1 4 March 2021 Admiral Group Plc Announces Full Year Results With
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4 March 2021 Admiral Group plc announces full year results with growth in Group profit and customers for the year ended 31 December 2020 2020 Results Highlights 2020 2019 % change Group’s share of profit before tax*1 £638.4 million £526.1 million +21% Group statutory profit before tax (continuing operations) £608.2 million £505.1 million +20% Earnings per share 179.5 pence 148.3 pence +21% Full year dividend per share 156.5 pence 140.0 pence +12% Return on equity*1 52% 52% -% Group turnover*1 £3.55 billion £3.46 billion +2% Group net revenue (continuing operations) £1.31 billion £1.21 billion +8% Group customers*1 7.66 million 6.98 million +10% UK insurance customers*1 5.98 million 5.48 million +9% International car insurance customers*1 1.60 million 1.42 million +13% Solvency ratio (post dividend)*2 187% 190% -2% *1 Alternative Performance Measures - refer to the end of the report for definition and explanation *2 Unaudited. Refer to capital structure and financial position section later in the report for further information Around 10,000 staff each receive free shares worth up to £3,600 under the employee share scheme based on the full year 2020 results. Comment from Milena Mondini de Focatiis, Group Chief Executive Officer: “2020 was certainly not an ordinary year, but one that I like to think of as a ‘litmus test’ for the business – where, despite the turbulent context, we demonstrated strong operational resilience and agility, we delivered a positive set of financial results, we stayed true to our values and we did what we believed was right for all our stakeholders. “Our existing customers chose to stay with us more than ever before, and we increased the share of those switching from other insurers to Admiral, resulting in over 650,000 new customers in 2020. “The year saw profit before tax exceeding £600 million, driven by strong reserve releases and a decrease in claims frequency as people drove less during lockdowns. We gave back to customers through the £110 million “Admiral Stay at Home Refund” in the UK and substantial pricing reductions across our operations, and we also supported key workers and our local communities. Staff remained a priority and we rapidly transitioned to working from home, while also implementing flexible working arrangements and other wellbeing initiatives. “A huge thank you to our customers and our shareholders for their continued support, to David, on behalf of the Admiral team, for his invaluable contribution to the business and, most importantly, to 1 all our colleagues who demonstrated incredible passion, adaptability and dedication to our business success.” Comment from Annette Court, Group Chair: “Who knew so much could happen in twelve months! We have faced the challenges of the global pandemic while ensuring at Admiral we focused on doing the right thing, went through a successful CEO transition, and reported another positive set of financial results. “I’m particularly pleased to mention an improvement of over 5% in customer Net Promoter Scores across our operations and that we were voted 14th best workplace in the world on the annual 25 World’s Best Workplaces list. “I’d like to take the opportunity to thank all our stakeholders for their support, and the Admiral team for maintaining the special Admiral spirit and values which gives us a solid foundation for the year ahead!” Dividend The Board has proposed a final dividend of 86.0 pence per share (2019: 77.0 pence per share, including the special dividend which was deferred and subsequently paid alongside the 2020 interim dividend) representing a normal dividend (65% of post-tax profits) of 63.6 pence per share and a special dividend of 22.4 pence per share. The dividend will be paid on 4 June 2021. The ex- dividend date is 6 May 2021 and the record date is 7 May 2021. Management presentation Analysts and investors will be able to access the Admiral Group management presentation which commences at 10h30am GMT on Thursday 4 March 2021 by registering on the Admiral website at www.admiralgroup.co.uk. A copy of the presentation slides will also be available on the website. 2 Chair Statement Background to the year What a year this has been! For Admiral the most significant event, apart from the Covid-19 pandemic of course, has been the announcement that David Stevens will be retiring as Group CEO and that Milena Mondini de Focatiis will be succeeding him (as I mentioned in last year’s annual report). This took effect from 1 January 2021 after a successful transition period - more on this later. Most of the year has been dominated by the repercussions of the Covid-19 pandemic. Life changed in unimaginable ways for all of our staff and customers. I am immensely proud of the way that Admiral responded to this situation. Our people’s health and well-being were at the centre of our response and we remained true to Admiral’s values in ensuring they were protected and allowing them to provide continued support to our customers. Management communicated quickly and clearly, and it was evident to all why Admiral remains one of the Best Companies to work for. Our people rose to the challenge and went above and beyond to support customers and each other through difficult times. Most importantly we demonstrated that we were doing the right thing not only for staff, but also for customers, suppliers, shareholders and the broader community. A key part of our response was the announcement of the Admiral Stay at Home premium refund. We announced back in April that we would give back £190 million to customers through a £110 million rebate in the UK as well as pricing reductions across operations and supporting the communities in which we operate, which included the launch of a £6 million Covid community support fund. This approach was unique to UK insurers. It was led by management and endorsed by the Board. Looking back at 2020 Admiral is reporting a strong performance in 2020 in both reported profit and growth. This is once again due to our people. They make the real difference at Admiral. They remain true to our purpose and ensure that we do the right thing in consideration of all of our stakeholders. The Group has continued to grow with turnover increasing by 2% to £3.55 billion, whilst customer numbers are 10% higher than 2019 at 7.7 million. The Group’s share of pre-tax profit increased by 21% to £638.4 million. Covid impacted the results in all markets in which we operate, resulting in reduced accident frequencies and lower loss ratios. We continue to maintain a prudent approach and, as a result, benefited from strong reserve releases from past years. Earnings per share rose by 21% and return on equity was 52%. The Group’s solvency ratio remains robust at 187% (190% at the end of 2019). In the UK the FCA announced a market pricing study for general insurance which will predominantly affect our motor and household products. This is still to be finalised, but we anticipate that it will have a significant impact on the market. We see this as an opportunity to continue to build on Admiral’s strengths and desire to do the right thing for customers. As a reminder, approximately 80% of Admiral customers shop around at renewal, so we are encouraged that the majority choose to remain with us; this being an indicator of our good customer experience and competitive pricing. 3 There have been strong contributions across the Group. Apart from UK Insurance there has been growth in profit and customers from our European insurers and also Confused.com. In the US we continue to strengthen the fundamentals of our insurance business. The Loans business has been impacted by Covid and we took early action to pause issuing new loans when the pandemic hit and have maintained a cautious approach since. The loans book remains resilient despite economic uncertainty largely as a result of our prime customer base and prudent approach. Admiral announced the purchase of the Penguin Portals and Preminen comparison businesses by ZPG Comparison Services Holdings UK Limited (“RVU") in December 2020. The Board believes the decision is a positive outcome for all stakeholders and provides an opportunity to combine the strengths of these businesses to allow for continued growth. Dividend As a result of the Covid-19 pandemic and regulatory guidance, we suspended the pay-out of the 2019 final special dividend. We were subsequently able to pay this out in addition to our half-year dividend in August with the confidence that we have a strong capital position. Our dividend policy remains that we pay a normal dividend of 65% of post-tax profit and distribute each year the available surplus over and above what we retain to meet regulatory requirements, the future development of our business and appropriate buffers. The Directors have recommended a final dividend of 86.0 pence per share (2019: 77.0 pence per share) for the year to 31 December 2020 representing a distribution of 89% of our second half earnings. This will bring the total dividend for the year to 156.5 pence per share, an overall increase of 12%. This represents a pay-out ratio of 87%. The Group has delivered a Total Shareholder Return (TSR) of 335% over the last 10 years. Group Board in 2020 The Board recognises the need for a strong corporate governance framework and supporting processes across the Group and believes that good governance, with the tone set from the top, is a key factor in delivering sustainable business performance and creating value for all the Group’s stakeholders.