Admiral Group Plc · LSE:ADM
Admiral — Investor Day (September 2018)
122 slides from Admiral's investor day presentation, Sep 17, 2018
Slide 1: Admiral Group European Investor Day
Admiral Group European Investor Day Rome 17th September 2018 15th August 2018
Slide 2: Agenda
Introduction David Stevens, Group CEO European Insurance Market Distribution and Price Comparison Elena Bétes, European and Emerging Markets Price Comparison Websites CEO European Insurance Part 1: Market and Results Agenda Milena Mondini, European Insurance CEO European Insurance Part 2: Admiral Mo
Slide 3: Introduction
Introduction David Stevens – Group CEO
Slide 4: Strategy Reminder
Strategy Reminder Ensure Admiral Demonstrate that Develop sources of remains one of the Admiral can be a great growth and profit best insurers in the UK insurer beyond the UK beyond insurance Exploit strengths and Serve more customers adapt locally Exploit strengths Know your customer Focus on exist
Slide 5: Strategy Reminder
Strategy Reminder TV Spend by PCW Market in France1 Demonstrate that € 9.2 Admiral can be a great insurer beyond the UK € 1.0 H1 2012 H1 2018 Exploit strengths and adapt locally Focus on existing countries Transformed the Price Accelerate channel Comparison market switch Sources: 1) Management estim
Slide 6: Strategy Reminder
Strategy Reminder Demonstrate that Admiral can be a great insurer beyond the UK 2017 Private Car Insurance Market GWP (bn)1 Exploit strengths and adapt locally € 21.3 € 16.1 Focus on existing € 14.8 countries € 10.9 Accelerate channel switch Spain UK Italy France Sources: 1) Internal estimation base
Slide 7: Strategy Reminder
Strategy Reminder Demonstrate that Admiral can be a great insurer beyond the UK 2017 Private Car Insurance Market GWP (bn)1 Exploit strengths and adapt locally € 204.8 Focus on existing countries € 63.1 Accelerate channel switch Total European & UK Markets Admiral United States Operates In Sources:
Slide 8: Strategy Reminder
Strategy Reminder Two way street: • People Demonstrate that • Intellectual Admiral can be a great Property insurer beyond the UK Exploit strengths and adapt locally Focus on existing countries Accelerate channel switch 8 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 9: Strategy Reminder
Strategy Reminder Demonstrate that H1 2018 Margin – 1.5% Admiral can be a great insurer beyond the UK Profitable despite: • Sub-optimal scale Exploit strengths and • Major headwinds of adapt locally higher cost of growth Focus on existing countries Admiral cumulative investment per vehicle: €891 Acc
Slide 10: European Insurance Market Distribution and Price Comparison Websites
European Insurance Market Distribution and Price Comparison Websites Elena Bétes – European and Emerging Markets Price Comparison Websites CEO
Slide 11: The Market
The Market The Market 11 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 12: European Car Insurance Overview
European Car Insurance Overview Estimated motor market GWP in 20171 (€bn) Price Comparison share of New Traditional vs Direct Business Sales (%)1 9.6 1.3 13% 14.4 1.7 14% 20.7 0.6 10% 44.7 3.6 7.1 7.7 73% Sources: 1) Internal estimation based on Ania, FFA, Inese, ICEA, ABI, Deloitte Motor seminar, m
Slide 13: Multiple players, few leaders
Multiple players, few leaders …2002 04 06 08 10 12 14 16 18 Market Leader Exited the Market Owned by insurer 13 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 14: Admiral PCW Strategy and Deployment in Spain and France
Admiral PCW Strategy and Deployment in Spain and France Admiral Price Comparison Websites in Spain and France 14 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 15: Ambition to Lead – Our Past
Ambition to Lead – Our Past Only a few players will survive per country A strong position fuelled by growth is key Admiral manages a leading PCW in all markets we are present in Prompted brand awareness 95% 79% Top of mind brand awareness 55% 15% Admiral PCW Market share 65% 40% Competitors Ma
Slide 16: Diversification – Our Present
Diversification – Our Present Expansion of product offering: Compensate low speed of change in market behaviour Increase frequency of use Maximise effectiveness of marketing budget Other insurance products Motorbike, home, health, life, Motorbike, health, home travel, burial… Other business
Slide 17: Best Customer Proposition – Our Future
Best Customer Proposition – Our Future Opportunity to improve customer experience and increase control in fulfilment Requires technological investment that can be transferred across markets Price Aggregator Model Lead Provider Page Lead Provider Price Hybrid Model Page Sale fulfilment Price Brok
Slide 18: Our History – Reflected in Our Financials
Our History – Reflected in Our Financials Rastreator and LeLynx Combined Turnover (€m) Rastreator and LeLynx Combined Profit Before Tax (€m) 4.4 2.8 39.4 3.1 25.2 2.0 3.1 29.5 31.3 22.7 3.2 25.6 -0.2 1.6 1.5 14.3 -1.0 25.5 26.1 21.4 4.4 0.5 -4.1 -4.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 19: Summary
Summary Market remains small with opportunity to grow with the shift towards digital Admiral has proven its ability to organically grow market leading PCWs in Spain and France Focus on maintaining leadership in European PCW markets by diversifying and strengthening the customer proposition 19 Admira
Slide 20: European Insurance Part 1: Market and Results
European Insurance Part 1: Market and Results Milena Mondini – European Insurance CEO Home town Family ConTe 10 year party Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 21: Admiral expansion across Europe
Admiral expansion across Europe Insurance Oct 06 Mar 08 May 08 Jan 10 Dec 10 Mar 13 Price Comparison Life and non-life insurance Motor insurance Utilities Health insurance Financial services Household insurance Travel Utilities Broadband Car buying and selling Note: Admiral also launched two operati
Slide 22: Admiral expansion across Europe
Admiral expansion across Europe 2006 2008 2010 22 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 23: European Insurance Snapshot: H1 2018
European Insurance Snapshot: H1 20181 Turnover2 Customers Profit3 +17% 15% €187m xx% +18% 925k +€9m €3m 2017 HY: €160m 2017 HY: 783k 2017 HY: €-6m 1200+ employees4 Note: 1) Admiral operations in Italy, France and Spain; 2) Turnover comprises total premiums written plus other revenue; 3) Admiral shar
Slide 24: European markets are large, with the direct channel less developed than in the UK
European markets are large, with the direct channel less developed than in the UK Estimated motor market GWP in 20171 (€bn) Estimated Admiral share Traditional vs Direct of direct market2 (%) 9.6 1.3 6% 14.4 1.7 9% 20.7 0.6 10% 44.7 3.5 8% 10 years from launch 7.1 7.7 20% (2003) = 12% Sources: 1) In
Slide 25: Steady but moderate growth of the direct market over time
Steady but moderate growth of the direct market over time Share of direct in motor insurance (%)1 2000 2010 2017 4% 10% 12% Spain shows the largest direct share, with several examples of hybrid distribution models e.g. several traditional also 1% 6% 10% distribute online Italy benefitted from th
Slide 26: Admiral growth outpaces the market
Admiral growth outpaces the market Admiral Premium Growth in Europe : 2015-2017 (%)1 126% Each of the Admiral operations has been 59% 62% growing faster than their respective markets from 2015 to 2017 30% 4% SP IT FR Total SP Total Admiral European Europe markets2 Sources: 1) internal estimation b
Slide 27: European Markets have diverse features
European Markets have diverse features European Market Overview1 Acquisition cost Acquisition Market average persistency Market average premium Market risk Underwriting segment variance Fraud frequency Market claims frequency Claims Market average claim cost Markets share similarities but require
Slide 28: European Market Features: The Cycle
European Market Features: The Cycle Market Average Premium trends1 (Indexed to 100 in 2005) 130 120 Sharp downturn in average market 110 premium in Italy and Spain over the last few years (c. 20%) 100 Upward trend in the UK while more stable premiums in France 90 Italy and UK with more pronoun
Slide 29: European Market Features: Profitability
European Market Features: Profitability Market Combined Ratio trends1 120% 110% Italy has seen the sharpest cycle of all the European markets 100% In France motor business was historically more cross-subsidised by other profit sources 90% 80% 2005 2007 2009 2011 2013 2015 2017 Sources: 1) Intern
Slide 30: Scale matters but there are opportunities to outperform
Scale matters but there are opportunities to outperform Comparison of main Direct Players in 2017 (Premiums (€m) vs Combined Ratio)1 150% Italy 140% Spain 130% France Combined Ratio 120% Admiral 110% 100% 90% 80% 70% 0 100 200 300 400 500 600 700 800 Gross Written Premiums Sources: 1) Admiral data o
Slide 31: Value of European policies is concentrated on the renewal book…
Value of European policies is concentrated on the renewal book… Split of lifetime value between year 1 and subsequent years1 French and Spanish policies are more reliant on renewal book, mostly due to persistency and 100% acquisition costs 124% 89% 148% Cost of growth is higher in Spain and Fran
Slide 32: …and total lifetime value per policy is growing year after year
…and total lifetime value per policy is growing year after year Lifetime value1 of a policy: 2016 vs 2018 (Indexed to 100 in 2016) 143 133 118 100 100 100 2016 2018 2016 2018 2016 2018 Notes: 1) “Lifetime value” is the sum of variable items (revenues and cost) related to a new business policy – i.e.
Slide 33: Continued and strong top-line growth in Europe
Continued and strong top-line growth in Europe European customers European turnover (€m) 925k 187 783k 160 608k 126 2016 H1 2017 H1 2018 H1 2016 H1 2017 H1 2018 H1 33 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 34: Sustainable loss ratio
Sustainable loss ratio Admiral European projected ultimate loss ratio1 Admiral European ultimate loss ratio development2 2013 2014 2015 2016 2017 86%86% 84% 82% 84% 83% 81% 81% 82% 82% 78% 79% 80% 82% 82% 75% 75% 80% 75% 75% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Admiral EU ultimate los
Slide 35: Expense ratio improving due to efficiencies and scale
Expense ratio improving due to efficiencies and scale Admiral European expense ratio1 39% 40% 38% 38% 33% 31% 2013 2014 2015 2016 2017 2018 H1 Admiral European businesses significantly improving ER trends Growing scale Increased share of online services Internal efficiencies and cost optimis
Slide 36: European operations are profitable overall
European operations are profitable overall Admiral European losses1 (€m) … … and profit1 (€m) 2015 2016 2017 2018 H1 3 2015 2016 2017 2018 H1 -2 -5 -10 ConTe profitable for the 4th year Minor losses from L’olivier and Admiral Seguros combined Reserve released in all three countries Notes: 1) A
Slide 37: Growth and profitability drives value creation
Growth and profitability drives value creation Admiral share of profit or loss per policy (€) 2012 2013 2014 2015 2016 2017 2018 H1 10 - -10 -20 -30 -40 -50 -60 925k policies across Admiral Europe, with a cumulated average investment per policy to date of €891 Improving share of profit/loss per
Slide 38: Summary
Summary Direct channel has been growing at a moderate pace over the past few years European businesses largely outgrowing their respective markets and achieving material top-line growth European operations overall profitable, showing a consistent trend of improvement 38 Admiral Group │ European Inve
Slide 39: European Insurance 2: Admiral Model in Europe
European Insurance 2: Admiral Model in Europe Milena Mondini – CEO European Insurance Antonio Bagetta – Head of operations, ConTe Daniele Tamborrelli – Technical Director, ConTe Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 40: Admiral competitive advantage in the UK … and overseas
Admiral competitive advantage in the UK … and overseas A Efficient direct acquisition B Sophisticated and accurate pricing C Effective claims handling D Low cost structure E Customer focus F People and Culture 40 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 41: Efficient direct acquisition: Customer acquisition supported by brand trust
Efficient direct acquisition: Customer acquisition supported by brand trust Brand Awareness (%) Direct Media Spending3 benchmark Annual Average 2015-17 (€M) Admiral brands Direct Market Top direct 2015 2018 average 2018 Player 2018 6,2 2,6 2,2 2,2 0,6 0,5 0,6 0,3 40%1 62%1 55%2 82%1 49,5 39,9 51%4 6
Slide 42: Efficient direct acquisition: Price comparison
Efficient direct acquisition: Price comparison % of Direct sales intermediated by PCW: Admiral vs market1 64% 64% 67% 48% 33% 30% #RIF! #RIF! #RIF! #RIF! #RIF! #RIF! #RIF! #RIF! #RIF! #RIF! Price comparison is efficient, costs are 20 to 50% lower #RIF! #RIF! Succeeding in price comparison requir
Slide 43: Sophisticated and accurate pricing: Solid loss ratio performance in Europe
Sophisticated and accurate pricing: Solid loss ratio performance in Europe ConTe ultimate projected Loss ratio1 compared to direct market2 MTPL + MOD premiums 82% 82% 79% 77% 77% 80% 79% 76% 65% 64% 2013 2014 2015 2016 2017 ConTe Market Loss Ratio advantage in Italian direct market; close to marke
Slide 44: Sophisticated and accurate pricing: Loss ratio in Europe is not only pricing
Sophisticated and accurate pricing: Loss ratio in Europe is not only pricing Spain example Geo-localisation tools against “Ghost” brokers Claims Product Antifraud Italy example IT-Data Internally developed Pricing antifraud tool and validation team against Under- fake claims writing Air Plastic bag
Slide 45: Sophisticated and accurate pricing: A focused team is key to build an advantage
Sophisticated and accurate pricing: A focused team is key to build an advantage Many CEOs have pricing background Pricing has a role in International every important cooperation, decision communication, exchange Technical expertise but also business and Large teams common sense talent Pricing in A
Slide 46: Sophisticated and accurate pricing: Mindset is also key
Sophisticated and accurate pricing: Mindset is also key Open-minded approach Fast Evolution Price comparison footprint1 Number of rate changes per year (range min - max) per individual operation vs market 81% 82% 71% 61% 25 - 50 max Admiral Top Avg 4 direct Top4 direct L'olivier Top Top44 direct dir
Slide 47: Sophisticated and accurate pricing: With the right pricing strategy, data is central
Sophisticated and accurate pricing: With the right pricing strategy, data is central Many Data Sources High Data Quality Smart use with Team mix of Access as a first Culture of data business focus and technical and Technology mover value technical expertise business skills Some examples: Telematic
Slide 48: Effective claims handling: Europe is very diverse from a claims perspective
Effective claims handling: Europe is very diverse from a claims perspective Average third party liability claims costs Main differences by market 60% Customers Percentage of fraudulent High ConTe (3) claims 40% Direct Line Percentage of claims Market AVG Genertel Medium where a counterparty Geni
Slide 49: Effective claims handling: Europe is very diverse from a claims perspective
Effective claims handling: Europe is very diverse from a claims perspective Example of large claim cost by market (€m)1 ~ 17 ILLUSTRATIVE Large BI Fatal ~6 ~3 ~3 1,5-2 0,5-1 ~1 0,5-1 UK Italy France Spain TPL Market Frequency2 6% 6% 4% 8% Fraud 0-1% 3-5% 0-1% ~1% (% of claims opened) France with the
Slide 50: Effective claims handling: Admiral European operations benefiting from group competitive advantages
Effective claims handling: Admiral European operations benefiting from group competitive advantages Competitive advantage Examples Claims Organisation centralised in the 3 580k€ ANIA incentive in Italy HQs and highly specialised Positive Knock for Knock balance due to positive fault / no fault
Slide 51: Effective claims handling: Admiral EU claim cost compared to the market
Effective claims handling: Admiral EU claim cost compared to the market Average Claims costs vs market1 (indexed, 2017, UK not included) 100 87 EU Market EU Admiral Admiral European operations has higher proportion of new business customers than market average Given this difference, Admiral Euro
Slide 52: Low cost structure: Expense ratio improving over time
Low cost structure: Expense ratio improving over time Europe Written Expense ratio1 Productivity: Active policies per FTE +10% -5 p.p. CAGR 745 38% 615 33% 2015 2017 2015 2017 Other key 2017 metrics (index, 2015 basis) Non Acquisition Cost per Policy 87 Cost per sale 90 Expense ratio higher than m
Slide 53: Low cost structure: Efficiency improving across all operations
Low cost structure: Efficiency improving across all operations Turnover and costs, YoY change Scale effect in the Italian direct market (written basis, 2017 vs 2016)1 (2017 data2) Turnover YoY change Costs YoY change Expenses (% of Turnover) 50% 43% 40% ConTe 3(3) Verti 30% Market average Genertel 2
Slide 54: Low cost structure: ER reduction led by a few strategic pillars
Low cost structure: ER reduction led by a few strategic pillars Key pillars Examples Fast, customer-oriented digital processes Personal area with self service Process optimisation features and easy access to information (e.g. dynamic FAQs on website and IVR1) From ~40% online closure in 2015 Continu
Slide 55: Customer focus: Customers and Quality
Customer focus: Customers and Quality Customers are key for our development and success… Admiral Experience …Focus on quality as an enabler to move customers from traditional channel… …as a result all our operations have good scores in terms of Customer Satisfaction A few examples Excellent call c
Slide 56: People and Culture: Key Success Factors
People and Culture: Key Success Factors • Management with a mix of managerial and insurance Italy #3 experience • Focus on developing talent • External recruiting of senior roles adding to technical and market experience Spain #4 COMMUNICATION REWARD & RECOGNITION A few examples Annual Staff Gener
Slide 57: EU organisational chart
EU organisational chart Milena Mondini European Insurance CEO Sarah Costantino Pascal Christophe Elisa Andrea Harris Moretti Gonzalvez Sanchez De Blas Tamborrelli Admiral Seguros ConTe.it L’olivier EUIGS AECS1 EU central European operations’ CEOs Heads of EU central functions Notes: 1) AECS is Admir
Slide 58: Brexit project progressing as planned
Brexit project progressing as planned Brexit project update in a nutshell 1 A new insurance company and intermediary have been established and licensed in Spain 2 The project is progressing as planned and we will be ready to operate post-Brexit after the UK has left the EU (also in a scenario of har
Slide 59: Learnings in Europe: Technological evolution
Learnings in Europe: Technological evolution Before Evolution and current structure • Limited investments in internal automation 1• Shared technology centre (EUIGS) based in Spain and IT internal processes enabling integrated technology functions, IT decisions and synergies • Some duplication of tec
Slide 60: Admiral Europe: What’s next?
Admiral Europe: What’s next? 5. Data and technology as 1. Cutting-edge UW competitive advantages • Antifraud competence • Cloud strategy centre • Data strategy • Analytics competence • EUIGS transformation centre • Pricing innovation …customers want! 4. Lean organisation 2. Exploration of new • Outs
Slide 61: A view on the future
A view on the future Admiral European losses1 (€) … … and profit1 (€) By 2022, we aim to deliver profit/year in the range of € 30-60m on a written whole 2018 account basis assuming normal market 2015 2016 2017 H1 conditions 3 As of today, Admiral share of whole 2015 2016 2017 account profit is s
Slide 62: Drivers for future profitability
Drivers for future profitability 1 Continued sustainable growth 2 Channel diversification and optimisation 3 Consolidate loss ratio advantage 4 Increase “revenue per user” through ancillaries and other business opportunities 62 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 63: Summary
Summary Admiral core competitive advantages exported to Europe European insurers benefiting from accelerated growth and economies of scale Aim to deliver material profit in the medium term 63 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 64: ConTe
ConTe Costantino Moretti - CEO ConTe Fun ConTe’s First Birthday Family
Slide 65: The Market
The Market The Market 65 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 66: Italian Market
Italian Market Whole Market Ratios (Third Party Liability)1 Market Premium (Third party Liability and Motor Own Damage) (€bn)2 Loss Ratio Expense Ratio Combiend ratio 20,1 19,9 20,7 20,2 108% 106% 18,7 103% 17,6 94% 98% 97% 16,7 93% 88% 91% 16,2 16,0 19% 18% 18% 18% 22% 22% 21% 20% 21% 89% 87% 85% 7
Slide 67: Market Competitive Landscape
Market Competitive Landscape Distribution Channel Whole Market GWP1 2017 Direct Market GWP1 2017 Split1 2017 Others 4% 11% Internet&Phone 8% Top 5 Market share Growth Direct 20171 (17 v 16)1 Total DirectMarket Tot Direct market Genialloyd 3,6% 6,1% 43% UNIPOLSAI Brokers 16% 23% Verti 2,3% -5,4% ALLI
Slide 68: Main Direct Competitors
Main Direct Competitors Genialloyd Verti 2nd largest player Largest player Launched in 2002 Launched in 1996 Rebranded as Verti in 2018 (was Direct Line) Part of Allianz Group Part of Mapfre Group from 2015 Profitable Significant losses in the last 2 years Multi-brand: GenialClic
Slide 69: Market characteristics
Market characteristics Regulatory changes Motor Third Party Liability compulsory product, only 15% of Motor Own Damage1 IDD and local new measures should increase Insurers obliged to quote for 100% of risks efficiency and transparency, reduce claims costs and fraud: Claims handling is complex Di
Slide 70: ConTe
The Market ConTe 70 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 71: ConTe Business Performance: Historic evolution
ConTe Business Performance: Historic evolution Turnover (€m) Customers 170 500k 139 415k 110 107 315k 102 285k 280k 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Expense Ratio1 Ultimate Loss Ratio2 ULR first projection ULR latest projection 83% 81% 82% 81% 80% 79% 79% 35% 35% 76% 31% 30% 65% 64%
Slide 72: ConTe in a nutshell
ConTe in a nutshell 1. Efficient growth over time sustained by a well recognised Brand 2. Customer centric organisation 3. Robust and reliable Loss Ratio position 4. Gaining efficiencies whilst maintaining good customer service 5. Leading Telematics player in the Direct Market 72 Admiral Group │ Eur
Slide 73: ConTe in a nutshell
ConTe in a nutshell 73 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 74: Efficient growth over time sustained by a well recognised brand
1) Efficient growth over time sustained by a well recognised brand Aided Brand Awareness 1 ConTe share of TV/Radio spending vs 100% growth rate2 32% 80% 64% 62% 54% 60% 20% 40% 17% 40% 19,4% 11% 20% 11,4% 9,8% 6,1% 0% 2015 2016 2017 H1 2018 2015 2016 2017 H1 2018 ConTe APB's Growth YOY ConTe Share o
Slide 75: Customer centric organisation
2) Customer centric organisation Customer centricity means: interactivity, speed, execution Customers are engaged to develop new products and features Customer needs and behaviours change rapidly, we need to respond quickly Execution means deliver value to the end users as soon as possible
Slide 76: Robust and Reliable Loss Ratio position
3) Robust and Reliable Loss Ratio position ConTe booked loss ratio development1 94% 93% 93% 90% 92% 89% 90% 87% 83% 82% 81% 80% 77% 71% 73% 68% 69% 67% 2012 2013 2014 2015 2016 2017 2014 2015 2016 2017 The Loss Ratio of each underwriting year positively evolving over time Prudent claims reserving
Slide 77: Robust and Reliable Loss Ratio position
3) Robust and Reliable Loss Ratio position 2017 Loss Ratio1 ranking by direct company 104% 93% 93% 97% 83% ConTe Genialloyd Verti Linear Genertel (Allianz) (Direct Line) (Unipol) (Generali) ConTe has a clear Loss Ratio advantage, despite strong growth Effective Pricing Advanced Antifraud solutio
Slide 78: Gaining efficiencies whilst maintaining good customer service
4) Gaining efficiencies whilst maintaining good customer service Expense Ratio decrease has been achieved due to: Indexed reduction of Operational Costs per Policy Positive scale effect Efficiency and digitalisation programme: 33% 1. Telephony System improved 2. IT platform modernisation 11% 100
Slide 79: Leading Telematics player in the Direct Market
5) Leading Telematics player in the Direct Market Allows better risk selection and growth in higher risk geographies c. 20% ConTe New Business sales are Telematics, slightly higher than Market (c. 15%)1 Telematics business is profitable Very valuable tool to reduce claims costs Continued e
Slide 80: Business Performance: Telematics antifraud example
Business Performance: Telematics antifraud example Customer reports an The accident occurred A very expensive claim! accident involving 3 vehicles in a very busy street in Naples Different location! Engine off! Accident never happened and the damage was Location was a garage! caused with a hammer! 8
Slide 81: What we’ve learned: Underwriting risk
What we’ve learned: Underwriting risk 2008 - 2010 2011 onwards Adverse selection False payments Personal Identity frauds Robust LR Geographical false declaration Rating structure not optimised More data points and mature portfolio Low use of external data Solid underwriting processes Antif
Slide 82: What we’ve learned: Risk selection examples
What we’ve learned: Risk selection examples 1 Customer declares to live in a geographical 2 Customer providing a manipulated postal ticket area where the insurance cost is low receipt of payment to get the policy issued without paying the correct amount Postal ticket receipt Province of Cremona Init
Slide 83: The four pillars of our sustainable growth strategy
The four pillars of our sustainable growth strategy LOSS RATIO advantage GROWTH Pricing & advanced Competitive prices analytics Product evolution Investment in data Customer loyalty Claims tech skills Innovation Lab Champions in customer service and convenience EFFICIENCY PEOPLE Digi
Slide 84: Summary
Summary ConTe is a profitable Operation with solid foundations in a competitive Market Loss Ratio is the key competitive advantage built over time ConTe will pursue a sustainable growth strategy based on four pillars: Loss Ratio, as growth and profit lever Efficiency Product enhancement and services
Slide 85: Admiral Seguros
Admiral Seguros Sarah Harris – CEO 2018 2015
Slide 86: The Market
The Market 86 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 87: Spanish market: Stable context
Spanish market: Stable context Gross Written Premium (€bn) Market Combined Ratio 12,1 LR ER 11,7 11,5 11,3 10,6 10,6 10,9 99% 100% 101% 102% 98% 10,0 10,1 95% 99% 100% 97% 98% 9,9 20% 20% 19% 20% 22% 22% 22% 23% 22% 20% 75% 79% 80% 78% 78% 77% 77% 79% 80% 76% 2008 2009 2010 2011 2012 2013 2014 2015
Slide 88: Direct Market – c. 12% of total premium
Direct Market – c. 12% of total premium Market share by company 2017 FY Premium Market Share Growth TOP 5 TRADITIONAL (17 vs 16) MAPFRE 19,3% 3,9% Other Direct; 6% Traditional (78%) ALLIANZ 13,1% 4,4% Línea Directa; Direct (22%) AXA 6,8% 1,4% 6,4% GENERALI 4,9% 2,7% Mutua 4,8% 4,2% REALE Madrileña;
Slide 89: Main competitors high level profile
Main competitors high level profile Mutua Madrileña Linea Directa Launched in 1995, 100% owned by Bankinter Hybrid model, 3rd in Spanish Market Large and profitable Very loyal portfolio with strong presence in Madrid and in high premium segments Auto (core), home, expanding to health Aut
Slide 90: Market characteristics
Market characteristics Low premium Claims Baremo change Claims cost constrained by regulatory environment Baremo system regulates (Knock for Knock, Baremo) compensation for bodily injury cases Long-term trend of frequency reduction, Changes in 2016: accentuated during the economic crisis I
Slide 91: Admiral Seguros
Admiral Seguros 91 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 92: Business Performance: Historic evolution
Business Performance: Historic evolution Turnover (€m) Customers 73 224k 62 54 55 189k 48 164k 161k 137k 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Expense Ratio1 Ultimate Loss Ratio2 ULR first projection ULR latest projection 51% 96% 94% 87% 89% 91% 89% 88% 42% 42% 84% 84% 79% 38% 33% 35% 20
Slide 93: Learnings: Branding
Learnings: Branding Launch date: 2006 Launch date: 2013 Brand Awareness peak: 72% (2012) Brand Awareness: 61% Brand Confidence Index: 10,3% Brand Confidence Index: 34,3% Sales (2017) 22% 22% 78% 78% 22% 78% Balumba Qualitas Source: 1) Internal figures, 2) Infoadex and Brandtracker for br
Slide 94: Our path to success
Our path to success 4. Innovative 2. Lean & Customer-centric 3. Outperformance on price comparison 1. Loss Ratio Excellence 94 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 95: Loss Ratio advantage
Loss Ratio advantage Admiral Seguros pricing ability - loss ratio 76% 76% 71-73% Admiral Seguros Ultimate Loss Ratio1 is already close to market level When adjusted for the weight of New Business vs Renewal we estimate a market comparable loss ratio advantage of 3-5 points Market 2017 Admiral Se
Slide 96: Loss Ratio Excellence: Risk Selection
Loss Ratio Excellence: Risk Selection Pricing - Granularity of risk selection - Investment in talent development Data/Analytics Underwriting/ Antifraud - EU Centre of excellence - More than 200 - Investment in platform underwriting rules governance - European antifraud system External Databases - St
Slide 97: Lean and Customer-Centric: Continuous Improvement
Lean and Customer-Centric: Continuous Improvement Acquisition cost Customer self-service New Business: Variable Cost per Sale Efficiency and customer experience improvements Investing in digitalisation of post-sale processes 2013 2014 2015 2016 2017 Growing more efficiently through continuous
Slide 98: Outperformance on Price Comparison
Outperformance on Price Comparison Admiral Seguros Click to Sale Click to Sale vs Rastreator Average Evolution on Price Comparison 2014 2015 2016 2017 2018H1 Admiral Seguros Rastreator Growing more efficiently through better conversion of available leads Source: Internal management estimates, Rast
Slide 99: Innovation: Test and Learn Culture
Innovation: Test and Learn Culture New channels Direct marketing quotes New direct traffic acquisition (display, affiliates, social) Testing other channels (partnership +38% +52% +23% and intermediated) 2015 2016 2017 2018 Reforecast New products “Comprehensive Motorbike & Vans Telematics Multic
Slide 100: Summary
Summary Stable market context Strong growth in the last two years with increased market share Generating value through differentiation: Loss ratio excellence Lean and Customer-centric Outperformance on price comparison Innovation 100 Admiral Group │ European Investor Day 2018 │ Rome │ 17 Sep
Slide 101: L’olivier assurance auto
L’olivier assurance auto Pascal Gonzalvez - CEO 2009 Sabbatical… 2018 2010 L’olivier pre-launch Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 102: The Market
The Market The Market 102 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 103: French Market: Motor insurance market landscape
French Market: Motor insurance market landscape Market Combined Ratio Gross Written Premium (€bn) 21.3 25% 26% 28% 28% 20.7 26% 30% 29% 30% 20.4 20.1 19.7 19.5 18.9 81% 18.3 77% 75% 73% 76% 74% 77% 73% 2010 2011 2012 2013 2014 2015 2016 2017 (p) 2010 2011 2012 2013 2014 2015 2016 2017 (p) Loss ratio
Slide 104: Market distribution and top players
Market distribution and top players Market Distribution Market Growth TOP 5 MOTOR INSURERS Share (17 vs 16) 3% 14% Covea 19.6% <1% Agents AXA 15.1% -1% 9% 41% Mutuals Brokers Groupama - Gan 10.2% <1% Direct Macif 8.5% 3% 34% Bank Allianz 8.2% 5% Market Growth TOP 5 MOTOR DIRECT Share (17 vs 16) Ma
Slide 105: Main direct competitor
Main direct competitor Direct Assurance Eurofil Biggest direct player Historical player Launched in 1992 Launched in 1990 Owned by Axa Owned by Aviva Profitable Profitable Auto, Motorbike, Home and Mortgage insurance Auto, Motorbike, Home and Mortgage insurance Strong brand awa
Slide 106: Market Characteristics
Market Characteristics Dynamic Aggregator Market Product €400 average premium 63% of market is fully comprehensive Gross Aggregator Quotes 70% of customers have full no-claims 9,0M bonus (“Bonus 50”) 8,2M 7,1M 7,2M High retention Low churn (15% attrition at renewal) But new law making swit
Slide 107: Two impactful regulatory changes
Two impactful regulatory changes Before 2016 Today Cancellation at the latest 2 months before Third party is unlimited liability while first party renewal date via registered letter; if passed, is limited (usually between €0.5M and €1M) for stuck for another year with current insurer the fault d
Slide 108: L’olivier
The Market L’olivier 108 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 109: Business Performance - Historic evolution
Business Performance - Historic evolution Turnover (€m) Customers 66 130k 46 92k 29 57k 18 34k 15 29k 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Expense Ratio1 Ultimate Loss Ratio2 69% 71% 66% 98% 97% 57% 83% 77% 79% 44% 38% 2013 2014 2015 2016 2017 2018 H1 2013 2014 2015 2016 2017 Source: 1)
Slide 110: Lessons learned: Things that we had underestimated
Lessons learned: Things that we had underestimated Mid term cancellations Quality of service • Acquisition cost higher than anticipated • Good quality of service more challenging because of mid-term cancellations issues than expected after insourcing our (over-represented for customers of price oper
Slide 111: L’olivier vision in the next 3 years
L’olivier vision in the next 3 years Bigger share of Price Comparison Website market (conversion) Keep improving persistency 2 Attracting more standard risks Self-service & automation Premium product Keep pricing advantage Quality positioning & TV Better use of data (both internal an
Slide 112: Scale is key to meet business objectives
Scale is key to meet business objectives L’olivier Aided Brand Awareness and Media Spend Conversion 40% 2,5 • Price competitiveness to get more clicks Aided Brand Awareness 35% Media Spend (€m) through 30% 2 • Operational efficiency to optimise 25% 1,5 conversion post clicks 20% • Brand awareness is
Slide 113: Self service and automation: Key levers for lower expense ratio and better quality of service
Self service and automation: Key levers for lower expense ratio and better quality of service ROBOTS Expected impact • Automation of low added-value to free up agents • Execution of time-consuming and value-added activities QUALITY OMNI-CHANNEL • Provide 24/7 servicing Improve accuracy of • New resp
Slide 114: How do we differentiate versus the market on loss ratio?
How do we differentiate versus the market on loss ratio? L’olivier pricing ability - loss ratio (2017 data, Indexed to Market) How are we different? 107 Pricing process (frequency of changes) 100 101 Pricing structure Pricing modelling Price optimisation techniques (beyond standard technical
Slide 115: Summary
Summary Strong growth in the past couple of years while strengthening our fundamentals and improving technical results Current competitive advantage in pricing to accelerate Plan is to keep growing Scale is a pre-requisite Special focus both on underwriting, quality and self- service/automation
Slide 116: Wrap-up
Wrap-up
Slide 117: Wrap-up
Wrap-up Solid operations and strong team in continental Europe Successful transfer of Group strengths whilst adapting businesses to local context European PCWs and Insurers enjoyed a couple of years of sustained growth European insurance is profitable on combined basis Consistent trend of
Slide 118: Q&A
Q&A
Slide 119: Appendix
The Market Appendix 119 Admiral Group │ European Investor Day 2018 │ Rome │ 17 September 2018
Slide 120: A strong management team - CEOs
A strong management team - CEOs Milena Mondini de Focatiis - European Insurance CEO Milena has been working in Admiral Group since 2007. Head of Continental Europe insurance at Admiral Group plc since April, 2016. Previously, she served as Managing Director of ConTe since its launch. Before joining
Slide 121: A strong management team – EU central functions and ConTe
A strong management team – EU central functions and ConTe Christophe Sanchez – European Insurance CTO Christophe joined Admiral Group in 2005. CTO of Continental Europe Insurance since 2016, he leads our technology strategy and efforts across Europe. Previously, Christophe was CEO of Admiral Seguros
Slide 122: Disclaimer
Disclaimer The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. No