UK Motor Insurer Admiral Sells German Unit

U.K. motor insurer Admiral Group plc said it has sold AdmiralDirekt, the group's motor insurance operations in Germany, to Itzehoer Versicherung.

According to Admiral, the value of the gross assets it sold is 4.4 million pounds (5.2 million euros).

Admiral said the insurance contracts issued by AdmiralDirekt and underwritten by the group will be fully reinsured by Itzehoer. Insurance contracts for 2011 and prior years will be transferred to Itzehoer upon court and regulatory approval.

"The group remains focused on continuing the profitable growth of its U.K. operations and on building profitable, growing, sustainable businesses in Spain, Italy, the United States and France," Admiral said.

In its interim report for the first half of 2010, Admiral reported that AdmiralDirekt had 31,300 vehicles insured, and posted a pretax loss of 1.6 million pounds.

"Having experienced a very tough year in 2009, management pulled back on new business acquisition in Germany by raising rates substantially before the busy season in Q4 2009," the interim report said. "This has led to a 25% fall in premiums written, to 8.6 million pounds from 11.4 million pounds. The number of cars insured has also fallen, by 17% to 31,300."

Admiral said this has "significantly rebalance[d] the portfolio in favor of renewal business, which tends to bring a notably better loss ratio" for AdmiralDirekt.

In 2009, Cardiff-based Admiral entered the U.S. motor market as part of an ongoing effort to branch out from its U.K. roots (BestWire, July 27, 2009). Andrew Rose, chief executive of Admiral Americas, pointed out at the time that the U.S. market, at about $162 billion (122 billion euros), is the largest in the world.

Admiral opened an office in Richmond, Va., which was to duplicate Admiral's direct-to-consumer approach.

Over the previous three years, Admiral launched operations in Spain, Italy and Germany.

AdmiralDirekt was the second company launched by Admiral on continental Europe. It was launched in October 2007. Its first European venture was Balumba, launched in Spain in November 2006.

Itzehoer is a 104-year-old mutual insurer that specializes in motor coverage. It claims to be the leading independent motor insurer in the German state of Schleswig-Holstein.

Based in Itzehoe, it has about 500 employees and more than 2,600 sales partners. The insurer said its acquisition of Cologne-based AdmiralDirekt will be a boost to its online market presence.

Launched in 1993, Admiral Group has 13 brands and 2.08 million customers.

In the first half of 2010, Admiral's pretax profit rose 21% to 126.9 million pounds from the same period a year earlier. Revenue (turnover) rose 33% to 720.5 million pounds.

Among first-half highlights, Admiral said Balumba turned a profit for the first time, of 25,000 pounds. The group also said it will launch a French insurance operation in 2011 "as the final part of our five-year strategic plan."

(By David Pilla, international editor, BestWeek: [email protected])