
–
94.2
20.8
20.8
–
–
–
–
–
2.3
2.3
–
94.2
–
–
94.2
23.1
23.1
–
9.4
12.5
75.5
–
(2.2)
(15.5)
(17.7)
313.2
313.2
–
7.5
15.4
8.0
–
–
–
–
183.6
183.6
–
16.9
27.9
83.5
–
(2.2)
(15.5)
(17.7)
496.8
496.8
–
20.1
35.2
(14.1)
94.2
(2.2)
(15.5)
76.5
519.9
519.9
–
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 256256
257
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
2022
Asset for remaining coverage
Asset for incurred claims
Excluding loss
component
24.7
–
24.7
Loss-recovery
component
21.7
–
21.7
Total
46.4
–
46.4
Present value of
future cashflows
250.7
–
250.7
Risk adj. for non-
financial risk
203.1
–
203.1
Total
453.8
–
453.8
Total
500.2
–
500.2
(69.8)
–
–
–
(69.8)
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in
profit or loss
Reinsurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Other changes
Cashflows
Premiums paid
Amounts received
Total cashflows
Net closing balance
Closing assets
Closing liabilities
–
–
–
–
–
(69.8)
–
–
–
(13.9)
(13.9)
(69.8)
(13.9)
(83.7)
–
–
(69.8)
–
65.3
–
65.3
20.2
20.2
–
1.3
(2.8)
(15.4)
–
–
–
–
6.3
6.3
–
1.3
(2.8)
(85.2)
–
65.3
–
65.3
26.5
26.5
–
91.9
90.9
182.8
182.8
(36.7)
(100.0)
(136.7)
(136.7)
–
55.2
–
–
(13.9)
(9.1)
46.1
(37.6)
5.1
3.9
9.0
10.3
(44.8)
(22.3)
(67.1)
(69.9)
15.5
1.8
–
(12.6)
(12.6)
255.4
255.4
–
(27.5)
–
–
–
–
175.6
175.6
–
(12.0)
1.8
–
(12.6)
(12.6)
431.0
431.0
–
(97.2)
1.8
65.3
(12.6)
52.7
457.5
457.5
–
UK Non-Motor
The following tables reconcile the opening and closing balances of the ARC and AIC for UK Non-motor insurance (Household, Travel and Pet).
2023
Asset for remaining coverage
Asset for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in
profit or loss
Reinsurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Reinsurance investment
components
Cashflows
Premiums paid
Claims recovered
Recoveries as a result
of commutations
Total cash flows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
11.7
–
11.7
Loss-recovery
component
0.1
–
0.1
Total
11.8
–
11.8
Present value of
future cashflows
98.6
–
98.6
Risk adj. for non-
financial risk
16.1
–
16.1
Total
114.7
–
114.7
Total
126.5
–
126.5
(49.5)
–
–
–
(49.5)
–
–
–
(49.5)
–
–
–
–
–
53.3
1.7
–
(1.3)
(0.3)
–
52.0
1.4
–
(2.2)
(2.2)
(49.5)
(2.2)
(51.7)
55.0
(1.6)
53.4
–
–
–
2.1
–
2.1
(49.5)
(0.1)
(49.6)
(111.7)
170.9
–
–
170.9
21.4
21.4
–
–
–
–
–
–
–
–
–
(111.7)
170.9
–
–
170.9
21.4
21.4
–
3.6
0.9
59.5
111.7
–
(91.2)
(23.7)
(114.9)
154.9
154.9
–
0.6
0.2
4.2
1.1
(0.8)
58.7
–
–
–
–
–
15.3
15.3
–
111.7
–
(91.2)
(23.7)
(114.9)
170.2
170.2
–
52.0
1.4
(2.2)
1.7
4.2
3.2
9.1
–
170.9
(91.2)
(23.7)
56.0
191.6
191.6
–
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 258258
259
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
2022
Asset for remaining coverage
Asset for incurred claims
Excluding loss
component Loss component
–
–
–
8.4
–
8.4
Total
8.4
–
8.4
Present value of
future cashflows
66.6
–
66.6
Risk adj. for non-
financial risk
3.1
–
3.1
Total
69.7
–
69.7
Total
78.1
–
78.1
(44.4)
–
–
–
(44.4)
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in
profit or loss
Reinsurance finance income/
(expense) recognised in OCI
Total changes in
comprehensive income
Reinsurance investment
components
Cashflows
Premiums paid
Amounts received
Total cashflows
Net closing balance
Closing assets
Closing liabilities
(44.4)
–
–
–
(44.4)
–
–
(44.4)
(78.4)
126.1
–
126.1
11.7
11.7
–
–
–
–
0.3
0.3
0.3
(0.5)
0.1
–
–
–
–
0.1
0.1
–
–
–
0.3
31.6
(1.8)
–
11.9
43.5
43.5
1.0
–
(0.8)
(0.8)
–
(44.1)
29.8
12.9
42.7
0.3
(0.5)
(44.3)
(78.4)
126.1
–
126.1
11.8
11.8
–
1.4
(0.7)
30.5
78.4
–
(76.9)
(76.9)
98.6
98.6
–
0.2
(0.1)
13.0
–
–
–
–
16.1
16.1
–
1.6
(0.8)
43.5
78.4
–
(76.9)
(76.9)
114.7
114.7
–
0.3
(1.4)
1.9
(1.3)
(0.8)
–
126.1
(76.9)
49.2
126.5
126.5
–
International Insurance
The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Asset for remaining coverage
Asset for incurred claims
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in
profit or loss
Reinsurance finance income/
(expense) recognised in OCI
Foreign exchange impact
Total changes in
comprehensive income
Reinsurance investment
components
Cashflows
Premiums paid
Amounts received
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
–
(19.0)
(19.0)
Loss-recovery
component
3.4
–
3.4
Total
3.4
(19.0)
(15.6)
Present value of
future cashflows
412.7
–
412.7
Risk adj. for non-
financial risk
35.1
–
35.1
Total
447.8
–
447.8
Total
451.2
(19.0)
432.2
(190.0)
–
–
–
–
–
–
(190.0)
–
–
–
(190.0)
–
–
243.7
26.6
270.3
270.3
(69.8)
(26.1)
(95.9)
(95.9)
(1.7)
(1.7)
–
(190.0)
(1.7)
(191.7)
173.9
–
–
6.3
–
0.5
–
–
0.5
6.3
(183.7)
(1.2)
(184.9)
(148.9)
–
(148.9)
328.4
–
328.4
(23.2)
–
(23.2)
–
–
–
2.2
2.2
–
328.4
–
328.4
(21.0)
2.2
(23.2)
4.0
7.4
(11.7)
173.6
148.9
–
(269.8)
(269.8)
465.4
465.4
–
–
0.5
0.6
1.9
(0.7)
2.3
–
–
–
–
37.4
37.4
–
–
(1.7)
174.4
(17.3)
4.6
9.3
(12.4)
175.9
148.9
–
(269.8)
(269.8)
502.8
502.8
–
4.6
9.8
(6.1)
(9.0)
–
328.4
(269.8)
58.6
481.8
505.0
(23.2)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 260260
261
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Gross claims development
2022
Asset for remaining coverage
Asset for incurred claims
Financial year ended 31 December 2023
£ million
Opening assets
Opening liabilities
Net opening balance
Allocation of reinsurance
premiums
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
Changes to liabilities for
incurred claims
Changes in the loss recovery
component
Net income/(expense) from
reinsurance contracts held
Reinsurance finance income/
(expense) recognised in profit
or loss
Reinsurance finance income/
(expense) recognised in OCI
Foreign exchange impact
Total changes in
comprehensive income
Reinsurance investment
component
Cashflows
Premiums paid
Amounts received
Total cashflows
Net closing balance
Closing assets
Closing liabilities
Excluding loss
component
13.8
–
13.8
Loss recovery
component
8.0
–
8.0
Total
21.8
–
21.8
Present value of
future cashflows
322.8
–
322.8
Risk adj. for
non-financial
risk
25.4
–
25.4
(161.3)
–
–
–
–
–
–
(161.3)
–
–
–
227.0
(69.2)
–
(4.9)
(4.9)
–
5.6
5.0
–
Total
348.2
–
348.2
Total
370.0
–
370.0
–
(161.3)
232.6
232.6
(64.2)
(64.2)
–
(4.9)
(161.3)
(4.9)
(166.2)
157.8
10.6
168.4
–
–
(11.4)
0.1
–
0.2
0.1
–
(11.2)
(172.7)
(4.6)
(177.3)
(129.6)
–
(129.6)
269.5
–
269.5
(19.0)
–
(19.0)
–
–
–
3.4
3.4
–
269.5
–
269.5
(15.6)
3.4
(19.0)
1.3
(18.6)
28.1
168.6
129.6
–
(208.3)
(208.3)
412.7
412.7
–
0.1
(2.0)
1.0
9.7
–
–
–
–
35.1
35.1
–
1.4
(20.6)
29.1
178.3
129.6
–
(208.3)
(208.3)
447.8
447.8
–
2.2
1.5
(20.6)
17.9
1.0
–
269.5
(208.3)
61.2
432.2
451.2
(19.0)
(iv) Claims development
The tables below illustrate how estimates of cumulative claims for UK Motor, UK Non-Motor and International Insurance have developed
over time on a gross and net of reinsurance basis.
Each table shows how the Group’s estimates of total claims for each underwriting year have developed over time and reconciles the
cumulative claims to the amount included in the Statement of Financial Position. Balances have been translated at the exchange rates
prevailing at the reporting date. The Group has not disclosed information for underwriting years 2017 and prior for the international
insurance and UK Non-Motor insurance businesses, given that the claims that remain outstanding on those years are immaterial.
IFRS 17 does not require an entity to disclose claims development information for which uncertainty about the amount and timing of
the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims in its other
lines of business or related directly attributable expenses.
Underwriting year
UK Motor (core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Gross best
estimates of
undiscounted
claims
Cumulative gross
claims paid
Gross undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Gross claims
liabilities
Ancillary claims
liabilities and
expense liabilities
UK Motor Gross
liabilities for
incurred claims
UK Non-motor
(core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Gross best
estimates of
undiscounted
claims
Cumulative gross
claims paid
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
845
1,584
973
688
1,326
1,294
552
985
954
921
701
1,067
1,010
996
981
686
1,175
1,109
1,064
1,008
1,000
552
1,144
994
947
912
890
865
436
829
788
727
713
690
656
652
394
701
707
680
636
619
606
594
585
382
675
659
689
643
635
619
604
593
590
3,225
590
585
652
865
1,000
981
921
1,294
1,584
973 12,670
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395) (10,091)
150
14
25
36
118
107
211
259
468
613
578
2,579
411
(537)
2,453
94
2,547
146
116
224
58
128
124
53
96
95
90
55
105
103
102
93
56
102
102
102
102
100
29
78
76
75
76
76
75
26
50
47
47
47
47
47
48
34
35
34
33
33
33
33
33
18
19
19
19
19
19
19
19
5
19
33
48
75
100
93
90
124
224
146
957
(5)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(147)
(50)
(758)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 262262
263
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Claims development net of XoL reinsurance
Underwriting year
Gross undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Gross claims
liabilities
Ancillary claims
liabilities and
expense liabilities
UK Non-motor
Gross liabilities for
incurred claims
International
Insurance
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Gross best
estimates of
undiscounted
claims
Cumulative gross
claims paid
Gross undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Gross claims
liabilities
Ancillary claims
liabilities and
expense liabilities
International
Insurance Gross
liabilities for
incurred claims
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
Financial year ended 31 December 2023
–
–
–
–
–
3
3
5
15
77
96
199
22
(7)
214
4
218
338
313
601
270
496
498
204
368
364
365
236
382
388
384
364
177
356
349
350
350
339
259
304
300
300
300
296
237
253
251
251
251
248
181
211
211
211
212
233
138
143
143
143
143
151
399
151
233
248
296
339
364
365
498
601
338
3,832
(398)
(149)
(193)
(244)
(281)
(320)
(336)
(316)
(412)
(414)
(155)
(3,218)
1
2
40
4
15
19
28
49
86
187
183
614
88
(98)
604
38
642
Underwriting year
UK Motor (core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Net of XoL best
estimates of
undiscounted
claims
Cumulative
claims paid
Net of XoL
undiscounted best
estimate liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Net of XoL claims
liabilities
Ancillary claims
liabilities and
expenses
UK Motor Net of
XoL liabilities for
incurred claims
UK Non-motor
(core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Gross best
estimates of
undiscounted
claims
Cumulative
claims paid
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
Financial year ended 31 December 2023
825
1,550
951
661
1,292
1,257
520
949
927
892
675
1,033
986
969
950
646
1,123
1,053
1,024
974
978
510
1,053
917
883
860
840
820
427
783
743
692
677
663
640
635
378
682
667
637
607
599
586
579
577
373
659
644
659
623
619
606
597
589
589
3,190
589
577
635
820
978
950
892
1,257
1,550
951 12,389
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395) (10,091)
115
13
17
19
73
85
180
230
431
579
556
2,298
331
(420)
2,209
94
2,303
127
116
220
57
126
124
50
91
90
90
54
96
94
93
93
56
102
101
101
101
100
29
78
75
75
76
75
75
26
50
47
47
47
47
47
48
34
35
34
33
33
33
33
33
18
19
19
19
19
19
19
19
4
19
33
48
75
100
93
90
124
220
127
933
(4)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(148)
(50)
(758)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 264264
265
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Financial year ended 31 December 2023
Financial year ended 31 December 2023
Claims development net of reinsurance
Underwriting year
Net of XoL
undiscounted best
estimate liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Net of XoL claims
liabilities
Ancillary claims
liabilities and
expense liabilities
UK Non-motor Net
of XoL liabilities for
incurred claims
International
Insurance
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Gross best
estimates of
undiscounted
claims
Cumulative gross
claims paid
Gross undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Gross claims
liabilities
Ancillary claims and
expense liabilities
International
Insurance Gross
liabilities for
incurred claims
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
–
–
–
–
–
3
3
5
15
72
77
175
19
(7)
187
3
190
335
313
559
270
496
477
204
368
364
355
236
382
388
384
360
177
356
349
350
350
337
259
304
300
300
300
290
237
253
251
251
251
248
181
211
211
211
212
210
138
143
143
143
143
151
397
397
151
210
248
290
337
360
355
477
559
335
3,719
(397)
(149)
(193)
(244)
(280)
(320)
(336)
(316)
(412)
(414)
(155)
(3,216)
–
2
17
4
10
17
24
39
65
145
180
503
73
(46)
530
38
568
Underwriting year
UK Motor (core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Net best estimates
of undiscounted
claims
Cumulative net
claims paid
Net undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Net claims
liabilities
Ancillary claims
liabilities and
expenses
UK Motor Net
liabilities for
incurred claims
UK Non-motor
(core)
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Net best estimates
of undiscounted
claims
Cumulative net
claims paid
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
762
1,442
939
657
1,259
1,239
520
949
927
892
626
1,033
986
969
950
625
1,086
1,018
990
957
944
493
1,016
886
853
830
811
793
427
783
743
692
677
663
640
635
378
682
667
637
607
599
586
579
577
373
659
644
659
623
619
606
597
589
589
3,190
589
577
635
793
944
950
892
1,239
1,442
939 12,190
(3,076)
(576)
(560)
(616)
(719)
(864)
(770)
(662)
(826)
(971)
(395) (10,035)
114
13
17
19
74
80
180
230
413
471
544
2,155
172
(365)
1,962
88
2,050
68
43
94
16
41
36
16
12
19
18
18
25
31
30
29
20
34
33
37
37
36
6
22
24
22
24
24
24
7
14
12
12
12
12
12
13
10
10
9
9
8
9
9
9
9
13
24
36
29
18
36
94
68
335
5
6
6
6
6
6
6
6
6
(6)
(9)
(13)
(23)
(34)
(28)
(16)
(28)
(87)
(55)
(301)
2
(2)
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 266266
267
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
5. Insurance service result continued
Underwriting year
Net undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Net claims
liabilities
Ancillary claims
liabilities
and expenses
UK Non-motor
Net liabilities for
incurred claims
International
Insurance
At end of year one
At end of year two
At end of year three
At end of year four
At end of year five
At end of year six
At end of year seven
At end of year eight
At end of year nine
Ten years later
Net best estimates
of undiscounted
claims
Cumulative net
claims paid
Net undiscounted
best estimate
liabilities
Risk adjustment
(undiscounted)
Effect of
discounting
Net claims
liabilities
Ancillary claims
liabilities and
expenses
International
Insurance net
liabilities for
incurred claims
2013 &
prior
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Total
£m
Financial year ended 31 December 2023
–
–
–
–
1
2
1
2
8
7
13
34
6
(2)
38
8
46
140
114
218
100
185
187
83
145
144
144
79
129
129
130
123
61
120
117
119
119
115
85
97
96
101
101
99
115
132
131
86
86
85
92
82
83
70
70
83
71
76
77
47
46
52
295
52
83
85
99
115
123
144
187
218
140
1,541
(298)
(51)
(68)
(83)
(95)
(109)
(114)
(129)
(163)
(223)
(100)
(1,433)
(3)
1
15
2
4
6
9
15
24
(5)
40
108
24
(20)
112
27
139
(v) UK Motor loss ratios and changes to liabilities for incurred claims
The table below shows the development of UK Motor Insurance loss ratios for the past three financial periods, presented on an
underwriting year basis, both using undiscounted amounts (i.e. cashflows) and discounted amounts.
UK Motor Insurance loss ratio development –
undiscounted, gross net of excess of loss reinsurance
Underwriting year
2018
2019
2020
2021
2022
2023
* Booked undiscounted loss ratios presented from the transition date of IFRS 17 (1 January 2022) onwards.
UK Motor Insurance loss ratio development –
discounted*, gross net of excess of loss reinsurance
Underwriting year
2018
2019
2020
2021
2022
2023
31 December
2022
68%
71%
65%
91%
104%
–
31 December
2022
67%
69%
63%
86%
97%
–
2021
73%
73%
68%
95%
–
–
2021
71%
71%
67%
92%
–
–
2023
65%
67%
58%
86%
96%
94%
2023
64%
65%
57%
81%
88%
86%
* Loss ratios using discounted locked-in curves, excluding finance expenses are presented from the transition date of IFRS 17 (1 January 2022) onwards.
The following table analyses the impact of movements in changes to liabilities from incurred claims by underwriting year on a gross and
net of excess of loss reinsurance basis for UK Motor.
Gross
Underwriting year
2018 & prior
2019
2020
2021
2022
2023
Total UK Motor gross changes to liabilities for incurred claims
Net
Underwriting year
2018 & prior
2019
2020
2021
2022
2023
Total UK Motor net of excess of loss changes to liabilities for incurred claims
31 December 2023
£m
31 December 2022
(restated)
£m
91.5
61.4
98.2
76.4
79.4
–
406.9
80.6
65.0
97.7
80.1
69.4
–
392.8
262.4
34.3
84.4
56.1
–
–
437.2
187.2
29.0
62.8
48.2
–
–
327.2
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 268268
269
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
6. Investment income and finance costs
6a. Accounting policies
i) Financial assets
Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:
a. The Group’s business model for managing the financial assets, and
b. The contractual cashflow characteristics of the financial asset.
Based on these factors, the financial asset is classified into one of the following categories:
Amortised cost
These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give
rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not
designated as fair value through profit or loss (FVTPL).
For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other
receivables and loans and advances to customers.
The interest income generated from these assets is included in investment returns, with the exception of loans and advances to
customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income.
Fair value through Other Comprehensive Income (FVOCI)
These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the
financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI),
where the asset is not designated as FVTPL.
For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder
liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement.
In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be
held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for
trading and are strategic investments to be designated as being reported through FVOCI.
Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest
revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss.
A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises.
Fair value through profit or loss (FVTPL)
These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL.
For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments.
The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held.
Buying and selling activity occurs depending on timing of different cashflows.
Impairment
The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost,
as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and
advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach.
This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group’s
external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data
as follows:
• Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is
recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody’s is used, together with
consideration of any overlay based on qualitative criteria
• Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting
a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for
a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on
watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate
by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based
on an average of a number of external and internal sources.
• Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to
return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available.
The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment
grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the
impairment provision required.
The impairment provision at 31 December 2023 is £6.9 million (£9.4 million at 31 December 2022).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are
recognised in Other Comprehensive Income.
Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial,
no further disclosure has been made.
Derecognition
A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset
and all the attached substantial risks and rewards relating to the asset to a third party.
ii) Financial liabilities
Classification and subsequent measurement
All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for
derivatives that are classified at fair value through profit or loss and subsequently measured at fair value.
Movements in the amortised cost are recognised through the Income Statement.
Derecognition
A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires.
iii) Investment return and finance costs
Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as
FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified
as amortised cost.
Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and
lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost
of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the
expected life of the asset or liability.
6b. Investment return
Investment return
On assets classified as FVTPL
On assets classified as FVOCI*1*3
On assets classified as amortised costs*1
Net unrealised losses
Unrealised (loss) / gain on forward
contracts
Share of associate profit/ loss
Interest receivable on cash and cash
equivalents*1
Total investment and
interest income*2
31 December 2023
£m
At EIR
Other
–
77.0
4.1
–
–
–
43.3
(3.6)
–
(0.2)
(1.3)
3.6
Total
43.3
73.4
4.1
(0.2)
(1.3)
3.6
31 December 2022
£m
At EIR
Other
–
50.3
2.0
–
–
–
8.4
2.3
–
0.5
(0.1)
1.2
Total
8.4
52.6
2.0
0.5
(0.1)
1.2
81.1
41.8
122.9
52.3
12.3
64.6
*1. Interest received during the year was £76.8 million (2022: £58.7 million).
*2. Total investment return excludes £3.2 million of intra-group interest (2022: £2.2 million).
*3. Realised losses on sales of debt securities classified as FVOCI are £0.9 million (2022: £2.2 million gain).
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 270270
271
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
6. Investment income and finance costs continued
6c. Finance costs
Interest payable on subordinated loan notes and other credit facilities*1*2
Interest payable on lease liabilities
Interest recoverable from co and re-insurers
Total finance costs
*1. Interest paid during the year was £20.5 million (2022: £13.4 million).
*2. See note 7e for details of credit facilities.
31 December 2023
£m
18.5
2.0
(0.4)
20.1
31 December 2022
£m
11.5
2.0
(1.5)
12.0
Finance costs represent interest payable on the £305.1 million (2022: £200.0 million) subordinated notes and other financial liabilities.
Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16 and does not result in a
cash payment.
6d. Expected credit losses
Expected credit (gains)/losses on financial investments
Expected credit losses on loans and advances to customers*1
Total expense for expected credit losses
Note
6f
7b
31 December 2023
£m
(2.5)
33.5
31.0
31 December 2022
£m
(1.8)
20.7
18.9
*1. Includes £15.0 million (2022: £7.2 million) of write offs, with total movement in the expected credit loss provision being £33.5 million (2022: £20.7 million).
See note 6a and note 7b for details of the impairment methodology.
6e. Financial assets and liabilities
The Group’s financial assets and liabilities can be analysed as follows:
Financial investments measured at FVTPL
Money market funds
Other funds*1
Derivative financial instruments
Equity Investments (designated FVTPL)
Financial investments classified as FVOCI
Corporate debt securities
Government debt securities
Private debt securities
Equity investments (designated FVOCI)
Financial assets measured at amortised cost
Deposits with credit institutions
Investment in Associates
Total financial investments
Other financial assets (measured at amortised cost)
Insurance receivables
Trade and other receivables
Insurance and other receivables
Loans and advances to customers (note 7)
Cash and cash equivalents
Total financial assets
Financial liabilities
Subordinated notes
Loan backed securities
Other borrowings
Derivative financial instruments
Subordinated and other financial liabilities
Trade and other payables
Lease liabilities
Total financial liabilities
*1. Other funds include fixed income securities recognised as fair value through profit and loss.
31 December 2023
£m
31 December 2022
(restated)
£m
587.5
301.3
17.6
12.4
918.8
2,040.6
519.6
242.7
2,802.9
23.0
2,825.9
706.5
188.8
33.0
6.4
934.7
1,701.2
479.8
166.6
2,347.6
25.1
2,372.7
116.7
101.4
1.0
2.4
3,862.4
3,411.2
272.7
75.0
347.7
879.4
353.1
5,442.6
315.2
759.6
55.0
–
1,129.8
305.8
81.2
1,516.8
187.6
87.6
275.2
823.9
297.0
4,807.3
204.4
714.7
20.0
–
939.1
254.9
88.5
1,282.5
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 272272
273
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
6. Investment income and finance costs continued
6f. Fair value measurement
IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of
significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end
of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none).
6g. Cash and cash equivalents
Cash at bank and in hand*1
Total cash and cash equivalents
31 December 2023
£m
353.1
353.1
31 December 2022
£m
297.0
297.0
The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
*1 Cash at bank and in hand includes £38.9 million (2022: £36.6 million) related to special purpose entities which is not available for use by the Group.
Level one (quoted prices in active markets)
Level two (use of observable inputs)
Level three (use of significant unobservable inputs)
Total
31 December 2023
31 December 2022
FVTPL
£m
888.8
17.6
12.4
918.8
FVOCI
£m
2,560.1
–
265.8
2,825.9
FVTPL
£m
900.2
28.1
6.4*1
934.7
FVOCI
£m
2,180.9
–
191.8
2,372.7
*1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information.
Fair value measurement using significant unobservable inputs (level three)
Level three investments consist of debt securities and equity securities.
Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group’s holding of the
Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and
commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on
active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these
instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is
the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future
performance will result in higher discount rates and lower values.
Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the
proportion of the Group’s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs
including market multiples and cashflow forecasts.
There were no significant inter-relationships between unobservable inputs that materially affect fair values.
The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
Level Three Investments
Balance as at 1 January 2023
Gains / (losses) recognised in IS
Gains / (losses) recognised in OCI
Purchases
Disposals
Balance as at 31 December 2023
Level Three Investments
Balance as at 1 January 2022
Gains / (losses) recognised in IS
Gains / (losses) recognised in OCI
Purchases
Disposals
Translation differences
Balance as at 31 December 2022
Equity Securities
£m
31.6
(0.1)
(1.0)
6.1
(1.1)
35.5
Equity Securities
£m
21.5
1.8
1.1
9.4
(2.5)
0.3
31.6
31 December 2023
Debt Securities
£m
166.6
10.0
0.8
89.6
(24.3)
242.7
31 December 2022
Debt Securities
£m
125.5
3.9
(9.6)
74.4
(27.6)
–
166.6
Total
£m
198.2
9.9
(0.2)
95.7
(25.4)
278.2
Total
£m
147.0
5.7
(8.5)
83.8
(30.1)
0.3
198.2
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term deposits with original maturities
of three months or less.
An assessment has been completed for impairment purposes in line with that set out in note 6a above. Given the short-term duration of
these assets and low risk of these assets, no impairment provision has been recognised.
For cash at bank and cash deposits and other receivables, the fair value approximates to the book value due to their short maturity.
6h. Other assets
Insurance and other receivables
Insurance receivables
Trade and other receivables
Prepayments and accrued income
Total insurance and other receivables
31 December 2023
£m
272.7
75.0
62.2
409.9
31 December 2022
£m
187.6
87.6
41.2
316.4
Insurance receivables
Insurance receivables are measured at historic cost. Given that non-repayment would result in a withdrawn policy and the short-term
duration of these assets, no bad debt provision has been recognised.
Insurance receivables reported within other receivables are comprised of the external coinsurer’s share of premium receivable, with the
related liability in respect of written premium presented within amounts owed to the coinsurer.
Trade and other receivables
Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances.
Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables
per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a
combination of
(i) Aged debtor analysis
(ii) Historic experience of write offs for each receivable
(iii) Any specific indicators of credit deterioration observed, and
(iv) Management judgement.
The level of provision is immaterial.
The amortised cost carrying amount of receivables is a reasonable approximation of fair value.
Contract balances
The following table provides information about receivables and contract assets from contracts with customers. Both balances are
included in Trade and other receivables.
Receivables
Contract assets
31 December 2023
£m
14.9
17.0
31 December 2022
£m
20.0
19.3
The contract asset relates to the Group’s right to consideration for work undertaken in the law companies on behalf of clients which is
ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee has been billed.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 274274
275
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
6. Investment income and finance costs continued
Significant changes in the contract asset balance during the period are as follows:
Contract asset balance
At 1 January 2022
Revenue recognised
Transferred to trade receivables
Write offs
At 31 December 2022
Revenue recognised
Transferred to trade receivables
Write offs
At 31 December 2023
31 December 2023
£m
23.8
16.3
(20.2)
(0.6)
19.3
18.9
(20.6)
(0.6)
17.0
The amount of revenue recognised in 2023 from performance obligations satisfied (or partially satisfied) in previous periods in relation to
the above contract balances is £nil (2022: £nil).
6i. Financial and lease liabilities
Financial liability at the start of the period
Interest payable per Income Statement
Cashflows*1
Other foreign exchange and non-cash
movements
Financial liability at the end of the period
Subordinated
notes
£m
204.4
17.5
94.2
Loan backed
securities
£m
714.7
40.6
4.3
31 December 2023
Other borrowings
and derivatives
£m
20.0
5.4
29.6
(0.9)
315.2
–
759.6
–
55.0
*1. Cash amounts relating to the interest proportion of the lease liability were £1.9 million.
Subordinated
notes
£m
204.4
11.0
(11.0)
Loan backed
securities
£m
446.5
11.7
256.5
31 December 2022
Other borrowings
and derivatives
£m
20.0
1.3
(0.9)
Financial liability at the start of the period
Interest payable per Income Statement
Cashflows*1
Other foreign exchange and non-cash
movements
Financial liability at the end of the period
–
204.4
–
714.7
(0.4)
20.0
(7.5)
88.5
(7.9)
1,027.6
*1. Cash amounts relating to the interest proportion of the lease liability were £2.1 million.
Subordinated notes
Financial liabilities are inclusive of two separate issuances of subordinated notes totalling £305.1 million. The first subordinated notes
were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of £200 million. In July 2023 these notes were tendered
with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024.
The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of £250 million and a
redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes).
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the
event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met.
There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes
in certain circumstances but to date none of these circumstances has arisen.
The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is £329.8 million
(2022: £196.4 million).
Lease
liabilities
£m
88.5
2.0
(10.7)
1.4
81.2
Lease
liabilities
£m
105.3
2.0
(11.3)
Total
£m
1,027.6
65.5
117.4
0.5
1,211.0
Total
£m
776.2
26.0
233.3
Other borrowings
The Group holds various revolving credit facilities including a £300.0 million facility which expires in April 2026, a £20.0 million facility
which expires in August 2024 and a €100.0 million facility which expires in August 2024. As at 31 December 2023 £55.0 million was
drawn under these facilities (2022: £20.0 million), which is shown within other borrowings in the table above. This is made up of
£35.0 million from the facility expiring April 2026 (2022: £nil) and £20.0 million from the pound sterling facility expiring August 2024
(2022: £20.0 million).
The carrying value is a reasonable approximation of fair value.
Loan backed securities
Asset backed senior loan note facilities of £1,000.0 million have been established in relation to the Admiral Money business (see note
2 for details of the accounting treatment of SPEs). As at the year end, £759.6 million (2022: £714.7 million) of these facilities had
been utilised.
The carrying value is a reasonable approximation of fair value.
Lease liabilities
The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension
options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available
for use by the Group.
The lease liability is initially measured at the present value of remaining lease payments, which include the following:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable
• Variable lease payments that are based on an index or a rate
• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s
incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of
a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is
charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability.
Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining
lease payments.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 276276
277
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
7. Loans and Advances to Customers
7a. Accounting policies
Loans and advances to customers consist of unsecured personal loans and car finance products.
Classification
Loans and advances to customers are measured at amortised cost. This is because assets are held in order to collect contractual cashflows
and the contractual terms of the financial asset demand cash inflows which are solely payments of principal and interest on the principal
amount outstanding.
Interest income and expense
Interest income received in relation to loans and advances to customers is calculated using the effective interest method which
allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been no change in
recognition of interest income from the comparative period.
Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts.
Finance leases
Included within loans and advances to customers are personal contract purchase (PCP) and hire purchase (HP) arrangements which are
classified as finance leases under IFRS 16. A receivable equal to the net investment in the lease has been recognised. The net investment
is equal to the gross investment in the lease discounted at the rate implicit in the lease.
Lease interest income is recognised within interest income in the Income Statement over the term of the lease using the effective
interest rate method.
The title to the underlying vehicle remains with the Group until the lessee has made all contractual payments, at which point ownership
is transferred to the lessee. In the event of breach of contract, such as non-payment, the vehicle itself acts as collateral for the finance
lease, becoming available for repossession in most cases.
Some of the ways in which the Group maintains its rights to the vehicle, and thus manages the risk of loss associated with the finance
lease, include:
• The Group does not enter into any finance leases with a maximum loan-to-value limit, reducing the risk of shortfall on termination of
the contract
• The Group requires the lessee to insure the underlying vehicle at all times, reducing the risk of non-recovery if the asset is stolen
or destroyed
• The estimated future value of each vehicle, which is sourced externally, is considered in the pricing of the lease contracts to provide
protection against deterioration in that value.
7b. Loans and advances to customers
Loans and advances to customers – gross carrying amount
Loans and advances to customers – provision
Total loans and advances to customers – Admiral Money
Total loans and advances to customers – Other
Total loans and advances to customers
Loans and advances to customers are comprised of the following:
Unsecured personal loans
Finance leases
Other
Total loans and advances to customers, gross
31 December 2023
£m
956.8
(81.7)
875.1
4.3
879.4
31 December 2022
£m
887.4
(63.7)
823.7
0.2
823.9
31 December 2023
£m
937.7
19.1
4.4
961.2
31 December 2022
£m
855.8
31.6
0.2
887.6
Fair value measurement
The loans and advances are recognised at fair value at the point of origination and then subsequently on an amortised cost basis.
This carrying value is deemed a reasonable approximation of fair value, which is calculated based on estimates using the present value of
future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
Expected credit losses
The expected credit loss model is a three-stage model based on forward looking information regarding changes in the credit quality since
origination. Credit risk is measured using a Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) defined
as follows:
• Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic customer behaviour.
Where customers have already met the definition of default this is 100%. For customers that are not in default the PD is determined
through analysis of historic default data using external and internal data sources available at the reporting date.
• Exposure at Default (EAD): The amount of balance at the time of default. For loans that are in arrears the EAD is taken as the current
balance plus any expected interest arrears. For up-to-date loans the EAD is calculated as the expected balance 3 months prior to each
period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears.
• Loss Given Default (LGD): The amount of the asset not recovered following a borrower’s default, determined through analysis of
historic recovery performance.
The PD is applied to the EAD to calculate the expected loss excluding recoveries. The LGD is then applied to this loss to calculate the total
expected loss including recoveries. A forward-looking provision is also calculated, as set out later in this note.
Loan assets are segmented into three stages of credit impairment:
• Stage 1 – no significant increase in credit risk of the financial asset since inception;
• Stage 2 – significant increase in credit risk of the financial asset since inception;
• Stage 3 – financial asset is credit impaired.
For assets in stage 1, the allowance is calculated as the expected credit losses from events within 12 months after the reporting date.
For assets in stages 2 and 3 the allowance is calculated as the expected credit loss from events in the remaining lifetime of each asset.
The allowance is calculated for each loan at an individual level.
Significant increase in credit risk (SICR) (stage 2)
As explained above, stage 1 assets have an ECL allowing for losses in the next twelve months, and stage 2 or 3 assets have an ECL allowing
for losses over the remaining lifetime of the contract. An asset moves to stage 2 when its credit risk has increased significantly since initial
recognition. IFRS 9 does not prescribe a definition of significant increase in credit risk but does include a rebuttable presumption that this
does occur for loan assets which are 30 days past due (which the Group does not rebut).
The Group has deemed a significant increase in credit risk to have occurred where:
• The loan is in arrears, or
• The behavioural PD has moved outside a specified threshold from the application PD
• The customer is identified as being two or more payments in arrears on a credit product with a third party and reported to the credit
reference agency.
The Group maintains two probation periods:
• Where a customer is up to date but previously has been 30+ days past due they will be held in stage 2 for 6 months;
• Where a customer is up to date but previously Credit impaired (stage 3) they will be held in stage 2 for 12 months.
A range of metrics including accuracy rates, false positive rates, oscillation rates and the Mathews corelation are monitored in relation to
loans which are held in the above probation periods.
Credit impaired (stage 3)
The Group does not rebut the presumption within IFRS 9 that default has occurred when an exposure is greater than 90 days past due,
which is consistent with a customer being three or more payments in arrears. In addition, a loan is deemed to be credit impaired where:
• There is an Individual Voluntary Arrangement (IVA) agreement confirmed or proposed, or
• Customer has started or progressed bankruptcy action, or
• A repayment plan is in place, or
• A customer is deceased.
As at 31 December 2023, there were 7,300 loans totalling £40.1m that were subject to forbearance (2022: 4,400 loans totalling
£21.5m). Significant categories of forbearance arrangements include Bankruptcy, Debt Management Plans and Individual
Voluntary Arrangements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 278278
279
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
7. Loans and Advances to Customers continued
Judgements required - Post Model Adjustments (‘PMA’s)
As at 31 December 2023, the expected credit loss allowance included PMAs totalling £9.2 million (2022: £11.3 million).
Sensitivities to key areas of estimation uncertainty
The key areas of estimation uncertainty identified, as per note 3 to the financial statements, are in the PD and the forward-
looking scenarios.
Post Model Adjustments
Model performance
Cost of Living
Economic scenarios
31 December 2023
£m
2.0
6.5
0.7
9.2
31 December 2022
£m
3.9
6.5
0.9
11.3
Base
Upturn
Downturn
Severe
31 December 2023
Weighting
50%
10%
30%
10%
31 December 2023
Sensitivity
£m
(1.1)
(5.2)
2.5
8.2
31 December 2022
Weighting
40%
10%
40%
10%
31 December 2022
Sensitivity
£m
(1.3)
(6.9)
1.4
5.7
PMAs are calculated using management judgement and analysis. The key categories of PMAs are as follows:
Model performance
The model has been calibrated on historical data that may not fully reflect the risk of losses in the recent and ongoing, highly volatile
macro-economic period. In addition, interest rate rises in 2023 have created the potential for performance uncertainty. For this reason
a Model Performance PMA has been made. It effectively recalibrates the modelled probability of default of the loans to reflect recent
monitored performance. A refresh of the PD model during 2023 has reduced the PMA in comparison to the previous year end.
Cost of Living
This PMA captures the risk of customers falling into a negative affordability position, whereby customers are no longer able to meet their
credit commitments due to higher expenditure driven by higher prices and increased mortgage payments, when their standard variable
or fixed term rate comes to an end. A PMA is held to acknowledge this, using both external and internal data.
Economic scenarios
An uncertainty factor determined by management judgment has been added to reflect the recent volatility in unemployment forecasts.
This factor has been reduced as variability between successive forecasts has fallen.
Write off policy
Loans are written off where there is no reasonable expectation of recovery. The Group’s policy is to write off balances to their
estimated net realisable value. Write offs are actioned on a case-by-case basis taking into account the operational position and the
collections strategy.
Forward-looking information
Under IFRS 9 the provision must reflect an unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes. The means by which the Group has determined this is to run scenario analysis.
Management judgment has been used to define the weighting and severity of the different scenarios based on available data.
The key economic driver of credit losses from the scenarios is the likelihood of a customer entering hardship through unemployment.
Unemployment forecasts include a risk grade split of PD based on the correlation between grade-level default rates observed relative
to the change in unemployment rates in the previous downturn, adjusted for the unemployment forecast expected in the current
economic environment.
The scenario weighting assumptions used are detailed below, along with the unemployment rate assumed in each scenario at
31 December 2023.
Base
Upturn
Downturn
Severe
31 December 2023
Scenario peak
Unemployment
rate
4.7%
3.5%
6.0%
8.0%
31 December 2023
Weighting
50%
10%
30%
10%
31 December 2022
Scenario peak
Unemployment
rate
4.8%
3.5%
6.0%
7.9%
31 December 2022
Weighting
40%
10%
40%
10%
The economic scenarios and forecasts have been updated in conjunction with a third party economics provider. The probability
weightings reflect the view that there is a probability of 90% attached to recessionary outcomes.
The sensitivities in the above tables show the variance to ECL that would be expected if the given scenario unfolded rather than the
weighted position the provision is based on. At 31 December 2023 the implied weighted peak unemployment rate is 5.2%: the table
shows that in a downturn scenario with a 6.0% peak unemployment rate the provision would increase by £2.5 million, whilst the upturn
would reduce the provision by £5.2 million, base case reduce by £1.1 million and severe increase the provision by £8.2 million.
Stage 1 assets represent 81% of the total loan assets; 0.1% increase in the stage 1 PD, i.e. from 2.2% to 2.3% would result in a £0.6 million
increase in ECL.
Amounts arising from ECL: loans and advances to customers
The following table sets out information about the credit quality of the loans and advances to customers measured at amortised cost.
Credit grades are used to segment customers by apparent credit risk at the time of acquisition. Higher grades are the lowest credit risk
with each subsequent grade increasing in expected credit risk. The Group does not have any purchased or originated credit impaired
assets. These tables are inclusive of the finance lease assets which are held by the Group, further analysis of these balances can be found
in note 7c.
All probability of default figures included in this paragraph allow for forward-looking information, i.e. the PDs are a weighted average from
the economic scenarios considered and relate to the Admiral Money consumer lending business. The average probability of default in
for stage 1 assets is 2.2% (2022: 2.7%) reflecting the expectation of defaults within 12 months of the reporting date. The average PD for
assets in stage 2 is 36.8% (2022: 36.6%) reflecting expected losses over the remaining life of the assets. The PD for assets in stage 3 is
100% (2022: 100%) as these assets are deemed to have defaulted.
31 December 2023
31 December 2022
Credit Grade*1
Higher
Medium
Lower
Credit impaired
Gross carrying amount
Expected credit loss allowance
Other loss allowance*2
Carrying amount – Admiral Money
Carrying amount – Other
Carrying amount
Stage 1
12- month ECL
£m
Stage 2
Lifetime ECL
£m
Stage 3
Lifetime ECL
£m
566.0
155.8
53.6
–
775.4
(12.8)
(0.5)
762.1
4.3
766.4
83.3
30.8
11.8
–
125.9
(29.1)
(0.1)
96.7
–
96.7
–
–
–
55.5
55.5
(39.2)
–
16.3
–
16.3
Total
£m
649.3
186.6
65.4
55.5
956.8
(81.1)
(0.6)
875.1
4.3
879.4
Total
£m
600.2
200.0
53.2
34.0
887.4
(63.1)
(0.6)
823.7
0.2
823.9
*1. Credit grade is the internal credit banding given to a customer at origination. This is based on external credit rating information.
*2 Other loss allowance covers losses due to a reduction in current or future vehicle value or costs associated with recovery and sale of vehicles and those as a result of changes in the performance of
.the EIR asset.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
280280
281
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
7. Loans and Advances to Customers continued
The following tables reconcile the opening and closing gross carrying amount and expected credit loss allowance. Loans originated in the
year are initially classified as Stage 1. In the following tables, the loans are presented in line with their staging as at each year end.
2023
Gross carrying amount as at 1 January 2023
Transfers
Transfers from stage 1 to stage 2
Transfers from stage 1 to stage 3
Transfers from stage 2 to stage 1
Transfers from stage 2 to stage 3
Transfers from stage 3 to stage 1
Transfers from stage 3 to stage 2
Principal redemption payments
Write offs
EIR adjustment
New financial assets originated or purchased
Gross carrying amount as at 31 December 2023
Stage 1
12- month ECL
£m
728.3
Stage 2
Lifetime ECL
£m
125.3
Stage 3
Lifetime ECL
£m
34.0
(60.2)
(19.4)
51.7
–
0.3
–
(315.0)
–
0.3
393.6
779.6
60.2
–
(51.7)
(10.8)
–
0.8
(48.8)
–
0.2
50.8
126.0
–
19.4
–
10.8
(0.3)
(0.8)
(5.5)
(15.6)
0.2
13.4
55.6
Total
£m
887.6
–
–
–
–
–
–
(369.3)
(15.6)
0.7
457.8
961.2
Of the amounts written off during the year, £8.3m related to loans which were still subject to enforcement activity (2022: £NIL). The loss
allowance in place in relation to these loans at the time of writing off totalled £7.9m (2022: £NIL).
The EIR adjustment represents incremental acquisition costs incurred when advancing loans. These costs are spread over the expected
economic lives of the loans under the effective interest rate method.
2022
Gross carrying amount as at 1 January 2022
Transfers
Transfers from stage 1 to stage 2
Transfers from stage 1 to stage 3
Transfers from stage 2 to stage 1
Transfers from stage 2 to stage 3
Transfers from stage 3 to stage 1
Transfers from stage 3 to stage 2
Principal redemption payments
Write offs
EIR adjustment
New financial assets originated or purchased
Gross carrying amount as at
31 December 2022
2023
Expected credit loss allowance
as at 1 January 2023
Movements with a profit and loss impact
Transfers
Transfers from stage 1 to stage 2
Transfers from stage 1 to stage 3
Transfers from stage 2 to stage 1
Transfers from stage 3 to stage 1
Changes in PDs/LGDs/EADs
New financial assets originated or purchased
Total net profit and loss charge in the period
Write offs
Transfers
Transfers from stage 2 to stage 3
Transfers from stage 3 to stage 2
Expected credit loss allowance as at
31 December 2023
Stage 1
12- month ECL
£m
510.6
Stage 2
Lifetime ECL
£m
68.4
Stage 3
Lifetime ECL
£m
28.0
(62.6)
(9.4)
25.3
–
0.2
–
(235.3)
–
3.4
496.1
728.3
62.6
–
(25.3)
(4.2)
–
0.4
(39.9)
–
0.4
62.9
–
9.4
–
4.2
(0.2)
(0.4)
(5.9)
(7.2)
–
6.1
125.3
34.0
Stage 1
12- month ECL
£m
Stage 2
Lifetime ECL
£m
Stage 3
Lifetime ECL
£m
13.4
23.5
26.2
(1.9)
(0.7)
3.4
–
(9.5)
8.0
(0.7)
–
–
–
12.7
5.0
–
(7.4)
–
(1.4)
12.5
8.7
–
(3.2)
0.3
29.3
–
1.9
–
(0.1)
13.6
9.8
25.2
(15.0)
3.2
(0.3)
39.3
Total
£m
607.0
–
–
–
–
–
–
(281.1)
(7.2)
3.8
565.1
887.6
Total
£m
63.1
3.1
1.2
(4.0)
(0.1)
2.7
30.3
33.2
(15.0)
–
–
81.2
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
282282
283
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
7. Loans and Advances to Customers continued
7d. Interest income
2022
Expected credit loss allowance as at 1 January 2022
Movements with a profit and loss impact
Transfers
Transfers from stage 1 to stage 2
Transfers from stage 1 to stage 3
Transfers from stage 2 to stage 1
Transfers from stage 3 to stage 1
Changes in PDs/LGDs/EADs
New financial assets originated or purchased
Total net profit and loss charge in the period
Write offs
Expected credit loss allowance as at 31 December 2022
Other movements with no profit and loss impact
Transfers
Transfers from stage 2 to stage 3
Transfers from stage 3 to stage 2
Stage 1
12- month ECL
£m
13.7
Stage 2
Lifetime ECL
£m
12.7
Stage 3
Lifetime ECL
£m
23.5
(1.5)
(0.4)
1.8
–
(10.1)
9.9
(0.3)
–
13.4
–
–
4.4
–
(3.9)
–
(2.4)
12.7
10.8
–
23.5
(1.3)
–
–
1.0
–
(0.1)
4.4
4.6
9.9
(7.2)
26.2
1.3
–
Total
£m
49.9
2.9
0.6
(2.1)
(0.1)
(8.1)
27.2
20.4
(7.2)
63.1
–
–
7c. Finance lease receivables
Loans and advances to customers include the following finance leases. The Group is the lessor for leases of cars
From loans and advances to customers
From finance leases
From bank interest
31 December 2023
£m
90.2
2.0
2.7
94.9
31 December 2022
£m
56.1
2.6
–
58.7
Interest income receivable is recognised in the Income Statement using the effective interest method, which calculates the amortised
cost of the financial asset and allocates the interest income over the expected product life.
7e. Interest expense
Interest payable on loan backed securities
Interest payable on other credit facilities
Total interest expense*1
31 December 2023
£m
23.4
3.4
26.8
31 December 2022
£m
11.7
0.9
12.6
*1. Interest paid in total net of swaps during the year was £25.6 million (2022: £11.9 million).
8. Other revenue and co-insurer profit commission
8a. Accounting policy
(i) Composition of Other revenue and co-insurer profit commission
Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from:
• Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5)
Gross investment in finance leases, receivable
Less than 1 year
Between 1 to 5 years
More than 5 years
Unearned finance income
Net investment in lease receivables
Less impairment allowance
Net investment in finance leases, receivable
Less than 1 year
Between 1 to 5 years
More than 5 years
31 December 2023
£m
31 December 2022
£m
• Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from
the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are
distinct, the revenue is recognised applying IFRS 15
7.0
14.3
–
21.3
(2.2)
19.1
(0.3)
18.8
5.7
13.4
–
19.1
9.8
25.7
–
35.5
(4.0)
31.5
(0.8)
30.7
7.9
23.7
–
31.6
• Revenue from the Group’s law firm
• Comparison income
Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17
(see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the
effective interest rate method, and as such is not within the scope of IFRS 15.
Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a
contractual arrangement between the Group’s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary
of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited.
The net investment in finance leases shown above includes an unguaranteed residual value of £0.2 million (2022: The net investment in
finance leases shown above is net of the unguaranteed residual value of £0.3 million).
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
284284
285
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
8. Other revenue and co-insurer profit commission continued
(ii) Nature of goods and services
The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Fee and commission revenue,
including administration fees:
where the income is separable
from the underlying
insurance contract
Revenue from
law firm
Profit commission
from co-insurers
Comparison
Nature, timing of satisfaction of performance obligations and significant payment terms
The performance obligation is the provision of insurance intermediary services, at which point
the performance obligation is met. Revenue is therefore recognised at a point in time, matching
the Group’s provision of services. Where the Group has no remaining obligations, the revenue is
recognised immediately. An allowance is made for expected cancellations where the customer may
be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
The performance obligation is the pursuit of the compensation from the at fault party’s insurer
on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission is generated if an individual year is profitable, based on the premiums written,
and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
• Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
• Insurance expenses incurred
• Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
• The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
• The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with
Customers due to the nature of the income.
The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of “Other revenue” is now recognised
under IFRS 17. The prior year comparatives have been restated from those previously reported as a result.
During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within
the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss
ratios in line with the Group’s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting
year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission
aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period
and in future is not expected to have a material impact on the Group’s financial statements.
There has been no further change in revenue recognition from the restated comparative period.
8b. Disaggregation of revenue
In the following tables, other revenue is disaggregated by major products/service lines and timing of revenue recognition. The total
revenue disclosed in the table of £205.8 million (2022: £256.4 million) represents total other revenue and co-insurer profit commission
and is disaggregated into the segments included in note 4.
Major products/service line
Fee and commission revenue
Revenue from law firm
Comparison income
Total other revenue
Profit commission from co-insurers
Total other revenue and co-insurer profit
commission
Timing of revenue recognition
Point in time
Over time
Revenue outside the scope of IFRS 15
Major products/service line
Fee and commission revenue
Law firm revenue
Comparison income*1
Total other revenue
Profit commission from co-insurers
Total other revenue and co-insurer profit
commission
Timing of revenue recognition
Point in time
Over time
Revenue outside the scope of IFRS 15
31 December 2023
UK Insurance
£m
International
Insurance
£m
Admiral Money
£m
Other
£m
107.2
18.3
–
125.5
76.5
202.0
160.4
20.1
21.5
202.0
–
–
–
–
2.0
2.0
2.0
–
–
2.0
0.1
–
–
0.1
–
0.1
0.1
–
–
0.1
–
–
1.6
1.6
–
1.6
1.6
–
–
1.6
31 December 2022 (restated)
UK Insurance
£m
International
Insurance
£m
Admiral Money
£m
Other
£m
104.3
15.8
–
120.1
127.5
247.6
209.0
17.8
20.8
247.6
–
–
–
–
–
–
–
–
–
–
0.3
–
–
0.3
–
0.3
0.3
–
–
0.3
0.2
–
8.3
8.5
–
8.5
8.5
–
–
8.5
Total
£m
107.3
18.3
1.6
127.2
78.5
205.7
164.1
20.1
21.5
205.7
Total
£m
104.8
15.8
8.3
128.9
127.5
256.4
217.8
17.8
20.8
256.4
*1. Comparison revenue excludes £nil million (31 December 2022: £0.3 million) of income from other Group companies.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 286286
287
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
8. Other revenue and co-insurer profit commission continued
Profit commission analysis
Underwriting year
2019 & prior
2020
2021
2022
2023
Total UK motor profit commission
31 December 2023
£m
31 December 2022
(restated)
£m
48.8
27.7
–
–
–
76.5
105.9
24.5
–
(2.9)
–
127.5
9. Directly attributable and other expenses
9a. Accounting policies
(i) Directly attributable insurance expenses
Directly attributable expenses are cashflows that are directly attributable to a portfolio of insurance contracts and recognised as incurred
insurance service expenses. See note 5a for details of the types of expenses recognised as directly attributable insurance expenses.
(ii) Other operating expenses
All other operating expenses are charged to the Income Statement in the period that they are incurred.
(iii) Employee benefits
As detailed in the Remuneration Committee Report, the key elements of employee remuneration are:
• Base salaries and pension contributions;
• Share based incentive plans;
• A discretionary bonus, (the ‘DFSS Bonus’), rather than an annual cash bonus, that is based on the number of DFSS awards held and
actual dividends paid out to shareholders.
Within note 9b, the charges for base salaries and pension contributions (and the related social security costs) are recognised within
Administration and acquisition expenses, Expenses relating to additional products and fees and Other expenses based on the role of
the employee.
Charges for the share-based incentive plans (and related social security costs) and discretionary bonus are included within share scheme
charges. These charges are not shown as part of the result for each reportable segment, or within the expense ratio, due to them being
materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result in a cash payment to
employees but instead results in an issue of new shares (resulting in a dilution of existing shares).
For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grant of the
free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement of changes in equity
(2023: £63.3 million; 2022: £57.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in liabilities.
The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are:
• The number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for each scheme
where shares remain unvested is set out in note 9f (iii)
• The fair value of the shares;
– For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled to receive
dividends, and hence no adjustment is made to this fair value
– For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid equivalent
to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised downwards to take
account of these expected dividends
– For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at the end of
each reporting period is used as an approximation for the closing price at the end of the vesting period.
• Employee attrition rates, which impact the ultimate number of shares that vest.
• In the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number of shares
that vest.
The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv).
At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on the latest
forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met.
The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes
in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected
cumulative charge required.
Social security costs on share-based incentive plans
Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised over the
vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting (typically 3–5
years after the grant date). For the DFSS, the costs are paid immediately upon vesting.
The total social security costs are calculated based on the following:
• The taxable value of the shares, being:
The rules of the share schemes ensure that the actual dilution level does not exceed 10% in any rolling ten-year period.
– For the SIP, the lower of the share price at award date and the share price at the balance sheet date
Base salaries and pension contributions
Base salaries and the related employer social security costs are charged to the Income Statement in the period that they are incurred.
– For the DFSS, the share price at the balance sheet date
• The number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the DFSS, the
The Group contributes to defined contribution personal pension plans for its employees. The contributions payable to these schemes are
charged in the accounting period to which they relate.
vesting rate based on performance conditions
• The appropriate social security rate.
Share based incentive plans and related social security costs
The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being:
• A Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and
• The Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees 50%
of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity and Total
Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% are guaranteed with
continued employment.
For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise the
shares are forfeited.
The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash) as
consideration for the services provided.
These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in the assumptions
is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased
charge in an accounting period as a result of this true-up of the expected cumulative charge required.
Discretionary bonus on shares allocated but unvested
The cost of the DFSS bonus is recognised and paid in each period equivalent to the dividends on shares allocated to employees that are
still entitled to vest but have not yet vested. The cost shown also includes the social security costs on the discretionary bonus. No accrual
is made for future discretionary bonus payments due to there being no contractual obligation for such a bonus at the balance sheet date.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 288288
289
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
9. Directly attributable and other expenses continued
9b. Operating expenses and share scheme charges
Administration and acquisition expenses
Expenses relating to additional products and fees
Share scheme expenses
Loan expenses (excluding movement on ECL provision)
Movement in expected credit loss provision
Other*1
Total
Administration and acquisition expenses
Expenses relating to additional products and fees
Share scheme expenses
Loan expenses (excluding movement on ECL provision)
Movement in expected credit loss provision
Other*1
Total
Directly
attributable
expenses
£m
836.8
–
55.3
–
–
–
892.1
31 December 2023
Other operating
expenses
£m
100.8
41.4
28.5
23.0
31.0
57.1
281.8
31 December 2022 (restated)
Directly
attributable
expenses
£m
755.1
–
53.0
–
–
–
808.1
Other operating
expenses
£m
83.8
38.5
26.3
22.2
18.9
33.8
223.5
Total expenses
£m
937.6
41.4
83.8
23.0
31.0
57.1
1,173.9
Total expenses
£m
838.9
38.5
79.3
22.2
18.9
33.8
1,031.6
*1. Other includes centralised costs (2023: £34.5 million, 2022: £15.0 million) , business development costs (2023: £15.3 million, 2022: £8.8 million) and other costs (2023: £7.3 million,
2022: £10.0 million).
9c. Employee costs and other expenses
Salaries
Social security charges
Pension costs
Share scheme charges (see note 9f)
Total employee expenses
Depreciation charge:
– Owned assets
– ROU assets
Amortisation charge:
– Software
Auditor’s remuneration (including VAT) (total Group):
– Fees payable for the audit of the Company’s annual accounts
– Fees payable for the audit of the Company’s subsidiary accounts
– Fees payable for audit related assurance services pursuant to legislation or regulation
31 December 2023
Total
£m
439.4
45.5
16.5
83.8
585.2
31 December 2022
Total
£m
397.0
41.4
14.6
79.3
532.3
11.2
7.0
40.3
0.3
3.0
1.1
10.1
8.1
23.7
0.1
1.7
1.0
£146,600 (inclusive of VAT) (2022: £10,800) was payable to the auditor for other services in the year.
Refer to the Corporate Governance Report for details of the Audit Committee’s policy on fees paid to the Company’s auditor for non-
audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed
as audit related assurance services under the FRC rules on non-audit services.
The majority of amortisation of software is charged to directly attributable expenses in the Income Statement
9d. Employee numbers (including Directors)
Direct customer contact employees
Support employees
Total
9e. Directors’ remuneration
(i) Directors’ remuneration
Directors’ emoluments
Amounts receivable under SIP and DFSS share schemes
Company contributions to money purchase pension plans
Total*1
Average for the year
2023
Number
8,365
4,276
12,641
2022
Number
7,490
3,845
11,335
31 December
2023
£m
1.2
2.1
–
3.3
31 December
2022
£m
1.1
2.2
–
3.3
*1. Directors’ remuneration is stated as that of the Executive Directors. For information on Non-Executive Directors’ remuneration see the remuneration report
(ii) Number of Directors
Retirement benefits are accruing to the following number of Directors under:
– Money purchase schemes
9f. Employee share schemes
Total share scheme costs for the Group are analysed below:
IFRS 2 charge for equity settled share schemes
IFRS 2 charge for cash settled share schemes
Total IFRS 2 charge
Social security costs on IFRS 2 charge
Discretionary bonus on shares allocated but unvested
Total share scheme charges
Amounts recovered from co-and reinsurance arrangements
Net share scheme charges
IFRS 2 charge for equity settled share schemes
IFRS 2 charge for cash settled share schemes
Total IFRS 2 charge
Social security costs
Discretionary bonus on shares allocated but unvested
Total share scheme charges
Amounts recovered from co-and reinsurance arrangements
Net share scheme charges
2023
Number
2022
Number
2
2
31 December 2023
SIP charge (i) £m DFSS charge (ii) £m
46.3
3.2
49.5
7.3
8.7
65.5
17.0
–
17.0
1.3
–
18.3
31 December 2022
SIP charge (i) £m DFSS charge (ii) £m
39.3
0.2
39.5
0.4
20.7
60.6
18.0
–
18.0
0.7
–
18.7
Total charge £m
63.3
3.2
66.5
8.6
8.7
83.8
(29.4)
54.4
Total charge £m
57.3
0.2
57.5
1.1
20.7
79.3
(27.6)
51.7
Share scheme charges are presented on a net basis within the strategic report, after allocations to co-insurers (in the UK and Italy) and
reinsurers (in the International Insurance businesses), in line with internal management reporting. The proportion of net to gross share
scheme charges would be expected to be consistent in each period, at approximately 65%.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 290290
291
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
9. Directly attributable and other expenses continued
(iv) Number of free share awards vesting during the year ended 31 December 2023
Total cumulative
charge to date
£m
SIP 2020 schemes
DFSS 2020 schemes
Original awards
982,643
2,795,261
Awards vested
819,861
1,898,249
Analysis of gross cost
Year of share scheme – SIP
2019
2020
2021*1
2022*1
2023*1
Gross IFRS 2 costs – SIP
Year of share scheme – DFSS
2019
2020
2021*2
2022*2
2023*2
Gross IFRS 2 costs – DFSS
Total IFRS 2 costs
Financial year ended 31 December
2020 and prior
£m
9.4
3.1
–
–
–
14.3
4.7
–
–
–
2021
£m
6.4
6.7
4.4
–
–
15.8
13.0
4.9
–
–
2022
£m
4.1
5.4
5.4
3.1
–
18.0
8.0
14.6
13.4
3.5
–
39.5
57.5
2023
£m
–
3.1
5.3
5.3
3.3
17.0
–
10.0
19.2
14.9
5.4
49.5
66.5
19.9
18.3
15.1
8.4
3.3
38.1
42.3
37.5
18.4
5.4
*1. Awards are made in March and September of each year, and vest over 36 months from award date. On the 2021 scheme, an average of 5 months’ charge remains outstanding, on the 2022 scheme
an average of 17 months’ charge remains outstanding, and on the 2023 schemes an average of 29 months’ charge remains outstanding.
*2. The main award is made in September of each year, with smaller awards made at other points through the year. The shares vest over 36 months from award date. On the 2021 main DFSS,
9 months’ charge remains outstanding; on the 2022 main DFSS 21 months’ charge remains outstanding, and on the 2023 main DFSS, 33 months’ charge remains outstanding.
(i) The Approved Share Incentive Plan (the SIP)
Eligible UK based employees qualify for awards under the SIP based upon the performance of the Group in each half-year period.
The maximum award for each year is £3,600 per employee and the maximum number of shares that can vest relating to the 2023
schemes is 1,045,697 (2022 schemes: 872,728; 2021 schemes: 688,384).
The awards are made at the discretion of the Remuneration Committee, taking into account the Group’s performance.
(ii) The Discretionary Free Share Scheme (the DFSS)
Under the DFSS, details of which are contained in the remuneration policy section of the Directors’ Remuneration Report, individuals
receive an award of free shares at no charge.
The maximum number of shares that can vest relating to the 2023 schemes is 3,360,665 (2022 scheme: 3,070,323; 2021
scheme: 2,850,114).
The vesting percentage for most employees for the 2020 DFSS scheme which vested during 2023 was 78.25% (2019 DFSS
scheme: 98.9%).
(iii) Number of free share awards committed at 31 December 2023
SIP 2021*2
SIP 2022*2
SIP 2023*2
DFSS 2021*3
DFSS 2022*3
DFSS 2023*3
Total awards committed
*1. Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions.
*2. Shares are awarded in March and September of each year, and vest three years later.
*3. The main award is made in September of each year, with smaller awards made at other points through the year.
Awards
outstanding*1
688,384
872,728
1,045,697
2,850,114
3,070,323
3,360,665
11,887,911
The difference between the original and vested awards reflects employee attrition (SIP schemes) and both employee attrition and the
vesting outcomes based on performance conditions noted above (DFSS schemes).
The weighted average fair value of the shares granted in the year was £20.48 (2022: £19.45).
The weighted average market share price at the date of exercise for shares exercised during the year was £23.28 (2022: £21.51).
10. Taxation
10a. Accounting policy
Income tax on the profit or loss for the periods presented comprise of current and deferred tax.
(i) Current tax
Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively
enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods.
Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in
the Income Statement.
(ii) Deferred tax
Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying
amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are
expected to apply in the period when the liability is settled, or the asset is realised.
The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of
property, plant and equipment, reserve movements and share scheme charges.
The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in
Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or
directly in equity respectively.
Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried
forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets
can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable
temporary differences and reviewing future profit projections for the businesses.
10b. Taxation
Current tax
Corporation tax on profits for the year
Under/(over) provision relating to prior periods
Current tax charge
Deferred tax
Current period deferred taxation movement
(Over)/Under provision relating to prior periods
Total tax charge per Consolidated Income Statement
31 December 2023
£m
31 December 2022
(restated)
£m
91.6
21.3
112.9
0.7
(8.0)
105.6
107.6
(0.8)
106.8
(31.6)
0.7
75.9
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023
292292
293
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
10. Taxation continued
Factors affecting the total tax charge are:
Profit before tax
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
Expenses and provisions not deductible for tax purposes
Non-taxable income
Impact of change in UK tax rate on deferred tax balances
Adjustments relating to prior periods
Impact of different overseas tax rates
Unrecognised deferred tax
Total tax charge for the period as above
31 December
2023
£m
442.8
104.1
3.0
(13.4)
(0.4)
13.5
(8.9)
7.7
105.6
31 December
2022 (restated)
£m
361.2
68.6
2.2
(6.0)
(5.6)
(0.2)
3.6
13.3
75.9
Corporation tax assets as at 31 December 2023 totalled £20.4 million, with corporation tax liabilities of £4.9 million (2022: £13.9 million
liability and £9.1 million asset).
The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25%
was announced in the 2021 Budget and has come into effect from 1 April 2023.
Adjustments relating to prior periods are higher than previous periods, with £11.7 million of the above total impact of £13.5 million
due to the Group deciding to settle a historic Italian tax matter, relating mainly to cross border matters. Further costs of £6.8 million
relating to this inspection, such as interest and penalties, are included in Other Group costs within the Income Statement. These costs are
expected to be non-recurring.
In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of the agreement was
to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate and this included the
introduction of a new global minimum corporate income tax rate of 15% - referred to as the Pillar Two rules.
Legislation has now been enacted in various countries (including the United Kingdom) and draft legislation or announcements have
been made in others, with the rules first coming into effect for the Group from 1 January 2024. Under the new rules, the Group may be
required to pay top-up taxes either in the UK ultimate parent location or in the overseas jurisdiction if a jurisdiction has an effective tax
rate of less than 15%, as calculated under the rules.
The Group expects top-up tax to arise in relation to our operations in Gibraltar, where the statutory corporate tax rate is 12.5%. However,
since the enacted Pillar Two legislation is only effective from 1 January 2024, the Group has no related current tax impact for the year
ended 31 December 2023. If the Pillar Two rules had applied in the year ended 31 December 2023, top-up tax arising in relation to the
profits in Gibraltar would have been immaterial to the Group.
The Pillar Two rules are complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the
impact for future periods. Current modelling indicates that the top-up tax will primarily be dependent on the profits arising in Gibraltar.
Based on current forecasts and the expected profit mix across the Group for the next two financial years (2024 and 2025), it is not
expected that the Pillar Two rules will result in a material increase in the Group effective tax rate compared to the average of the last
three years (2021-2023: 21% average).
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
In addition to the Pillar Two legislation, the Government of Gibraltar announced on 24 January 2024 that the taxation of interest income
as trading income is to be extended to include that of insurers for accounting periods beginning on or after 1 February 2024. This change
would result in additional investment and interest income of the Group’s subsidiary, Admiral Insurance (Gibraltar) Limited becoming
taxable from 1 January 2025 at the Gibraltar corporation tax rate of 12.5%.
If the change in treatment had taken effect for the current financial year ended 31 December 2023, the impact to the Group on current
tax and deferred tax is estimated to be immaterial. The Group are continuing to review the draft legislation against the particular nature
of the investments held in Gibraltar to determine how widely it applies.
It should be noted that there will be interactions between these two legislative changes. Additional corporation tax in Gibraltar payable
as a result of the proposed changes to the taxation of interest income will correspondingly reduce the Pillar Two top-up tax required to
be paid by the Group for periods ending 31 December 2025 onwards.
10c. Deferred income tax asset/(liability)
Analysis of deferred tax asset/(liability)
Tax
treatment
of share
schemes
£m
Capital
allowances
£m
Carried
forward
losses
£m
Fair value
reserve
£m
Hedging
reserve
£m
Insurance
finance
reserve
£m
Other
differences
£m
Total
£m
3.0
(1.2)
20.7
Balance brought forward at
1 January 2022 (restated)
Tax treatment of share scheme
charges through income or expense
Tax treatment of share scheme
charges through reserves
Capital allowances
Carried forward losses
Movement in fair value reserve
Movement in hedging reserve
Movement in insurance
finance reserve
Other difference
Balance carried forward at
31 December 2022 (restated)
Tax treatment of share scheme
charges through income or expense
Tax treatment of share scheme
charges through reserves
Capital allowances
Carried forward losses
Movement in fair value reserve
Movement in hedging reserve
Movement in insurance
finance reserve
Other difference
Balance carried forward at
31 December 2023
8.5
1.2
(6.3)
–
–
–
–
–
–
3.4
1.7
2.1
–
–
–
–
–
–
7.8
–
–
(0.7)
–
–
–
–
–
7.1
–
–
(11.0)
–
–
–
–
–
8.4
–
–
–
29.2
–
–
–
–
37.6
–
–
–
15.9
–
–
–
–
(5.8)
–
–
–
–
13.0
–
–
(0.3)
6.9
–
–
–
–
(5.7)
–
–
–
–
–
–
–
–
–
(7.0)
–
–
–
–
–
–
–
–
(22.8)
–
(7.0)
(19.8)
–
–
–
–
–
4.5
–
–
–
–
–
–
–
–
9.7
–
–
–
–
–
–
–
–
1.4
0.2
–
–
–
–
–
–
–
0.5
0.7
1.2
(6.3)
(0.7)
29.2
13.0
(7.0)
(22.8)
1.1
28.4
1.7
2.1
(11.0)
15.9
(5.7)
4.5
9.7
0.5
46.1
7.2
(3.9)
53.5
1.2
(2.5)
(10.1)
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has increased during the year, mainly relating to unused tax losses in the UK and Gibraltar which are recognised as
it is considered probable that there are sufficient future taxable profits available to utilise the losses.
At 31 December 2023, the Group had unused tax losses amounting to £233.0 million (2022: £322.0 million, including losses of compare.
com which was disposed of in 2023) and other deductible timing differences of £43.4 million, relating primarily to the Group’s businesses
in the US and Spain for which no deferred tax assets have been recognised. This is due to uncertainty over the availability and timing of
future taxable profits against which to utilise these deferred tax assets. The earliest expiry date for the US tax losses is 2029, with no
expiry for the losses in Spain.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 294294
295
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
11. Other Assets and Other Liabilities
11a. Accounting policy
(i) Property and equipment, and depreciation
All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method
to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
Computer equipment
Office equipment
Furniture and fittings
Right-of-use assets
– four to ten years
– two to four years
– four years
– four years
– two – twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group’s lease arrangements.
The right-of-use asset is measured at cost, which comprises the following:
• The amount of the initial measurement of lease liability (note 6i to the financial statements)
• Any lease payments made at or before the commencement date less any lease incentives received
• Any initial direct costs, and
• Restoration costs.
The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset’s useful life on a straight-line basis.
The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption.
(ii) Impairment of property and equipment
In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are
any indicators of impairment. If any such indicators exist, the asset’s recoverable amount is estimated and compared to the carrying
value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset’s value in use. Impairment losses are
recognised through the Income Statement.
(iii) Intangible assets
Goodwill
All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries
and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.
The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing
the Group’s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of
acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the
amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has
ceased as required by IAS 38.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to
business segment and is reviewed annually for impairment.
The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment.
Impairment of goodwill
The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill
to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income
Statement and are not subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU.
The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to
three years. Cashflows beyond this period are considered, but not included in the calculation.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing
and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past
practices and expected future changes in the market.
The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which
is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs
incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of
the systems and amortisation commences when the software is available for use.
The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any
impairment exists. Impairment may be reversed if conditions subsequently improve.
Customer contracts and relationships
Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the
term of the contract), amortisation commences when the contract begins.
The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value
being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve.
(iv) Provisions, contingent liabilities and contingent assets
Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet
date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably.
Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation
arising from a past event that is contingent on a future event, a contingent liability is disclosed.
Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-
occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 296296
297
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
11. Other Assets and Other Liabilities continued
11b. Property and equipment
Improvements to
short leasehold
buildings
£m
Computer
equipment
£m
Office
equipment
£m
Furniture and
fittings
£m
ROU
Asset – Leasehold
buildings
£m
Cost
At 1 January 2022
Additions
Impairment
Disposals
Foreign exchange and other
movements
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Impairment
Disposals
Foreign exchange and other
movements
At 31 December 2022
Net book amount
At 1 January 2022
Net book amount
At 31 December 2022
Cost
At 1 January 2023
Additions
Impairment
Disposals
Foreign exchange and other
movements
At 31 December 2023
Depreciation
At 1 January 2023
Charge for the year
Impairment
Disposals
Foreign exchange and other
movements
At 31 December 2023
Net book amount
At 31 December 2023
37.0
1.7
–
(1.6)
0.4
37.5
26.3
3.2
–
(1.6)
0.2
28.1
10.7
9.4
37.5
3.5
–
(10.9)
(0.4)
29.7
28.1
3.1
–
(9.5)
(0.1)
21.6
8.1
68.9
7.0
–
(2.7)
0.7
73.9
57.3
5.5
–
(2.4)
0.7
61.1
11.6
12.8
73.9
4.9
–
(20.8)
(0.7)
57.3
61.1
6.4
–
(20.8)
(0.9)
45.8
11.5
21.9
0.6
–
(1.5)
0.4
21.4
19.9
0.8
–
(1.5)
0.3
19.5
2.0
1.9
21.4
0.2
–
(2.8)
(0.5)
18.3
19.5
0.9
–
(2.8)
(0.4)
17.2
1.1
9.9
0.7
–
(0.1)
0.2
10.7
8.5
0.6
–
–
0.1
9.2
1.4
1.5
10.7
0.7
–
(1.9)
0.1
9.6
9.2
0.8
–
(1.7)
0.1
8.4
1.2
103.3
1.3
(1.3)
(9.7)
1.4
95.0
25.8
8.1
(0.7)
(3.2)
0.8
30.8
77.5
64.2
95.0
3.3
6.1
(5.6)
1.1
99.9
30.8
7.0
(0.2)
(5.4)
(0.5)
31.7
11c. Intangible assets
At 1 January 2022
Additions
Amortisation charge
Foreign exchange movement
At 31 December 2022
Additions
Amortisation charge
Disposals
Impairment
Transfers
Foreign exchange movement & other
At 31 December 2023
Goodwill
£m
62.3
–
–
–
62.3
–
–
–
–
–
–
62.3
Customer
contracts and
relationships
£m
–
–
–
–
–
7.9
–
–
–
–
–
7.9
Software
– Internally
generated
£m
64.4
83.4
(18.3)
6.9
136.4
51.1
(34.8)
(0.1)
(0.2)
–
(0.4)
152.0
Software
– Other
£m
25.0
5.2
(5.4)
(5.9)
18.9
7.7
(5.5)
–
–
–
(0.4)
20.7
Total
£m
151.7
88.6
(23.7)
1.0
217.6
66.7
(40.3)
(0.1)
(0.2)
–
(0.8)
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999.
As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual
impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying
amount of £24.1 million as at 31 December 2023 (2022: £33.4 million) and a remaining amortisation period of 3 years.
Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the
recoverable amount, no terminal growth rate or discounting is applied.
Refer to the accounting policy for goodwill for further information.
11d. Trade and other payables
Trade payables
Other tax and social security
Amounts owed to co-insurers
Other payables
Accruals and deferred income
Total trade and other payables
Analysis of accruals and deferred income
Accruals
Deferred income
Total accruals and deferred income as above
31 December 2023
£m
42.3
11.9
156.9
42.5
52.2
305.8
31 December 2022
(restated)
£m
22.7
14.9
115.8
38.2
63.3
254.9
28.3
23.9
52.2
41.0
22.3
63.3
Total
£m
241.0
11.3
(1.3)
(15.6)
3.1
238.5
137.8
18.2
(0.7)
(8.7)
2.1
148.7
103.2
89.8
238.5
12.6
6.1
(42.0)
(0.4)
214.8
148.7
18.2
(0.2)
(40.2)
(1.8)
124.7
68.2
90.1
11e. Leases
The Group occupies various properties under leasing arrangements that are now recognised as right of use assets and lease liabilities.
Amounts recognised in the Statement of Financial Position are as follows:
Lease liabilities
Current
Non-Current
Total
31 December 2023
£m
31 December 2022
(restated)
£m
13.7
67.5
81.2
8.3
80.2
88.5
See note 11b for right of use assets depreciation and the carrying amount of right of use assets at the end of the reporting period.
Only one class of underlying assets is identified as leasehold buildings. Total cash outflows in relation to leases is disclosed under 6i.
The Group has no significant financial commitments other than those accounted for as right of use assets and lease liabilities under
IFRS 16.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 298298
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
11. Other Assets and Other Liabilities continued
11f. Contingent liabilities
The Group’s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by the relevant
tax authority.
One of the Group’s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the
application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish
Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way
similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which
the Company is exposed to has been indemnified by the Admiral Group up to a cap of £22 million.
No material provisions have been made in these financial statements in relation to the matters noted above.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations or
similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisers if
appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision is established
to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts are unclear or
because further time is needed to properly assess the merits of the case or form a reliable estimate of its financial effect. In these
circumstances, specific disclosure of a contingent liability and an estimate of its financial effect will be made where material, unless it is
not practicable to do so.
The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group’s financial
position, operations or cashflows, and as such, no material provisions are currently held in relation to such matters.
A number of the Group’s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to
recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group.
12. Dividends, Earnings and Share Capital
The Group’s capital includes share capital and the share premium account, other reserves which are comprised of the fair value reserve,
insurance finance reserve, hedging reserve and foreign exchange reserve, and retained earnings.
12a. Accounting policies
(i) Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets.
(ii) Fair value reserve
For investments recognised as Fair Value through Other Comprehensive Income (FVOCI), changes in fair value are accumulated within
the fair value reserve within equity. The accumulated changes in fair value are transferred to profit or loss when the investment is
derecognised or impaired.
(iii) Hedging reserve
The hedging reserve includes the cash flow hedge reserve. The cash flow hedge reserve is used to recognise the effective portion of
gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently reclassified to profit or loss
as appropriate.
(iv) Insurance finance reserve
The insurance finance reserve relates to the impact of changes in market interest rates on the value of the insurance and reinsurance
assets and liabilities. These changes are reflected in the insurance finance reserve in order to minimise accounting mismatches between
the accounting for financial assets and insurance assets and liabilities.
(v) Dividends
Dividends are recorded in the period in which they are declared and paid.
(vi) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company, Admiral Group
plc by the weighted average number of ordinary shares during the period.
Diluted earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company by the
weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 299
12b. Dividends
Dividends were proposed, approved and paid as follows:
Proposed March 2022 (118.0 pence per share, approved April 2022 and paid June 2022)
Declared August 2022 (105.0 pence per share, paid October 2022)
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
Declared August 2023 (51.0 pence per share, paid October 2023)
Total dividends
31 December 2023
£m
–
–
154.9
152.2
307.1
31 December 2022
(restated)
£m
348.1
310.2
–
–
658.3
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2021 and 2022 financial years.
The dividends declared in August are interim distributions in respect of 2022 and 2023.
A 2023 final dividend of 52.0 pence per share (approximately £156.2 million) has been proposed. Refer to the financial narrative for
further detail.
12c. Earnings per share
Profit for the financial year after taxation attributable to equity shareholders
Weighted average number of shares – basic
Unadjusted earnings per share – basic
Weighted average number of shares – diluted
Unadjusted earnings per share – diluted
31 December 2023
£m
338.0
303,989,170
111.2p
305,052,941
110.8p
31 December2022
(restated)
£m
286.5
300,207,330
95.4p
301,543,390
95.0p
The difference between the basic and diluted number of shares at the end of 2023 (being 1,063,771; 2022: 1,336,060) relates to awards
committed, but not yet issued under the Group’s share schemes. Refer to note 9 for further detail.
12d. Share capital
Authorised
500,000,000 ordinary shares of 0.1 pence
Issued, called up and fully paid
306,304,676 ordinary shares of 0.1 pence
302,837,726 ordinary shares of 0.1 pence
31 December 2023
£m
31 December 2022
(restated)
£m
0.5
0.3
–
0.3
0.5
–
0.3
0.3
During 2023, 3,466,950 (2022: 3,283,006) new ordinary shares of 0.1 pence were issued to the trusts administering the Group’s
share schemes.
806,950 (2022: 675,927) of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme
resulting in cumulative shares issued to the Trust at 31 December 2023 of 14,500,249 (31 December 2022: 13,693,299). Of the shares
issued, 4,028,579 remain in the Trust at 31 December 2023 (2022: 3,851,967). These shares are entitled to receive dividends.
2,660,000 (2022: 2,607,079) shares were issued to the Admiral Group Employee Benefit Trust for the purposes of the Discretionary
Free Share Scheme resulting in cumulative shares issued to the Trust of 33,209,027 (31 December 2022: 30,549,027). Of the shares
issued 5,868,352 remain in the Trust at 31 December 2023 (2022: 5,111,601) to be used for future vesting, the remaining issued shares
having vested.
The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed is 8,755,431
(2022: 8,302,363).
The Trustees have waived the right to dividend payments, other than to the extent of 0.001 pence per share, unless and to the extent
otherwise directed by the Company from time to time.
There is one class of share with no unusual restrictions.
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 300300
301
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
12. Dividends, Earnings and Share Capital continued
12e. Group related undertakings
The Parent Company’s subsidiaries are as follows:
Subsidiary
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Able Insurance Services Limited
EUI Limited*2
Admiral Insurance Company Limited
Admiral Syndicate Limited
Admiral Syndicate Management Limited
Bell Direct Limited*4
Diamond Motor Insurance Services Limited*4
Elephant Insurance Services Limited*4
Admiral Life Limited*4
Admiral Financial Services Limited
Class of
shares held
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
% ownership
Principal Activity
100
100
95 Legal Company
Insurance
Intermediary
Insurance
Intermediary
Insurance
Company
Dormant*1
Dormant*1
Dormant*1
Dormant*1
Dormant*1
Dormant*1
Financial
Services
Company
100
100
100
100
100
100
100
100
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Incorporated in France
Registered office: la Boétie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Insurance
Company
Insurance
intermediary
Financial
services
Company
Incorporated in Spain
Registered office: Calle Rodríguez Marín 61 1ª Planta, 28016 Madrid
Admiral Europe Compañía de Seguros, S.A.
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A.*3
Ordinary
Ordinary
Insurance
Company
Insurance
Intermediary
100
100
Subsidiary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Class of
shares held
% ownership
Principal Activity
Elephant Insurance Company
Grove General Agency Inc
Platinum General Agency Inc
Ordinary
100 (indirect)
Ordinary
100 (indirect)
Ordinary
100 (indirect)
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Elephant Holding Company LLC
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU
Ordinary
100
Insurance
company
Insurance
intermediary
Insurance
intermediary
Insurance
intermediary
Holding
Company
Seren One Limited
Seren Two Limited
n/a
n/a
Special purpose
entity
Special purpose
entity
0
0
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006.
*2. EUI Limited has branches in India and Canada.
*3. Admiral Intermediary Services S.A. has branches in Italy and France.
*4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved.
For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report.
12f. Related party transactions
The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel.
A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration and
shareholdings of key management personnel set out in the Directors’ Remuneration Report.
Key management personnel received short term employee benefits in the year of £2,900,278 (2022: £3,058,170), post-employment
benefits of £30,000 (2022: £30,000) and share based payments of £1,608,776 (2022: £1,561,768). Key management personnel are able to
obtain discounted motor insurance at the same rates as all other Group employees, typically at a reduction of 15%.
12g. Post balance sheet events
No events have occurred since the reporting date that materially impact these financial statements.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 302302
303
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
13. Reconciliation of turnover to reported insurance premium and other revenue as per the financial statements
The following table reconciles turnover, a significant Key Performance Indicators (KPIs) and non-GAAP measure presented within the
Strategic Report, to insurance revenue, as presented in note 4 to the financial statements
APPENDIX 1 TO THE GROUP FINANCIAL STATEMENTS (unaudited)
The following tables reconcile significant Key Performance Indicators (KPIs) and non-GAAP measures included in the Strategic Report to
items included in the financial statements.
Insurance premium revenue
Movement in unearned premium
Premiums written after co-insurance
Co-insurer share of written premiums
Total premiums written
Other insurance revenue
Other revenue
Interest income
Turnover as per note 4b of financial statements
Intra-group income elimination*1
Total turnover
Note
5b
5b
8
31 December 2023
£m
3,283.3
528.3
3,811.6
577.8
4,389.4
202.8
127.2
92.1
4,811.5
–
4,811.5
31 December 2022
(restated)
£m
2,782.1
142.7
2,924.8
393.4
3,318.2
174.8
128.9
58.7
3,680.6
0.3
3,680.9
*1. Total insurance revenue of £3,486.1 million (2022: £2,956.9 million), comprised of insurance premium revenue of £3,283.3 million (2022: £2,782.1 million) and Other insurance revenue of
£202.8 million (2022: £174.8 million).
*2. Intra-group income elimination relates to comparison income earned by compare.com from other Group entities.
1a. Reconciliation of reported loss and expense ratios: Group
£m
Insurance premium revenue
Administration fees, instalment income and
non-separable ancillary commission
Insurance revenue (A)
Insurance expenses (B)
Claims incurred (C)
Claims releases (D)
Quota share reinsurance result*1
Onerous loss component movement*2
Underwriting result (E)
Net share scheme costs3
Insurance service result
Reported loss ratio ((C+D)/A)
Reported expense ratio (B/A)
Insurance service margin (E/A)
£m
Insurance premium revenue
Administration fees, instalment income and
non-separable ancillary commission
Insurance revenue (A)
Insurance expenses (B)
Claims incurred (C)
Claims releases (D)
Quota share reinsurance result*1
Onerous loss component movement*2
Underwriting result (E)
Net share scheme costs*3
Insurance service result
Reported loss ratio ((C+D)/A)
Reported expense ratio (B/A)
Insurance service margin
Consolidated
financial
statement note
5b/5d
5c
5c/5d
5c/5d
31 December 2023
Core
product
3,152.3
–
3,152.3
(795.2)
(2,624.6)
440.6
Ancillary
income
131.0
202.8
333.8
(41.6)
(40.5)
–
Consolidated
financial
statement note
5b/5d
5c
5c/5d
5c/5d
31 December 2022 (restated)
Core
product
2,646.5
–
2,646.5
(710.4)
(2,339.3)
420.5
Ancillary
income
135.6
174.8
310.4
(44.6)
(33.0)
–
Total
gross
3,283.3
Total, net of XoL
reinsurance
3,170.6
202.8
3,486.1
(836.8)
(2,665.1)
440.6
202.8
3,373.4
(836.8)
(2,605.8)
447.3
(40.4)
4.9
342.6
(36.8)
305.8
63.9%
24.8%
10.2%
Total
gross
2,782.1
Total, net of XoL
reinsurance
2,704.0
174.8
2,956.9
(755.0)
(2,372.3)
420.5
174.8
2,878.8
(755.0)
(2,341.0)
309.8
117.4
4.1
214.1
(32.8)
181.3
70.6%
26.2%
7.4%
*1. Quota share reinsurance result excludes quota share reinsurers’ share of share scheme costs and movement in onerous loss-recovery component.
*2. Onerous loss component movement is shown net of all reinsurance.
*3. Net share scheme costs of £36.8 million (2022: £32.8 million), being gross costs of £55.3 million (2022: £53.0 million, see note 5c) less reinsurers’ share of share scheme costs of £18.5 million
(2022: £20.2 million) are excluded from the underwriting result.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 304304
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
continued
1b. Reconciliation of reported loss and expense ratios: UK Motor
£m
Total premiums written
Gross premiums written
Insurance premium revenue
Instalment income
Administration fees non-separable
ancillary commission
Insurance revenue (A)
Insurance expenses (B)
Claims incurred (C)
Claims releases (D)
Current period loss ratio (C/A)
Claims releases (D/A)
Reported loss ratio ((C+D)/A)
Reported expense ratio (B/A)
£m
Total premiums written
Gross premiums written
Insurance premium revenue
Instalment income
Administration fees and non-
separable ancillary commission
Insurance revenue (A)
Insurance expenses (B)
Claims incurred (C)
Claims releases (D)
Current period loss ratio (C/A)
Claims releases (D/A)
Reported loss ratio ((C+D)/A)
Reported expense ratio (B/A)
Consolidated
financial
statement note
5b/5d
5c
5c/5d
5c/5d
Consolidated
financial
statement note
5b/5d
5c
5c/5d
5c/5d
31 December 2023
Ancillary
income*1
113.9
113.9
107.8
99.0
35.8
242.6
(34.4)
(35.6)
–
Total
gross
3,118.2
2,567.8
2,115.4
99.0
35.8
2,250.2
(451.2)
(1,755.5)
406.9
31 December 2022 (restated)
Ancillary
income*1
113.6
113.6
113.3
75.3
38.7
227.3
(35.2)
(28.2)
–
Total
gross
2,271.3
1,886.4
1,795.7
75.3
38.7
1,909.7
(389.6)
(1,620.4)
437.2
Core
product
3,004.3
2,453.9
2,007.6
–
–
2,007.6
(416.8)
(1,719.9)
406.9
Core
product
2,157.7
1,772.8
1,682.4
–
–
1,682.4
(354.4)
(1,592.2)
437.2
Total, net
of XoL
reinsurance
3,016.8
2,485.0
2,053.8
99.0
Core product
net of XoL
reinsurance
2,903.0
2,371.1
1,946.0
–
35.8
2,188.6
(451.2)
(1,729.0)
392.8
79.0%
(17.9%)
61.1%
20.6%
–
1,946.0
(416.8)
(1,693.4)
392.8
87.0%
(20.2%)
66.8%
21.4%
Total, net
of XoL
reinsurance
2,213.5
1,838.9
1,751.1
75.3
Core product
net of XoL
reinsurance
2,099.9
1,725.3
1,637.8
–
38.7
1,865.1
(389.6)
(1,596.0)
327.2
85.5%
(17.5%)
68.0%
20.9%
–
1,637.8
(354.4)
(1,567.8)
327.2
95.7%
(20.0%)
75.7%
21.6%
*1. Ancillary income combined with other net income is presented as part of UK motor insurance other revenue in reporting “Other revenue per vehicle”.
Total other revenue was £247.3 million (2022: £236.8 million).
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 Parent Company Financial Statements
305
Parent Company Income Statement
Administrative expenses
Operating loss
Investment and interest income
Impairment expense
Gain/(loss) on disposal of subsidiaries
Interest payable
Profit before tax
Taxation credit
Profit after tax
Parent Company Statement of Comprehensive Income
Profit for the period
Other Comprehensive Income
Items that are or may be reclassified to profit or loss
Movements in fair value reserve
Deferred tax in relation to movement in fair value reserve
Other Comprehensive Income for the period, net of income tax
Total Comprehensive income for the period
Year ended
31 December 2023
£m
Total
(29.9)
(29.9)
362.8
(37.2)
(3.2)
(20.4)
272.1
12.1
284.2
31 December 2022
£m
Total
(26.3)
(26.3)
320.1
(37.0)
–
(12.0)
244.8
5.7
250.5
Note
2
3
4
6
7
Year ended
Note
31 December 2023
£m
284.2
31 December 2022
£m
250.5
7
13.4
(3.4)
10.0
294.2
(20.9)
5.2
(15.7)
234.8
Financial StatementsAdmiral Group plc Annual Report and Accounts 2023 306306
Parent Company Financial Statements
For the year ended 31 December 2023
307
Parent Company Statement of Financial Position
Parent Company Statement of Changes in Equity
ASSETS
Investments in group undertakings
Intangible assets
Financial investments
Corporation tax asset
Deferred tax asset
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY
Share capital
Share premium account
Fair value reserve
Retained earnings
Total equity
LIABILITIES
Subordinated and other financial liabilities
Trade and other payables
Total liabilities
Total equity and total liabilities
As at
31 December 2023
£m
31 December 2022
£m
Note
4
5
6
7
7
8
6
10
10
6
9
426.2
–
220.2
9.0
10.0
227.6
5.0
898.0
0.3
13.1
8.4
137.2
159.0
370.2
368.8
739.0
898.0
421.6
0.4
167.5
4.6
0.9
184.5
3.5
783.0
0.3
13.1
(1.6)
96.7
108.5
224.4
450.1
674.5
783.0
The accompanying notes form part of these financial statements.
These financial statements were approved by the Board of Directors on 6 March 2024 and were signed on its behalf by:
Geraint Jones
Chief Financial Officer
Admiral Group plc
Company Number: 03849958
Note
10
7
10
10
10
7
10
10
At 1 January 2022
Profit for the period
Other Comprehensive Income
Movements in fair value reserve
Deferred tax charge in relation to
movements in fair value reserve
Total comprehensive income/(expense)
for the period
Transactions with equity holders
Dividends
Issues of share capital
Share scheme credit
Deferred tax on share scheme credit
Total transactions with equity holders
As at 31 December 2022
At 1 January 2023
Profit for the period
Other Comprehensive Income
Movements in fair value reserve
Deferred tax charge in relation to
movements in fair value reserve
Total comprehensive income
for the period
Transactions with equity holders
Dividends
Issues of share capital
Share scheme credit
Deferred tax on share scheme credit
Total transactions with equity holders
As at 31 December 2023
Share capital
£m
0.3
–
Share premium
account
£m
13.1
–
–
–
–
–
–
–
–
–
0.3
0.3
–
–
–
–
–
–
–
–
–
0.3
–
–
–
–
–
–
–
–
13.1
13.1
–
–
–
–
–
–
–
–
–
13.1
Fair Value
Reserve
£m
14.1
–
(20.9)
5.2
Retained
earnings
£m
447.3
250.5
–
–
Total equity
£m
474.8
250.5
(20.9)
5.2
(15.7)
250.5
234.8
–
–
–
–
–
(1.6)
(1.6)
–
13.4
(3.4)
10.0
–
–
–
–
–
8.4
(658.3)
–
57.3
(0.1)
(601.1)
96.7
96.7
284.2
–
–
(658.3)
–
57.3
(0.1)
(601.1)
108.5
108.5
284.2
13.4
(3.4)
284.2
294.2
(307.1)
–
63.3
0.1
(243.7)
137.2
(307.1)
–
63.3
0.1
(243.7)
159.0
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 308308
309
Notes to the Parent Company Financial Statements
For the year ended 31 December 2023
continued
1. Accounting policies
1.1 Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS
101). The financial statements are prepared on the historical cost basis except for the revaluation of financial assets classified as fair value
through the profit or loss or as fair value through Other Comprehensive Income. The Parent Company financial statements are presented
alongside the consolidated financial statements which can be found on page 437.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the UK (“Adopted IFRSs”) but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
Admiral Group plc is considered to be the parent entity and the ultimate parent Company of the Group.
1.2 Changes to accounting policies
No changes to accounting policies have been made in the period which have a material impact.
1.3 Disclosure exemptions applied under FRS 101
The Company has taken advantage of the following disclosure exemptions under FRS 101:
• FRS 101.8 (a): the requirements of paragraph 45(b) and 46 to 52 of IFRS 2 Share-based payment
1.7 Employee share schemes
The Company operates a number of share schemes for employees of the Group’s subsidiaries. For equity settled schemes, the fair value
of the employee services received in exchange for the grant of free shares under the schemes is recognised as an increase in equity in the
Company. A corresponding intercompany charge is made to the subsidiaries whose employees receive the free shares. For further detail,
see note 9 in the consolidated financial statements.
1.8 Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are regarded as recoverable. They are regarded as recoverable to the extent
that, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient taxable profits from
which the future reversal of the underlying timing differences can be deducted.
1.9 Financial assets and financial liabilities
Under IFRS 9, classification and subsequent measurement of financial assets depend on:
• The Company’s business model for managing the asset; and
• The cashflow characteristics of the asset.
• FRS 101.8 (d): the requirement of IFRS 7 Financial Instruments: Disclosure to make disclosures about financial instruments
Based on these factors, the Company classifies its financial assets into one of the three categories below:
• FRS 101.8 (f): the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in
• Amortised cost: assets held for collection of contractual cashflows where the cashflows represent solely payments of principal and
respect of:
– paragraph 118(3) of IAS 38 Intangible Assets
• FRS 101.8 (g): the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation
of Financial Statements to produce a cashflow statement, a third balance sheet and to make an explicit and unreserved statement of
compliance with IFRSs
• FRS 101.8 (h): the requirements of IAS 7 Statements of Cashflows to produce a cashflow statement
• FRS 101.8 (i): the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to
include a list of new IFRSs that have been issued but that have yet to be applied
• FRS 101.8 (k): the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a party to transaction is wholly owned by such a member
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements.
1.4 Going concern
The financial statements have been prepared on a going concern basis. In considering the appropriateness of this assumption, the
Board have reviewed the Company’s projections for the next twelve months and beyond, including cashflow forecasts and regulatory
capital surpluses.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern basis in preparing the annual financial statements.
1.5 Critical accounting judgements and key source of estimation uncertainty
In applying the Company’s accounting policies as described below, management consider there to be a key source of estimation
uncertainty within the impairment testing of the Company’s investments in group undertakings. Management recognises the estimation
involved in determining whether the carrying value of the investment may be supported by the recoverable amount calculation based on
the ‘value in use’ of the asset (the net present value of future cashflows arising from the asset).
In calculating the net present value of future cashflows, Management has made assumptions over the timing and amount of underlying
profit projections of the relevant undertakings, long term growth rates in those projections and the discount rate applied to these
projections that is appropriate to reflect the market’s view of the risk of the relevant investment. Sensitivity of these assumptions is also
considered in calculating the net present value and suitably incorporated in Management’s valuations.
No key accounting judgements have been made in the process of applying the Company’s accounting policies.
1.6 Shares in Group undertakings
Shares in Group undertakings are valued at cost less any provision for impairment in value.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the
Company’s investments in subsidiaries. When necessary, the entire carrying amount of the investment is tested for impairment in
accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value
less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases. See note 4 to these financial statements for further detail.
interest, that are not designated as FVTPL.
• Fair value through Other Comprehensive Income (FVOCI): Financial assets that are held for collection of contractual cashflows and
selling the assets, where the assets’ cashflows represent solely payments of principal and interest, and that are not designated
at FVTPL.
• Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI, or which are designated as
FVTPL at initial recognition.
In line with the above:
• Gilts and other debt securities are measured at FVOCI. Unrealised changes in the fair value of these assets are recognised in Other
Comprehensive Income (OCI). The recognition of impairment gains or losses and interest revenue are recognised in the profit or loss.
• Investments measured at FVTPL are primarily money market funds. Interest income is recognised in the Income statement.
The expected credit loss model is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as
financial investments measured at FVOCI. Impairment is measured using the simplified approach.
Cash and cash equivalents include cash in hand and deposits held at call with banks. All cash and cash equivalents are measured at
amortised cost.
The Company’s financial liabilities comprise of subordinated notes and revolving credit facilities which are held at amortised cost using
the effective interest method.
1.10 Intangible Assets
Purchased software licences are classified as an intangible asset and stated in the balance sheet at a cost less accumulated amortisation.
Software is amortised from the point at which the asset is operational and is amortised over the licence period.
1.11 Trade and other receivables
Trade and other receivables are measured at amortised cost, less any impairment.
1.12 Trade and other payables
Trade and other payables are measured at amortised cost.
2. Administrative expenses
Included within administrative expenses are re-charges of £7.1 million (2022: £6.1 million) relating to employees within the Group who
perform services on behalf of the Company. No employees are directly employed by the Company.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 310310
311
Notes to the Parent Company Financial Statements
For the year ended 31 December 2023
continued
3. Investment and interest income
Dividend income from subsidiary undertakings
Interest income - other
Interest (expense)/income at effective interest rate*1
Total investment and interest income
*1. Interest income at effective interest rate in 2023 includes £3.6 million loss on disposal of gilts (2022: £4.7 million gain).
4. Investments in Group undertakings
Investments in subsidiary undertakings:
At 1 January 2022
Additions
Disposals
Impairment
At 31 December 2022
Additions
Disposals
Impairment
At 31 December 2023
31 December 2023
£m
357.5
7.1
(1.8)
362.8
31 December 2022
£m
310.0
1.3
8.8
320.1
£m
315.1
143.5
–
(37.0)
421.6
41.7
–
(37.1)
426.2
A full list of the Company’s subsidiaries is disclosed in note 12 of the consolidated financial statements.
The additions to investments in the period of £41.7 million relate to the following:
• Further investment in Admiral Europe Compañía de Seguros (‘AECS’) (£30.7 million);
• Further investment in Able Insurance Services Limited (‘Able’) (£5.0 million);
• Further investment in Admiral Financial Services Italia S.P.A (‘AFSI’) (£6.0 million)
An annual impairment review is performed over the carrying value of the investments in subsidiary undertakings, which involves
comparing the carrying amount to the estimated recoverable amount. The recoverable amount is the greater of the fair value of the
asset less costs to sell, and the value in use of the subsidiary, calculated using cashflow projections based on financial budgets approved
by the Group Board.
Elephant
In 2023 a non-cash impairment loss of £19.5 million (2022: £35.2 million) has been recognised by the Parent Company in respect of its
investment in the Group’s US Insurance business Elephant. The impairment charge is to reflect the loss incurred during 2023 to bring the
value of the investment to its recoverable amount, being its fair value less costs to sell (equivalent to net asset value), of £36.9 million
(2022: £56.3 million). The impairment charge is presented within the “Impairment losses” line of the Parent Company Income Statement.
The carrying value is based on fair value less costs of disposal, for which the net assets has been used as a reasonable approximation, using
tier 3 of the fair value hierarchy. Due to limitations on evidential market information and restrictions in readily available information, net
assets have been used to estimate fair value less costs to sell.
As the valuation is based on net assets, any movement in future profits will impact the investment held.
Able
In 2023 a non-cash impairment loss of £7.9 million (2022: £nil) has been recognised by the Parent Company in respect of its investment in
the Group’s UK based insurance business Able. The impairment charge is to bring the value of the investment to its recoverable amount,
being its fair value less costs to sell (equivalent of net asset value), of £6.1 million (2022: £9.0 million).
AFSI
In 2023 a non-cash impairment loss of £9.8 million (2022: £nil) has been recognised by the Parent Company in respect of its
investment in the Group’s Italian loans business AFSI. The impairment charge is to reflect the loss incurred during 2023 to bring the
value of the investment to its recoverable amount, being its fair value less costs to sell (equivalent of net asset value), of £4.7 million
(2022: £8.5 million).
The Board continues to explore new adventures and is committed to supporting Able and AFSI in its diversification strategy.
Impairment charges is presented within the “Impairment losses” line of the Parent Company Income Statement.
5. Intangible Assets
Cost
At 1 January 2023
Additions
Disposal
At 31 December 2023
Amortisation
At 1 January 2023
Charge for the year
Disposal
At 31 December 2023
Net Book Value
At 31 December 2022
At 31 December 2023
6. Financial assets and liabilities
The Company’s financial instruments can be analysed as follows:
Investments classified as FVOCI
Gilts and government debt securities
Corporate debt securities
Investments classified as FVTPL
Money market and other similar funds (level 1 of the IFRS 13 hierarchy)
Total financial investments
Financial assets held at amortised cost
Trade and other receivables (note 8)
Cash and cash equivalents
Total financial assets
Financial liabilities
Subordinated notes
Other borrowings
Trade and other payables (note 9)
Total financial liabilities
Software
£m
0.4
–
–
0.4
–
0.4
–
0.4
0.4
–
Total
£m
0.4
–
–
0.4
–
0.4
–
0.4
0.4
–
31 December 2023
£m
31 December 2022
£m
134.6
78.2
212.8
7.4
7.4
143.6
–
143.6
23.9
23.9
220.2
167.5
227.6
5.0
452.8
315.2
55.0
368.8
739.0
184.5
3.5
355.5
204.4
20.0
450.1
674.5
The amortised cost carrying amount of deposits and receivables is a reasonable approximation of fair value.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 312312
313
Notes to the Parent Company Financial Statements
For the year ended 31 December 2023
continued
6. Financial assets and liabilities continued
The table below compares the carrying value of subordinated notes (as per the Statement of Financial Position) with the fair value of the
subordinated notes using a level one valuation:
7b. Deferred income tax (asset)/liability
Analysis of deferred tax (asset)/liability
Financial liabilities
Subordinated notes
31 December 2023
31 December 2022
Carrying
amount
£m
Fair
value
£m
Carrying
amount
£m
Fair
value
£m
315.2
329.8
204.4
196.4
The subordinated notes consist of two separate issuances. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5%
and a total value of £200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining
the original redemption date of 25 July 2024.
The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5%, with a total value of £250 million and a redemption
date of 6 January 2034.
Total interest payable of £20.4 million (2022: £12.0 million) was recognised, of which £17.5 million (2022: £11.1 million) was in relation to
the subordinated loan notes.
7. Taxation
7a. Taxation credit
Current tax
Corporation tax credit on profits for the year
Change in provision relating to prior periods
Current tax credit
Deferred tax
Current period deferred taxation movement
Change in provision relating to prior periods
Total tax credit per income statement
31 December 2023
£m
31 December 2022
£m
9.0
(9.3)
(0.3)
0.2
12.2
12.1
4.6
1.0
5.6
0.1
–
5.7
The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25%
was announced in the 2021 Budget and has come into effect from 1 April 2023.
Factors affecting the total tax credit are:
Profit before tax
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
Expenses and provisions not deductible for tax purposes
Adjustments relating to prior periods
Non-taxable income
Total tax credit for the period as above
At the year end, the corporation tax asset was £9.0 million (2022: £4.6 million).
31 December 2023
£m
272.1
63.9
10.9
(2.9)
(84.0)
(12.1)
31 December 2022
£m
244.8
46.5
6.2
–
(58.4)
(5.7)
Balance brought forward at 1 January 2022
Tax treatment of share scheme charges
through income or expense
Tax treatment of share scheme charges
through reserves
Movement in fair value reserve
Balance carried forward at
31 December 2022
Tax treatment of share scheme charges
through income or expense
Tax treatment of share scheme charges
through reserves
Carried forward losses
Movement in fair value reserve
Balance carried forward at
31 December 2023
Tax
treatment
of share
schemes
£m
(0.3)
(0.1)
0.1
–
(0.3)
(0.2)
(0.1)
–
–
(0.6)
Capital
allowances
£m
–
Carried
forward losses
£m
–
Fair value
reserve
£m
4.6
Other
differences
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12.2)
–
(12.2)
–
–
(5.2)
(0.6)
–
–
–
3.4
2.8
–
–
–
–
–
–
–
–
–
Total
£m
4.3
(0.1)
0.1
(5.2)
(0.9)
(0.2)
(0.1)
(12.2)
3.4
(10.0)
The recognition of deferred tax assets is supported by the expected future taxable profits of the UK group.
Legislation to introduce a global minimum effective tax rate of 15% known as the Pillar Two rules was substantively enacted in the
UK on 20 June 2023 under Finance (No.2) Act 2023. The rules introduce a domestic top-up tax and multinational top-up tax effective
for accounting periods starting on or after 31 December 2023. There is therefore no related current tax impact for the year ended
31 December 2023. The Parent Company has applied the temporary mandatory exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
Further information can be found in note 10 of the consolidated financial statements.
8. Trade and other receivables
Trade and other receivables
Amounts owed by subsidiary undertakings
Total trade and other receivables
31 December 2023
£m
2.8
224.8
227.6
31 December 2022
£m
1.2
183.3
184.5
Held within amounts owed by subsidiary undertakings is £223.7 million (2022: £182.2 million) which relate to loans with formal
agreements in place between the parent and the subsidiary. The estimated credit losses of these loans has been considered and any
expected credit loss is considered to be immaterial due to the assessment of credit risk being low due to the positive net value of assets
of the subsidiaries and future trading projections.
Of the above amount, £28.5 million is due in greater than one year (2022: £155.1 million).
9. Trade and other payables
Trade and other payables
Amounts owed to subsidiary undertakings
Total trade and other payables
31 December 2023
£m
10.3
358.5
368.8
31 December 2022
£m
7.2
442.9
450.1
Held within amounts owed to subsidiary undertakings is £201.4 million (2022: £198.2 million) which relate to loans with formal
agreements in place between the parent and the subsidiary.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 314314
315
Notes to the Parent Company Financial Statements
For the year ended 31 December 2023
continued
10. Share capital and reserves
Capital within the Company is comprised of share capital and the share premium account, the fair value reserve (which reflects
movements in the fair value of assets classified as FVOCI) and retained earnings. Further information can be found within note 12 of the
consolidated financial statements.
10a. Share capital
Authorised
500,000,000 ordinary shares of 0.1 pence
Issued, called up and fully paid
306,304,680 (2022: 302,837,726) ordinary shares of 0.1 pence
10b. Dividends
Dividends were proposed, approved and paid as follows:
Proposed March 2022 (118.0 pence per share, approved April 2022 and paid June 2022)
Declared August 2022 (105.0 pence per share, paid October 2022)
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
Declared August 2023 (51.0 pence per share, paid October 2023)
Total dividends
31 December 2023
£m
31 December 2022
£m
0.5
0.3
0.3
0.5
0.3
0.3
31 December 2023
£m
–
–
154.9
152.2
307.1
31 December 2022
£m
348.1
310.2
–
–
658.3
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2021 and 2022 financial years.
The dividends declared in August are interim distributions in respect of 2022 and 2023.
A final dividend of 52.0 pence per share (£156.2 million) has been proposed in respect of the 2023 financial year. Refer to the Chair’s
Statement and Strategic Report for further detail.
The profit and loss account of the Parent Company does not include any unrealised profits, therefore the amount available for
distribution by reference to these accounts is £137.2 million. Interim accounts will be laid before Companies House prior to payment
of the 2023 Final Dividend in order to demonstrate that profits are available for distribution.
The Group also has substantial retained profits in its subsidiary companies which are expected to flow up to the Parent Company in due
course, such that surplus cash generated can continue to be returned to shareholders.
11. Related party transactions
The Company has taken advantage of the exemptions permitted by Financial Reporting Standard 101.8 (k) and not disclosed details of
transactions with other wholly owned group undertakings. Transactions with group undertakings that are not wholly owned by Admiral
Group plc are disclosed below.
compare.com Insurance Agency LLC (Subsidiary undertaking)
Transaction
Value
2023
£m
–
Balance at
31 December 2023
due/(to) related
party
£m
–
Transaction
Value
2022
£m
0.3
Balance at
31 December 2022
due/(to) related
party
£m
2.6
12. Guarantees and contingent liabilities
During 2018, a Special Purpose Entity (SPE) was set up in order to secure additional funding for the Admiral Money business, with a
second such SPE set up in October 2021. The Company acts as guarantor for certain operational performance conditions of its subsidiary,
AFSL, as seller and servicer for the SPEs, and indemnifies AFSL in respect of any amount that would have been payable by AFSL for non-
compliance with such performance conditions.
One of the Groups’ previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the
application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish
Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way
similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which
the Company is exposed to has been indemnified by the Admiral Group up to a cap of £22 million.
A number of the Group’s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to
recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from Admiral
Group plc.
13. Post balance sheet events
No events have occurred since the reporting date that materially impact these financial statements.
14. Continued application of Financial Reporting Standard (FRS) 101 – Reduced Disclosure Framework
Following the first time application of FRS 101 Reduced Disclosure Framework in 2015, the Board considers that it is in the best interests
of the Group for Admiral Group plc to continue to apply the FRS 101 Reduced Disclosure Framework in future periods. A shareholder or
shareholders holding in aggregate 5% or more of the total allotted shares in Admiral Group plc may serve objections to the use of the
disclosure exemptions on Admiral Group plc, in writing, to its registered office (Tŷ Admiral, David Street, Cardiff, CF10 2EH) no later than
30 June 2024.
Financial StatementsFinancial StatementsAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 316316
Glossary
317
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative Performance Measures (APMs); measures that are not required or
commonly reported under International Financial Reporting Standards, the Generally Accepted Accounting Principles (GAAP) under
which the Group prepares its financial statements.
These APMs are used by the Group, alongside GAAP measures, for both internal performance analysis and to help shareholders and
other users of the Annual Report and financial statements to better understand the Group’s performance in the period in comparison to
previous periods and the Group’s competitors.
The table below defines and explains the primary APMs used in this report. Financial APMs are usually derived from financial statement
items and are calculated using consistent accounting policies to those applied in the financial statements, unless otherwise stated.
Non-financial KPIs incorporate information that cannot be derived from the financial statements but provide further insight into the
performance and financial position of the Group.
APMs may not necessarily be defined in a consistent manner to similar APMs used by the Group’s competitors. They should be considered
as a supplement rather than a substitute for GAAP measures.
Turnover
Turnover is defined as total premiums written (as below), Other insurance revenue, Other revenue and
interest income from Admiral Money. It is reconciled to financial statement line items in note 13 to the
financial statements.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004.
It reflects the total value of the revenue generated by the Group and analysis of this measure over time provides a
clear indication of the size and growth of the Group.
The measure was developed as a result of the Group’s business model. The UK Car insurance business has
historically shared a significant proportion of the risks with Munich Re, a third party reinsurance Group, through
a co-insurance arrangement, with the arrangement subsequently being replicated in some of the Group’s
international insurance operations. Premiums and claims accruing to the external co-insurer are not reflected
in the Group’s Income Statement and therefore presentation of this metric enables users of the Annual Report
to see the scale of the Group’s insurance operations in a way not possible from taking the Income Statement
in isolation.
Total premiums written are the total forecast premiums, net of forecast cancellations written in the underwriting
year within the Group, including co-insurance. It is reconciled to financial statement line items in note 13 to the
financial statements.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004.
It reflects the total premiums written by the Group’s insurance intermediaries and analysis of this measure over
time provides a clear indication of the growth in premiums, irrespective of how co-insurance agreements have
changed over time.
Total Premiums
Written
Earnings per share
Underwriting result
(profit or loss)
Loss Ratio
The reasons for presenting this measure are consistent with that for the Turnover APM noted above.
Earnings per share represents the profit after tax attributable to equity shareholders, divided by the weighted
average number of basic shares.
For each insurance business an underwriting result is presented. This shows the insurance segment result before
tax excluding investment income, finance expenses, co-insurer profit commission and other net income. It
excludes both gross share scheme costs and any assumed quota share reinsurance recoveries on those share
scheme costs.
Loss ratios are reported as follows:
Reported loss ratios are expressed as a percentage, of claims incurred, on a gross basis net of XoL reinsurance,
divided by insurance revenue net of XoL reinsurance premiums ceded.
The reported loss ratios use the total claims, and earned premium loss ratios, we use the total claims, and earned
premium and related income (instalment income, administration fees and ancillary income where it is highly
correlated to the core product). It is understood that this is consistent with the approach taken by peers, and
reflects the true profitability of products sold.
Core product loss ratios use the total claims and earned premiums for the core product only. This measure is
more consistent with that used previously, and are reflective of the performance of the core product in a line
of business.
The calculations and compositions of the loss ratios are presented within Appendix 1a and Appendix 1b to these
financial statements.
Expense Ratio
Expense ratios are reported as follows:
Reported expense ratios are expressed as a percentage, of expenses incurred, on a gross basis excluding share
scheme costs, divided by insurance revenue net of XoL reinsurance premiums ceded.
The reported expenses ratios use the total expenses ratios, we use the total expenses (excluding share scheme
costs), and earned premium and related income (instalment income, administration fees and ancillary income
where it is highly correlated to the core product). It is understood that this is consistent with the approach taken
by peers, and it is considered to be reflect the true profitability of products sold.
Core product expense ratios use the total expenses (excluding share scheme costs) and earned premiums
for the core product only. This measure is more consistent with that used previously, and are reflective of the
performance of the core product in a line of business.
Written expense ratios are calculated using total expenses (excluding share scheme costs) and written
premiums, net of cancellation provision, for the core product only.
The calculations of the reported expense ratios are presented within Appendix 1a and Appendix 1b to the
financial statements.
Combined ratios are the sum of the loss and expense ratios as defined above. Explanation of these figures is noted
above and reconciliation of the calculations are provided in Appendix 1a and Appendix 1b.
This is the reported insurance segment underwriting result, divided by insurance revenue net of excess of loss
premiums ceded.
The total result (ceded premiums minus ceded recoveries) from contractual quota share arrangements,
excluding the quota share reinsurer’s share of share scheme expenses, finance expenses and onerous
loss component.
The profit or loss before tax reported for individual business segments, which exclude net share scheme costs and
other central expenses.
Return on equity is calculated as profit after tax for the period attributable to equity holders of the Group divided
by the average total equity attributable to equity holders of the Group in the year. This average is determined by
dividing the opening and closing positions for the year by two. It excludes the impact of discontinued operations.
Group customer numbers reflect the total number of cars, vans, households and pets on cover at the end of the
year, across the Group, and the total number of travel insurance and Admiral Money customers.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004.
It reflects the size of the Group’s customer base and analysis of this measure over time provides a clear indication
of the growth. It is also a useful indicator of the growing significance to the Group of the different lines of business
and geographic regions.
The measure has been restated from 2022 onwards to exclude Veygo policies, given the significant fluctuations
that can arise at a point in time as a result of the short-term nature of the product.
Effective tax rate is defined as the approximate tax rate derived from dividing the Group’s profit before tax by the
tax charge going through the Income Statement. It is a measure historically presented by the Group and enables
users to see how the tax cost incurred by the Group compares over time and to current corporation tax rates.
Combined Ratio
Insurance service
margin
Quota share result
Segment result
Return on Equity
Group Customers
Effective Tax Rate
Additional InformationAdditional InformationAdmiral Group plc Annual Report and Accounts 2023Admiral Group plc Annual Report and Accounts 2023 318318
Glossary continued
Additional Terminology
There are many other terms used in this report that are specific to the Group or the markets in which it operates.
These are defined as follows:
Accident year
Actuarial best
estimate
ASHE
Claims reserves
Co-insurance
Commutation
The year in which an accident occurs. Claims incurred may be presented on an accident year basis or an
underwriting year basis, the latter sees the claims attach to the year in which the insurance policy incepted.
The probability-weighted average of all future claims and cost scenarios calculated using historical data,
actuarial methods and judgement.
‘Annual Survey of Hours and Earnings’ – a statistical index that is typically used for calculating the inflation of
annual payment amounts under Periodic Payment Order (PPO) claims settlements.
A monetary amount set aside for the future payment of incurred claims that have not yet been settled, thus
representing a balance sheet liability.
An arrangement in which two or more insurance companies agree to underwrite insurance business on a
specified portfolio in specified proportions. Each co-insurer is directly liable to the policyholder for their
proportional share.
An agreement between a ceding insurer and the reinsurer that provides for the valuation, payment, and
complete discharge of all obligations between the parties under a particular reinsurance contract.
The Group typically commutes UK motor insurance quota share contracts after 24-36 months from the start of
an underwriting year where it makes economic sense to do so. Although an individual underwriting year may
be profitable, the margin held in the financial statement claims reserves may mean that an accounting loss
on commutation must be recognised at the point of commutation of the reinsurance contracts. This loss on
commutation unwinds in future periods as the financial statement loss ratios develop to ultimate.
The tendency for the insurance market to swing between highs and lows of profitability over time, with the
potential to influence premium rates (also known as the “underwriting cycle”).
The cost of claims incurred in the period, less any claims costs recovered via salvage and subrogation arrangements
or under XoL reinsurance contracts. It includes both claims payments and movements in claims reserves.
Contractual arrangements whereby the Group transfers part or all of the insurance risk accepted to another
insurer on an excess of loss (‘XoL’) basis (full reinsurance for claims over an agreed value).
The element of premium, less XoL reinsurance premium, earned in the period.
Gross earned premium (excluding any co-insurer share) plus Other insurance revenue.
NPS is currently measured based on a subset of customer responding to a single question: On a scale of 0–10
(10 being the best score), how likely would you recommend our Company to a friend, family or colleague
through phone, online or email. Answers are then placed in 3 groups; Detractors: scores ranging from 0 to 6;
Passives/neutrals: scores ranging from 7 to 8; Promoters: scores ranging from 9 to 10 and the final NPS score is :
% of promoters - % of detractors.
The discount rate used in calculation of personal injury claims settlements in the UK.
Revenue that is considered non-separable from the core insurance product sold and therefore under IFRS 17 is
reported as insurance revenue. For the Group, this is typically the instalment income, administration fees and
any other non-separable income related to the Group’s retained share of the underwritten products.
A compensation award as part of a claims settlement that involves making a series of annual payments to a
claimant over their remaining life to cover the costs of the care they will require.
A series of payments are made by the policyholder, typically monthly or annually, for part of or all of the duration
of the contract. Written premium refers to the total amount the policyholder has contracted for, whereas
earned premium refers to the recognition of this premium over the life of the contract.
A clause found in some reinsurance and co-insurance agreements that provides for profit sharing. Co-insurer
profit commission is presented separately on the Income Statement whilst reinsurer profit commissions are
presented within the reinsurance result, as a part of any recovery for incurred claims.
Insurance
market cycle
Claims net of XoL
reinsurance
Excess of Loss (‘XoL’)
reinsurance
Insurance premium
revenue net of XoL
Insurance revenue
Net promotor score
Ogden discount rate
Other insurance
revenue
Periodic Payment
Order (PPO)
Premium
Profit commission
Regulatory Solvency
Capital Requirement
(‘SCR’)
The Group’s Regulatory Solvency Capital Requirement (SCR) is an amount of capital that it should hold in addition
to its liabilities in order to provide a cushion against unexpected events. In line with the rulebook of the Group’s
regulator, the PRA, the Group’s SCR is calculated using the Solvency II Standard Formula, and includes a fixed
capital add-on to reflect limitations in the Standard Formula with respect to Admiral’s risk profile (predominately
in respect of co-and reinsurance profit commission arrangements and risks relating to Periodic Payment Orders
(PPOs). The Group’s current fixed capital add-on of £24 million was approved by the PRA during 2023.
The Group is required to maintain eligible Own Funds ( Solvency II capital) equal to at least 100% of the Group SCR.
Both eligible Own Funds and the Group SCR are reported to the PRA on a quarterly basis and reported publicly on
an annual basis in the Group’s Solvency and Financial Condition Report.
Admiral separately calculates a ‘dynamic’ capital add-on and has used this to report a solvency capital requirement
and solvency ratio at the date of this report. A reconciliation between the regulatory solvency ratio and that
calculated on a dynamic basis is included in note 3 to the Group financial statements.
Contractual arrangements whereby the Group transfers part or all of the insurance risk accepted to another
insurer. This can be on a quota share basis (a percentage share of premiums, claims and expenses) or an excess of
loss (‘XoL’) basis (full reinsurance for claims over an agreed value).
Scaled Agile is a framework that uses a set of organisational and workflow patterns for implementing agile
practices at an enterprise scale. Scaled agile at Admiral represents the ability to drive agile at the team level
whilst applying the same sustainable principles of the Group.
A process by which a group of assets, usually loans, is aggregated into a pool, which is used to back the issuance
of new securities. A Company transfer assets to a special purpose entity (SPE) which then issues securities
backed by the assets.
A ratio of an entity’s Solvency II capital (referred to as Own Funds) to Solvency Capital Requirement.
Unless otherwise stated, Group solvency ratios include a reduction to Own Funds for a foreseeable dividend (i.e.
dividends relating to the relevant financial period that will be paid after the balance sheet date).
An entity that is created to accomplish a narrow and well-defined objective. There are specific restrictions or
limited around ongoing activities. The Group uses an SPE set up under a securitisation programme.
A projected actuarial best estimate loss ratio for a particular accident year or underwriting year.
The year in which an insurance policy was incepted.
Also referred to as the written basis. Claims incurred are allocated to the calendar year in which the policy was
underwritten. Underwriting year basis results are calculated on the whole account (including co-insurance
and reinsurance shares) and include all premiums, claims, expenses incurred and other revenue (for example
instalment income and commission income relating to the sale of products that are ancillary to the main
insurance policy) relating to policies incepting in the relevant underwriting year.
Reinsurance
Scaled Agile
Securitisation
Solvency ratio
Special Purpose
Entity (SPE)
Ultimate loss ratio
Underwriting year
Underwriting
year basis
Written/Earned basis An insurance policy can be written in one calendar year but earned over a subsequent calendar year.
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Additional InformationAdmiral Group plc Annual Report and Accounts 2023 Thank you
TO ALL OUR
COLLEAGUES
OVER THE LAST
30 YEARS
Registered Office
Tŷ Admiral
David Street
Cardiff
CF10 2EH
www.admiralgroup.co.uk