Annual Financial Report
*7 March 2024*
*Admiral Group reports solid profits and strong growth in turnover*
*2023 Results Highlights*
*2023* *2022* *% change vs. 2022*
Group profit before tax ^i £442.8m £361.2m +23%
Earnings per share^ i 111.2p 95.4p +17%
Dividend per share 103.0p 112.0p -8%
Special dividend per share from sale of Penguin Portals comparison businesses - 45.0p nm
Return on equity^ i^,^ii 36% 29% +7pts
Group turnover^ii £4.81bn £3.68bn +31%
Insurance revenue £3.49bn £2.96bn +18%
Group customers^ii,^iii 9.73m 9.20m +6%
UK insurance customers^ii 7.39m 6.96m +6%
International insurance customers^ii 2.17m 2.08m +4%
Admiral Money gross loans balances £0.96bn £0.89bn +8%
Solvency ratio (post-dividend)^ ii 200% 180% +20pts
Over 10,000 employees each receive free share awards worth up to £3,600 under the employee share scheme based on the full year 2023 results.
*Comment from Milena Mondini de Focatiis, Group Chief Executive Officer:*
“Admiral achieved another good set of results, within the context of challenging market conditions, with Group profit of £443 million and a 31% rise in turnover. The addition of over 500,000 customers and improved loss ratios demonstrate our commitment to strengthening and diversifying our business.
“Our 30th anniversary is a good opportunity to remind ourselves of our growth story, from a Welsh startup to a £4.8 billion business serving nearly ten million customers in five countries, driven by technical competence and continuous innovation across service, pricing, products, and distribution. Our core values of prioritising customers and people remain unchanged.
“In 2023, we accelerated our UK diversification. We announced the intention to acquire the renewal rights for RSA’s pet and home insurance businesses, improved results in all our main lines of business, and achieved double-digit growth in our electric vehicle book, supporting customers in transitioning to green mobility.
“Despite global uncertainties, our outlook is positive, benefitting from improved market conditions and a strengthened position, thanks to the discipline we maintained in the last year.
“I would like to thank our people for their hard work, and our customers for continuing to support us, as I look forward to a positive 2024.”
*Comment from Mike Rogers, Group Chair:*
“In my first year as Chair, I've personally witnessed the Group's exceptional ability to adapt, evolve, and consistently deliver results. This resilience is a testament to our deliberate financial discipline and strategic foresight.
“In the face of high inflation, Admiral remained resolute in ensuring peace of mind for our colleagues, customers, and shareholders. We have confidence in our diversified portfolio, agile business model, and unwavering commitment to achieving optimal outcomes for our customers. These factors position us strongly for continued success.”
*Final Dividend*
The Board has proposed a final dividend of 52.0 pence per share (2022 final: 52.0 pence per share) representing a normal dividend (65% of post-tax profits) of 35.4 pence per share and a special dividend of 16.6 pence per share. The final dividend will be paid on 7 June 2024. The ex-dividend date is 9 May 2024 and the record date is 10 May 2024.
*Management presentation*
Analysts and investors will be able to access the Admiral Group management presentation which commences at 10.30 GMT on Thursday 7 March 2024 by registering at the following link to attend the presentation in person, or access the presentation live via webcast or conference call: 2023 Full Year Results | Admiral Group Plc. A copy of the presentation slides will be available at the following link: Results, reports and presentations | Admiral Group Plc (www.admiralgroup.co.uk).
*Investors and Analysts: Admiral Group plc*
Diane Michelberger Diane.Michelberger@admiralgroup.co.uk
*Media: Admiral Group plc *
Claire Foster Claire.Foster2@admiralgroup.co.uk
*Media: FTI Consulting*
Edward Berry +44 (0) 7703 330 199
Tom Blackwell +44 (0) 7747 113 919
*Chair Statement*
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.
*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*
*Group Chief Executive Officer’s Review*
*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 30^th 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 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 for 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.
*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.
*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 13^th 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 30^th 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**Group Chief Financial Officer’s Review*
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.
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*:
*£m* *IFRS 17*
*2023* *IFRS 17*
*2022* *Change v 2022* *IFRS 4*
*2022*
UK Insurance 597 510 +87 616
Europe Insurance (motor & other lines) 2 (20) +22 (5)
US Insurance (20) (36) +16 (49)
Admiral Money 10 2 +8 2
Admiral Pioneer (16) (14) (2) (16)
Share scheme cost (54) (52) (2) (52)
Other costs (76) (29) (47) (27)
*Pre-tax profit* *443* *361* *+82* *469*
*See important footnote below on the basis of preparation of the 2022 IFRS 17 numbers. The original IFRS 4 numbers are also shown.
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 product 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, adverse currency movement, costs to settle a historic Italian tax matter). Fuller details later in the report. 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 businesses 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 later in the report, 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.
*2023 Group overview*
*£m* *2023* *2022*
(restated)^*1 *% change vs. 2022*^*1*5
Group turnover (£bn) ^*2 4.81 3.68 +31%
Net insurance and investment result 363.1 207.5 +75%
Net interest income from financial services 68.1 46.1 +48%
Other income and expenses 31.7 119.6 -73%
*Operating profit*^*1 *462.9* *373.2* +24%
*Group profit before tax*^*1 *442.8* *361.2* +23%
* * * *
*Analysis of profit* * *
UK Insurance 596.5 509.7 +17%
International Insurance (18.0) (56.2) Nm
International Insurance – European Motor 6.1 (16.5) Nm
International Insurance – US Motor (19.6) (36.4) Nm
International Insurance – Other (4.5) (3.3) Nm
Admiral Money 10.2 2.1 +386%
Other (145.9) (94.4) -55%
*Group profit before tax*^*1 *442.8* *361.2* +23%
*Key metrics*
Reported Group loss ratio^*1*2 *3 63.9% 70.6% -7pts
Reported Group expense ratio^*1*2 *3 24.8% 26.2% -1pts
Reported Group combined ratio^*1 ^*2^*3 88.7% 96.8% -8pts
Insurance service margin^*2 *3 10.2% 7.4% +3pts
Customer numbers (million)^*2*4 9.73m 9.20m +6% * *
Earnings per share^ *1 111.2p 95.4p +17%
Dividend per share 103.0p 112.0p -8%
Special dividend from sale of Penguin Portals - 45.0p Nm
Return on equity^*1^*2 36.0% 29.4% +7pts
Solvency ratio^*2 200% 180% +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.
*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.
*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 95^th 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 95^th 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.
*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*
*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.
*UK Insurance Review – Cristina Nestares, CEO UK Insurance*
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.
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.
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, significantly improving 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.
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* *2023* *2022*
(restated)
Turnover^*1*2 3,776.0 2,784.3
Total premiums written^*1*3 3,502.6 2,555.0
Insurance revenue 2,596.9 2,174.1
*Underwriting result including net investment income*^**1* *438.6* *301.6*
Co-insurer profit commission and net other revenue 157.9 208.1
*UK Insurance profit before tax*^**1* *596.5* *509.7*
*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.
*Split of UK Insurance profit before tax*
*£m* *2023* *2022*
(restated)
Motor 593.3 524.9
Household 7.9 (10.7)
Travel and Pet (4.7) (4.5)
*UK Insurance profit before tax* *596.5* *509.7*
*Key performance indicators*
*2023* *2022*
Vehicles insured at period end 4.94m 4.94m
Households insured at period end 1.76m 1.58m
Travel and Pet policies at period end 0.69m 0.44m
*Total UK Insurance customers* *7.39m* *6.96m*
*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.
*UK Motor Insurance financial review*
*£m* *2023* *2022*
(restated)
Turnover^*1 3,371.8 2,493.0
Total premiums written^*1*2*4 3,118.2 2,271.3
Gross earned premium^*1 2,115.4 1,795.7
Gross other insurance revenue 134.8 114.0
Insurance revenue 2,250.2 1,909.7
Insurance revenue net of XoL^*2 2,188.6 1,865.1
Insurance expenses^*1*2*3 (451.2) (389.6)
Insurance claims incurred net of XoL^*2^*5 (1,729.0) (1,596.0)
Insurance claims releases net of XoL^*2^*5 392.8 327.2
Quota share reinsurance result^*2*3 (16.8) 95.2
Movement in onerous loss component net of reinsurance^*2 4.1 5.2
*Underwriting result**^*2* *388.5* *307.1*
Investment income 111.8 53.8
Net insurance finance expenses (58.2) (36.4)
*Net investment income* *53.6* *17.4*
Co-insurer profit commission 76.5 127.5
Other net income 74.7 72.9
*UK Motor Insurance profit before tax*^*1 *593.3* *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*
*2023* *2022*
(restated)
Reported Motor loss ratio^*1*2 61.1% 68.0%
Reported Motor expense ratio^*1*3 20.6% 20.9%
Reported Motor combined ratio^*1*2 81.7% 88.9%
Reported Motor Insurance service margin^*1*4 17.7% 16.5%
Core motor loss ratio before releases^*1*5 87.0% 95.7%
Core motor claims releases ^*1*5 (20.2%) (20.0%)
Core motor loss ratio^*1*5 66.8% 75.7%
Core motor expense ratio^*1*6 21.4% 21.6%
Core motor combined ratio^*1 88.2% 97.3%
Core motor written expense ratio^*1^*7 17.8% 20.8%
Vehicles insured at period end^*1 4.94m 4.94m
Other revenue per vehicle^*8 £62 £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.
*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 a significant and prudent risk adjustment above best estimate reserves, which has reduced (93^rd percentile confidence level) when compared to the end of 2022 (95^th percentile confidence level). The movement is 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* *Core motor loss ratio before releases* *Impact of claims reserve releases * *Core motor loss ratio *
*2022* *95.7%* *(20.0%)* *75.7%*
Change in current period loss ratio (8.7%) — (8.7%)
Change in claims reserve release — (0.2%) (0.2%)
*2023* *87.0%* *(20.2%)* *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.
The quota share reinsurance result by underwriting year is as follows:
*Quota share reinsurance result*
*£m* *2023 * *2022 *
*(restated) *
2020 & prior 2.3 (2.9)
2021 (57.6) 7.1
2022 8.2 91.0
2023 30.3 —
*Total* *(16.8)* *95.2*
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.
*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.
*Other revenue*
*UK Motor Insurance Other revenue*
*£m * *2023* Within underwriting result Other net income *Total*
Premium and revenue from additional products & fees^*1 107.8 89.4 197.2
Instalment income and administration fees^*2 134.8 29.3 164.1
*Other revenue* *242.6* *118.7* *361.3*
Claims costs and allocated expenses^*3 (70.0) (44.0) (114.0)
*Net other revenue* *172.6* *74.7* *247.3*
*Other revenue per vehicle*^*4 *£62*
Other revenue per vehicle net of internal costs £52
*£m * *2022 *(restated) Within underwriting result Other net income *Total*
Premium and revenue from additional products & fees^*1 113.3 90.5 203.8
Instalment income and administration fees^*2 114.0 21.9 135.9
*Other revenue* *227.3* *112.4* *339.7*
Claims costs and allocated expenses^*3 (63.4) (39.5) (102.9)
*Net other revenue* *163.9* *72.9* *236.8*
*Other revenue per vehicle*^*4 *£58*
Other revenue per vehicle net of internal costs £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.
Admiral generates other revenue from a portfolio of insurance products that complement the core car insurance product, and also 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. The remaining income from instalment income and 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 * *2023* *2022*
(restated)
Turnover^*1 338.6 255.4
Total premiums written^*1*2 318.8 245.7
Insurance revenue 292.8 236.9
Insurance revenue net of XoL^*1 275.3 222.8
Insurance expenses^*1 (80.9) (70.0)
Insurance claims incurred net of XoL^*1 (199.8) (198.1)
Insurance claims releases net of XoL^*1 6.4 16.5
*Underwriting result, net of XoL reinsurance*^**1* *1.0* *(28.8)*
Quota share reinsurance result^*1^*3 (1.4) 9.2
*Underwriting result*^ *1 *(0.4)* *(19.6)*
Net insurance investment income 1.6 1.2
Other income 6.7 7.7
*UK Household Insurance result before tax*^**1* *7.9* *(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*
*2023* *2022*
(restated)
Reported Household loss ratio^*1* 70.2% 81.5%
Reported Household expense ratio^*1* 29.4% 31.4%
Reported Household combined ratio^*1 99.6% 112.9%
Household insurance service margin (0.1%) (8.8%)
Household loss ratio before releases 72.6% 88.9%
Impact of severe weather and subsidence on reported loss ratio^*1 11.3% 29.0%
Impact of severe weather and subsidence on result before tax^*1 (£m) 9.8 33.3
Households insured at period end (m) 1.76 1.58
*1 Alternative Performance Measures – refer to the end of this report for definition and explanation
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 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*
*International Insurance – Costantino Moretti – CEO, International Insurance *
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 inflation decelerating 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). 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!
*France – Pascal Gonzalvez – CEO, L’olivier *
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 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