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"iso4217:GBP" } }, "fact-450": { "value": "992800000", "decimals": -5, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-454": { "value": "
General information
Admiral Group plc is a public limited Company incorporated in England and Wales. Its registered office is at T\u0177 Admiral, David Street,
Cardiff, CF10 2EH and its shares are listed on the London Stock Exchange. The nature of Admiral Group operations and its principal
activities is set out in the Business model section on page 8.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-2": { "value": "Admiral Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-451": { "value": "Admiral Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-3": { "value": "public limited Company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-4": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-452": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-5": { "value": "T\u0177 Admiral, David Street, Cardiff, CF10 2EH", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-455": { "value": "
1. Basis of preparation
The consolidated financial statements have been prepared and approved by the Directors in accordance with United Kingdom adopted
international accounting standards in conformity with the requirements of the Companies Act 2006. The Company has elected to
prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101).
The accounting policies set out in the notes to the financial statements have, unless otherwise stated, been applied consistently to all
periods presented in these Group financial statements.
The financial statements are prepared on the historical cost basis, except for the revaluation of financial assets classified as fair value through
profit or loss or as fair value through Other Comprehensive Income, and insurance and reinsurance contract assets and liabilities which
are measured at their fulfilment value in accordance with IFRS 17 Insurance Contracts. The Group and Company financial statements are
presented in pounds sterling, rounded to the nearest \u00a30.1 million.
Cashflows from operating activities before movements in investments comprise all cashflows arising from the Group\u2019s insurance and
reinsurance activities, and from loans and advances issued to customers. Cashflows from financing activities include the cashflows on issues
of loan backed securities, lease liabilities and other financial liabilities.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and can affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date
on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date control ceases. Losses applicable to the non-controlling interests in a subsidiary are
allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
The Group has securitised certain loans and advances to customers by the transfer of the loans to special purpose entities (\u2019SPEs\u2019)
controlled by the Group. Securitisation enables a subsequent issuance of debt by the SPEs to investors who gain the security of the
underlying assets as collateral. These SPEs are fully consolidated into the Group financial statements under IFRS 10 Consolidated Financial
Statements, as the Group controls the entity in line with the above definition.
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not
readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
year in which the estimate is reviewed. To the extent that a change in an accounting estimate gives rise to changes in assets and liabilities,
the movement is recognised by adjusting the carrying amount of the related asset or liability in the period in which the change occurs.
Further information regarding the Group\u2019s critical accounting judgements and estimates is provided in note 2 to the financial statements.
Going concern
The consolidated financial statements have been prepared on a going concern basis. In considering this requirement, the directors have
taken into account the following:
\u2022 The Group\u2019s profit projections, including:
\u2013 Changes in premium rates and projected policy volumes across the Group\u2019s insurance businesses
\u2013 The impacts of the continued elevated inflationary environment on the cost of settling claims across all of the Group\u2019s
insurance businesses
\u2013 The return of motor claims frequency towards pre-pandemic levels
\u2013 Projected trends in other revenue generated by the Group\u2019s insurance business from fees and the sale of ancillary products
\u2013 Projected contributions to profit from businesses other than the UK Car insurance business
\u2013 Expected trends in unemployment in the context of credit risks and the growth of the Group\u2019s consumer lending business
\u2013 The More Than acquisition due to complete in the first half of 2024
\u2013 Assessment of wider market risk and changes in investment performance given the changing interest rates toward the end of 2023.
\u2022 The Group\u2019s solvency position, which has been closely monitored through periods of market volatility. The Group continues to maintain
a strong solvency position above target levels
\u2022 The adequacy of the Group\u2019s liquidity position after considering all the factors noted above
\u2022 The results of business plan scenarios and stress tests on the projected profitability, solvency and liquidity positions including the
impact of severe downside scenarios that assume severe adverse economic, credit and trading stresses
\u2022 The regulatory environment, focusing on regulatory guidance issued by the FCA and the PRA in the UK and regular communications
between management and regulators
\u2022 A review of the Company\u2019s principal risks and uncertainties and the assessment of emerging risks, including climate related risks.
Following consideration of all of the above, the Directors have reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report, and that it is therefore
appropriate to adopt the going concern basis in preparing the consolidated financial statements.
Further information regarding the Company\u2019s business activities, together with the factors likely to affect its future development,
performance and position, is set out in the Strategic Report. Further information regarding the financial position of the Company,
its cashflows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, note 2 to the financial
statements include the Group\u2019s insurance and financial risk management objectives, details of its financial instruments and its exposures
to credit risk and liquidity risk; and its objectives, policies and processes for managing its capital.
Adoption of new and revised standards
The Group has adopted the following IFRSs and interpretations during the year, which have been issued and endorsed:
\u2022 IFRS 17 Insurance Contracts (effective 1 January 2023)
\u2022 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective
1 January 2023)
\u2022 Amendments to IAS 1 Presentation of Financial Statements and Practice Statement 2: Disclosures of Accounting policies (effective
1 January 2023)
\u2022 Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective
1 January 2023).
\u2022 Amendments to IAS 12 Income Taxes: International tax reform - Pillar two model rules (effective 1 January 2023).
The application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and cashflows.
Further information on the impact of the transition to IFRS 17 is provided below.
IFRS 17 adoption
IFRS 17, the new insurance contracts standard, replaces IFRS 4 Insurance Contracts, from 1 January 2023.
As a result, the opening balance sheet (1 January 2022) and prior year comparatives (FY 2022) have been restated under IFRS 17, applying
the transitional provisions in Appendix C to IFRS 17. The nature of the changes in accounting policies can be summarised as follows:
Changes to classification and measurement.
The adoption of IFRS 17 did not change the classification of the Group\u2019s insurance contracts.
The Group was previously permitted under IFRS 4 to continue accounting using its previous (UK GAAP) accounting policies. However, IFRS
17 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by
the Group.
Under IFRS 17, the Group\u2019s insurance contracts issued and reinsurance contracts held have all been assessed as eligible to be measured
by applying the premium allocation approach (\u2018PAA\u2019). The PAA simplifies the measurement of insurance contracts in comparison with the
general model in IFRS 17.
The measurement principles of the PAA differ from the \u2018earned premium approach\u2019 used under IFRS 4 in the following key areas:
\u2022 The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance services provided
\u2022 The Group has chosen to expense its insurance acquisition cashflows as incurred
\u2022 Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial risk when a
group of contracts is onerous in order to calculate a loss component
\u2022 Measurement of the liability for incurred claims (previously claims outstanding) is determined on a discounted probability-weighted
expected value basis, and includes an explicit risk adjustment for non-financial risk.
\u2022 Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held minus ceded earned
premium) is adjusted to include a loss-recovery component to reflect the expected recovery of onerous contract losses where such
contracts reinsure onerous direct contracts.
Presentation and disclosure
For presentation in the Statement of Financial Position, the Group aggregates insurance and reinsurance contracts issued and reinsurance
contracts held respectively, and presents separately:
\u2022 Portfolios of insurance contracts issued that are assets
\u2022 Portfolios of insurance contracts issued that are liabilities
\u2022 Portfolios of reinsurance contracts held that are assets
\u2022 Portfolios of reinsurance contracts held that are liabilities.
The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements.
The line item descriptions in the Statement of Profit or Loss and Other Comprehensive Income have been changed significantly
compared with last year. Previously, the Group reported the following line items:
\u2022 Gross written premiums
\u2022 Net written premiums
\u2022 Changes in unearned premium reserves
\u2022 Gross insurance claims
\u2022 Net insurance claims
\u2022 Net operating expenses.
Instead, IFRS 17 requires separate presentation of:
\u2022 Insurance revenue
\u2022 Insurance service expenses
\u2022 Income or expenses from reinsurance contracts held
\u2022 Insurance finance income or expenses.
The Group provides disaggregated qualitative and quantitative information about:
\u2022 Amounts recognised in its financial statements from insurance contracts issued and reinsurance contracts held
\u2022 Significant judgements, and changes in those judgements, when applying the standard.
The new accounting policies and choices adopted in the implementation of IFRS 17 are disclosed in the notes to these
financial statements.
Transition approach
The full retrospective approach was applied to the insurance contracts issued and reinsurance contracts held that were in force at the
transition date.
The transition approach was determined at a group of insurance contracts level. Accordingly, the Group has recognised and measured
each group of insurance contracts in this category as if IFRS 17 had always applied; derecognised any existing balances that would not
exist had IFRS 17 always applied; and recognised any resulting net difference in equity.
Impact of Transition on Equity
The total impact of the transition was a reduction in equity of \u00a3125.6 million, as shown in the Consolidated Statement of Changes
in Equity. The Statement of Financial Position presents the restated balance sheet as at the transition date of 1 January 2022, with
supporting notes providing further detail as required.
The key changes driving the adverse impact on transition are:
\u2022 An adverse impact arising from the Group\u2019s accounting policy choice to expense acquisition costs, which results in a write off of the
Group\u2019s gross deferred acquisition cost asset
\u2022 A reduction in quota share reinsurance assets primarily as a result of the change in timing in recognition of ceded quota share expense
recoveries, which under IFRS 17 are realised in line with the earning of premium, rather than aligned to when the gross expenses
are incurred
\u2022 An adverse impact due to the deferral of revenue in relation to underwritten ancillary products, which was previously recognised
immediately as commission income
\u2022 An offsetting favourable impact due to change in the Group\u2019s claims liabilities, net of reinsurance, as a result of the requirements for
the liability and asset for incurred claims to be calculated using a probability weighted, discounted best estimate plus risk adjustment
for non-financial risk
\u2022 The tax treatment of the transition impact follows the accounting treatment, with no transitional relief available. The tax impact on
transition has been calculated at an entity level, based on the tax rates in place in 2023, when the tax transition impacts are realised.
Deferred tax assets in relation to carried forward losses are recognised only to the extent that it is probable future taxable profit will be
available against which the assets can be utilised, in accordance with the Group\u2019s accounting policy for taxation.
Summary of Impact of Transition on FY 2022 restated result
31 December 2022
\u00a3m
IFRS 17
IFRS 4
Change
Analysis of profit
UK Insurance
509.7
615.9
(106.2)
International Insurance
(56.2)
(53.8)
(2.4)
International Insurance \u2013 European Motor
(16.5)
(1.6)
(14.9)
International Insurance \u2013 US Motor
(36.4)
(48.9)
12.5
International Insurance \u2013 Other
(3.3)
(3.3)
\u2013
Admiral Money
2.1
2.1
\u2013
Other
(94.4)
(95.2)
0.8
Group profit before tax
361.2
469.0
(107.8)
The 2022 profit before tax on an IFRS 17 basis is lower than that reported under IFRS 4. The following table sets out the key differences
for the UK and international insurance profits reported under IFRS 17 compared to IFRS 4:
\u00a3m
UK
International
IFRS 4 reported profit
615.9
(53.8)
Timing of reserve releases
(93.3)
(9.9)
Discounting
15.4
9.5
Timing of Quota share reinsurance recoveries
(41.2)
(2.9)
Other
12.9
0.9
IFRS 17 reported profit before tax
509.7
(56.2)
The difference between IFRS 4 and IFRS 17 reported profit primarily arises as a result of differences in the reserve strength or risk
adjustment position over the course of 2022 under each standard. Under IFRS 4, Admiral moved down to the 95th percentile over the
course of 2022. Under IFRS 17, Admiral moved down to the 95th percentile at the transition date of 1 January 2022, and remained at that
percentile during 2022. This results in lower reserve releases under IFRS 17 in 2022, and therefore lower profit.
The discounting impact shown above is the impact of the discounting of the gross, net of XoL claims cost and finance expenses
recognised in the period. In UK Insurance, whilst there is a favourable impact of discounting of the claims incurred of circa \u00a352 million at
YE 2022, this is offset by the unwind of discounting of prior years, reducing the overall discounting benefit to \u00a315 million when compared
to IFRS 4 claims costs. It should be noted that whilst the higher discount curves seen in 2022 result in lower claims reserves, the Group\u2019s
accounting policy decision to take the impact of changes in yield curve on outstanding claims reserves to Other Comprehensive Income
means that this is not a material driver of IFRS 17 profit in 2022.
In addition, the majority of the discounting benefit on gross claims net of excess of loss reinsurance is offset by the significant adverse
movement on quota share recoveries. This is significant given that, due to quota share contracts having been largely commuted on
earlier underwriting years, there is no significant offsetting finance income (representing the unwind of discounting within the quota
share result).
Other movements include a number of largely offsetting differences in the timing of recognition of acquisition expenses, quota share
reinsurance profit commission recoveries, and movements in the onerous loss component.
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards that
have been issued but are not yet effective:
\u2022 Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (effective 1 January 2025)
\u2022 Amendments to IAS 7 Statement of Cashflows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements
(effective 1 January 2024)
\u2022 Amendments to IAS 1 Presentation of Financial Statements: Classification of liabilities as Current or Non-current
(effective 1 January 2024)
\u2022 Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024).
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements
of the Group in future periods.
Acquisition of More Than home and pet personal lines from RSA
During December 2023 the Group signed an agreement to acquire the UK direct Home and Pet personal lines insurance operations of
RSA Insurance Group Limited (\u201cRSA\u201d). The acquisition is expected to complete during the first half of 2024. The consideration payable at
completion is \u00a382.5 million, with a further potential payment of \u00a332.5 million depending on the number of policies successfully migrated
to the Group. The acquisition will not include liabilities relating to existing policies, which will remain with RSA. There is no impact on the
results reported in these financial statements as a result of the transaction.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-471": { "value": "The consolidated financial statements have been prepared and approved by the Directors in accordance with United Kingdom adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Company has elected to prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-6": { "value": "The consolidated financial statements have been prepared and approved by the Directors in accordance with United Kingdom adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Company has elected to prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). ", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-472": { "value": "Going concern The consolidated financial statements have been prepared on a going concern basis. In considering this requirement, the directors have taken into account the following: \u2022 The Group\u2019s profit projections, including: \u2013 Changes in premium rates and projected policy volumes across the Group\u2019s insurance businesses \u2013 The impacts of the continued elevated inflationary environment on the cost of settling claims across all of the Group\u2019s insurance businesses \u2013 The return of motor claims frequency towards pre-pandemic levels \u2013 Projected trends in other revenue generated by the Group\u2019s insurance business from fees and the sale of ancillary products \u2013 Projected contributions to profit from businesses other than the UK Car insurance business \u2013 Expected trends in unemployment in the context of credit risks and the growth of the Group\u2019s consumer lending business \u2013 The More Than acquisition due to complete in the first half of 2024 \u2013 Assessment of wider market risk and changes in investment performance given the changing interest rates toward the end of 2023. \u2022 The Group\u2019s solvency position, which has been closely monitored through periods of market volatility. The Group continues to maintain a strong solvency position above target levels \u2022 The adequacy of the Group\u2019s liquidity position after considering all the factors noted above \u2022 The results of business plan scenarios and stress tests on the projected profitability, solvency and liquidity positions including the impact of severe downside scenarios that assume severe adverse economic, credit and trading stresses \u2022 The regulatory environment, focusing on regulatory guidance issued by the FCA and the PRA in the UK and regular communications between management and regulators \u2022 A review of the Company\u2019s principal risks and uncertainties and the assessment of emerging risks, including climate related risks. Following consideration of all of the above, the Directors have reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report, and that it is therefore appropriate to adopt the going concern basis in preparing the consolidated financial statements. Further information regarding the Company\u2019s business activities, together with the factors likely to affect its future development, performance and position, is set out in the Strategic Report. Further information regarding the financial position of the Company, its cashflows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, note 2 to the financial statements include the Group\u2019s insurance and financial risk management objectives, details of its financial instruments and its exposures to credit risk and liquidity risk; and its objectives, policies and processes for managing its capital. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-497": { "value": "Adoption of new and revised standards The Group has adopted the following IFRSs and interpretations during the year, which have been issued and endorsed: \u2022 IFRS 17 Insurance Contracts (effective 1 January 2023) \u2022 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023) \u2022 Amendments to IAS 1 Presentation of Financial Statements and Practice Statement 2: Disclosures of Accounting policies (effective 1 January 2023) \u2022 Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). \u2022 Amendments to IAS 12 Income Taxes: International tax reform - Pillar two model rules (effective 1 January 2023). The application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and cashflows. Further information on the impact of the transition to IFRS 17 is provided below. ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-473": { "value": "Adoption of new and revised standards The Group has adopted the following IFRSs and interpretations during the year, which have been issued and endorsed: \u2022 IFRS 17 Insurance Contracts (effective 1 January 2023) \u2022 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective 1 January 2023) \u2022 Amendments to IAS 1 Presentation of Financial Statements and Practice Statement 2: Disclosures of Accounting policies (effective 1 January 2023) \u2022 Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). \u2022 Amendments to IAS 12 Income Taxes: International tax reform - Pillar two model rules (effective 1 January 2023). The application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and cashflows. Further information on the impact of the transition to IFRS 17 is provided below. IFRS 17 adoption IFRS 17, the new insurance contracts standard, replaces IFRS 4 Insurance Contracts, from 1 January 2023. As a result, the opening balance sheet (1 January 2022) and prior year comparatives (FY 2022) have been restated under IFRS 17, applying the transitional provisions in Appendix C to IFRS 17. The nature of the changes in accounting policies can be summarised as follows: Changes to classification and measurement. The adoption of IFRS 17 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS 4 to continue accounting using its previous (UK GAAP) accounting policies. However, IFRS 17 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. Under IFRS 17, the Group\u2019s insurance contracts issued and reinsurance contracts held have all been assessed as eligible to be measured by applying the premium allocation approach (\u2018PAA\u2019). The PAA simplifies the measurement of insurance contracts in comparison with the general model in IFRS 17. The measurement principles of the PAA differ from the \u2018earned premium approach\u2019 used under IFRS 4 in the following key areas: \u2022 The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance services provided \u2022 The Group has chosen to expense its insurance acquisition cashflows as incurred \u2022 Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial risk when a group of contracts is onerous in order to calculate a loss component \u2022 Measurement of the liability for incurred claims (previously claims outstanding) is determined on a discounted probability-weighted expected value basis, and includes an explicit risk adjustment for non-financial risk. \u2022 Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held minus ceded earned premium) is adjusted to include a loss-recovery component to reflect the expected recovery of onerous contract losses where such contracts reinsure onerous direct contracts. Presentation and disclosure For presentation in the Statement of Financial Position, the Group aggregates insurance and reinsurance contracts issued and reinsurance contracts held respectively, and presents separately: \u2022 Portfolios of insurance contracts issued that are assets \u2022 Portfolios of insurance contracts issued that are liabilities \u2022 Portfolios of reinsurance contracts held that are assets \u2022 Portfolios of reinsurance contracts held that are liabilities. The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements. The line item descriptions in the Statement of Profit or Loss and Other Comprehensive Income have been changed significantly compared with last year. Previously, the Group reported the following line items: \u2022 Gross written premiums \u2022 Net written premiums \u2022 Changes in unearned premium reserves \u2022 Gross insurance claims \u2022 Net insurance claims \u2022 Net operating expenses. Instead, IFRS 17 requires separate presentation of: \u2022 Insurance revenue \u2022 Insurance service expenses \u2022 Income or expenses from reinsurance contracts held \u2022 Insurance finance income or expenses. The Group provides disaggregated qualitative and quantitative information about: \u2022 Amounts recognised in its financial statements from insurance contracts issued and reinsurance contracts held \u2022 Significant judgements, and changes in those judgements, when applying the standard. The new accounting policies and choices adopted in the implementation of IFRS 17 are disclosed in the notes to these financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-518": { "value": "IFRS 17 adoption IFRS 17, the new insurance contracts standard, replaces IFRS 4 Insurance Contracts, from 1 January 2023. As a result, the opening balance sheet (1 January 2022) and prior year comparatives (FY 2022) have been restated under IFRS 17, applying the transitional provisions in Appendix C to IFRS 17. The nature of the changes in accounting policies can be summarised as follows: Changes to classification and measurement. The adoption of IFRS 17 did not change the classification of the Group\u2019s insurance contracts. The Group was previously permitted under IFRS 4 to continue accounting using its previous (UK GAAP) accounting policies. However, IFRS 17 establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group. Under IFRS 17, the Group\u2019s insurance contracts issued and reinsurance contracts held have all been assessed as eligible to be measured by applying the premium allocation approach (\u2018PAA\u2019). The PAA simplifies the measurement of insurance contracts in comparison with the general model in IFRS 17. The measurement principles of the PAA differ from the \u2018earned premium approach\u2019 used under IFRS 4 in the following key areas: \u2022 The liability for remaining coverage reflects premiums received less amounts recognised in revenue for insurance services provided \u2022 The Group has chosen to expense its insurance acquisition cashflows as incurred \u2022 Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial risk when a group of contracts is onerous in order to calculate a loss component \u2022 Measurement of the liability for incurred claims (previously claims outstanding) is determined on a discounted probability-weighted expected value basis, and includes an explicit risk adjustment for non-financial risk. \u2022 Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held minus ceded earned premium) is adjusted to include a loss-recovery component to reflect the expected recovery of onerous contract losses where such contracts reinsure onerous direct contracts. Presentation and disclosure For presentation in the Statement of Financial Position, the Group aggregates insurance and reinsurance contracts issued and reinsurance contracts held respectively, and presents separately: \u2022 Portfolios of insurance contracts issued that are assets \u2022 Portfolios of insurance contracts issued that are liabilities \u2022 Portfolios of reinsurance contracts held that are assets \u2022 Portfolios of reinsurance contracts held that are liabilities. The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements. The line item descriptions in the Statement of Profit or Loss and Other Comprehensive Income have been changed significantly compared with last year. Previously, the Group reported the following line items: \u2022 Gross written premiums \u2022 Net written premiums \u2022 Changes in unearned premium reserves \u2022 Gross insurance claims \u2022 Net insurance claims \u2022 Net operating expenses. Instead, IFRS 17 requires separate presentation of: \u2022 Insurance revenue \u2022 Insurance service expenses \u2022 Income or expenses from reinsurance contracts held \u2022 Insurance finance income or expenses. The Group provides disaggregated qualitative and quantitative information about: \u2022 Amounts recognised in its financial statements from insurance contracts issued and reinsurance contracts held \u2022 Significant judgements, and changes in those judgements, when applying the standard. The new accounting policies and choices adopted in the implementation of IFRS 17 are disclosed in the notes to these financial statements. Transition approach The full retrospective approach was applied to the insurance contracts issued and reinsurance contracts held that were in force at the transition date. The transition approach was determined at a group of insurance contracts level. Accordingly, the Group has recognised and measured each group of insurance contracts in this category as if IFRS 17 had always applied; derecognised any existing balances that would not exist had IFRS 17 always applied; and recognised any resulting net difference in equity. Impact of Transition on Equity The total impact of the transition was a reduction in equity of \u00a3125.6 million, as shown in the Consolidated Statement of Changes in Equity. The Statement of Financial Position presents the restated balance sheet as at the transition date of 1 January 2022, with supporting notes providing further detail as required. The key changes driving the adverse impact on transition are: \u2022 An adverse impact arising from the Group\u2019s accounting policy choice to expense acquisition costs, which results in a write off of the Group\u2019s gross deferred acquisition cost asset \u2022 A reduction in quota share reinsurance assets primarily as a result of the change in timing in recognition of ceded quota share expense recoveries, which under IFRS 17 are realised in line with the earning of premium, rather than aligned to when the gross expenses are incurred \u2022 An adverse impact due to the deferral of revenue in relation to underwritten ancillary products, which was previously recognised immediately as commission income \u2022 An offsetting favourable impact due to change in the Group\u2019s claims liabilities, net of reinsurance, as a result of the requirements for the liability and asset for incurred claims to be calculated using a probability weighted, discounted best estimate plus risk adjustment for non-financial risk \u2022 The tax treatment of the transition impact follows the accounting treatment, with no transitional relief available. The tax impact on transition has been calculated at an entity level, based on the tax rates in place in 2023, when the tax transition impacts are realised. Deferred tax assets in relation to carried forward losses are recognised only to the extent that it is probable future taxable profit will be available against which the assets can be utilised, in accordance with the Group\u2019s accounting policy for taxation. Summary of Impact of Transition on FY 2022 restated result
31 December 2022
\u00a3m
IFRS 17
IFRS 4
Change
Analysis of profit
UK Insurance
509.7
615.9
(106.2)
International Insurance
(56.2)
(53.8)
(2.4)
International Insurance \u2013 European Motor
(16.5)
(1.6)
(14.9)
International Insurance \u2013 US Motor
(36.4)
(48.9)
12.5
International Insurance \u2013 Other
(3.3)
(3.3)
\u2013
Admiral Money
2.1
2.1
\u2013
Other
(94.4)
(95.2)
0.8
Group profit before tax
361.2
469.0
(107.8)
The 2022 profit before tax on an IFRS 17 basis is lower than that reported under IFRS 4. The following table sets out the key differences for the UK and international insurance profits reported under IFRS 17 compared to IFRS 4:
\u00a3m
UK
International
IFRS 4 reported profit
615.9
(53.8)
Timing of reserve releases
(93.3)
(9.9)
Discounting
15.4
9.5
Timing of Quota share reinsurance recoveries
(41.2)
(2.9)
Other
12.9
0.9
IFRS 17 reported profit before tax
509.7
(56.2)
The difference between IFRS 4 and IFRS 17 reported profit primarily arises as a result of differences in the reserve strength or risk adjustment position over the course of 2022 under each standard. Under IFRS 4, Admiral moved down to the 95th percentile over the course of 2022. Under IFRS 17, Admiral moved down to the 95th percentile at the transition date of 1 January 2022, and remained at that percentile during 2022. This results in lower reserve releases under IFRS 17 in 2022, and therefore lower profit. The discounting impact shown above is the impact of the discounting of the gross, net of XoL claims cost and finance expenses recognised in the period. In UK Insurance, whilst there is a favourable impact of discounting of the claims incurred of circa \u00a352 million at YE 2022, this is offset by the unwind of discounting of prior years, reducing the overall discounting benefit to \u00a315 million when compared to IFRS 4 claims costs. It should be noted that whilst the higher discount curves seen in 2022 result in lower claims reserves, the Group\u2019s accounting policy decision to take the impact of changes in yield curve on outstanding claims reserves to Other Comprehensive Income means that this is not a material driver of IFRS 17 profit in 2022. In addition, the majority of the discounting benefit on gross claims net of excess of loss reinsurance is offset by the significant adverse movement on quota share recoveries. This is significant given that, due to quota share contracts having been largely commuted on earlier underwriting years, there is no significant offsetting finance income (representing the unwind of discounting within the quota share result). Other movements include a number of largely offsetting differences in the timing of recognition of acquisition expenses, quota share reinsurance profit commission recoveries, and movements in the onerous loss component. 2. Critical accounting judgements and estimates In applying the Group\u2019s accounting policies as described in the notes to the financial statements, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant, including where appropriate, weather-related factors. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2.1 Critical accounting judgements The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Group\u2019s accounting policies and that have the most significant effect on the amounts recognised in financial statements. Premium allocation approach (\u2018PAA\u2019) The Group applies the PAA to all of its insurance and reinsurance contracts. The coverage period of insurance contracts is typically one year or less, including insurance contract services arising from all premiums within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to be material. The Group\u2019s insurance contracts are therefore automatically eligible for the PAA. However, the Group\u2019s reinsurance contracts are not automatically eligible for the PAA given that the coverage period is greater than one year. The Group has modelled the expected cashflows and reasonably possible future scenarios for its reinsurance contracts, and as a result expects that the measurement of the asset for remaining coverage for the group containing those contracts under the PAA does not differ materially from the measurement that would be produced applying the general model. Its reinsurance contracts are therefore eligible for the PAA. The modelling of the cashflows associated with the Group\u2019s reinsurance contracts, and reasonably possible future scenarios, is a key area of judgement that impacts the PAA eligibility assessment and the resulting measurement of and presentation of reinsurance contracts in these financial statements. Classification of the Group\u2019s contracts with reinsurers as reinsurance contracts A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms and conditions of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance contracts (both excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that all contracts transfer significant insurance risk and have therefore been classified and accounted for as reinsurance contracts within these financial statements. Unit of account: combination of insurance contracts and separation of distinct components The lowest unit of account in IFRS 17 is the contract and there is a presumption that a contract with the legal form of a single contract would generally be considered a single contract in substance. However, there might be certain facts and circumstances where legal form does not reflect the substance of the arrangement and separation of the contract is required, or alternatively circumstances when contracts should be combined, such as when a set of insurance contracts with the same or a related counterparty may achieve, or be designed to achieve, an overall commercial effect. Overriding the legal contract to reflect substance is not a policy choice; it is a significant judgement requiring careful consideration of all relevant facts and circumstances. The following considerations, as set out by the IFRS 17 Transition Resource Group, are deemed relevant in assessing whether the contracts should be separated, or alternatively, combined: \u2022 whether there is interdependency between the different risks covered \u2022 whether components lapse together, and \u2022 whether components can be priced and sold separately.
In addition, any cashflows related to promises to transfer distinct goods or services, other than insurance contract services, that are
within the host insurance contract are separated and recognised by applying IFRS 15. In determining whether there are such distinct
components, the following is considered:
\u2022 whether the policyholder can benefit from the good or service on its own or together with other resources available to
the policyholder
\u2022 whether the cashflows and risks associated with the good or service are highly interrelated with the cashflows and risks associated
with the insurance components in the contract
\u2022 whether the Group provides a significant service in integrating the good or service with the insurance components.
After separating any such distinct components, IFRS 17 is applied to all remaining components of the (host) insurance contract.
The Group has determined that, in applying these requirements to its insurance contracts:
\u2022 The individual insurance policies contained in a \u2019multi-cover policy\u2019 are treated as separate contracts, given that the components can
be priced and sold separately, there is little interdependency between the risks covered, and the components can lapse separately
\u2022 The cashflows associated with administration fees (for changes to the underlying insurance policy), and instalment income (being
the additional fees payable by a policyholder associated with paying for an insurance contract over 12 months, rather than in one
up-front payment), are non-distinct given that the policyholder cannot benefit from these services separately and the services are
highly interrelated with the core insurance policy. These cashflows are therefore treated as insurance revenue under IFRS 17. However,
for the component of the insurance policy that is underwritten outside the Group by a third party insurer, the Group is performing an
agency service on behalf of the third party insurer, and therefore this component is treated as a separate component of revenue and
accounted for under IFRS 15
\u2022 The cashflows associated with ancillary or \u2019add on\u2019 products (which are sold within the same set of contracts as the core product), are
separated from the core product in cases where the policyholder can benefit from the product on its own, and where the cashflows are
not highly interrelated with the insurance components in the contract or the Group does not provide a significant service in integrating
the products.
In addition, the Group\u2019s quota share reinsurance contracts contain profit commission arrangements. Under these arrangements, there
is a minimum guaranteed amount that the Group, as the policyholder, will always receive \u2013 either in the form of profit commission, or
as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been
assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment
components which are not accounted for separately. Given that the receipt and payment of these non-distinct investment components
do not relate to the provision of insurance services, the amounts are excluded from the net reinsurance expenses in the Group\u2019s Income
Statement (i.e. both ceded reinsurance premiums and ceded recoveries are presented net of the minimum guaranteed amount that the
Group will always receive).
Presentation of reinsurance \u2018funds withheld\u2019 contracts
The Group has a number of quota share reinsurance contracts that have funds withheld features, whereby the quota share proportion of
ceded premiums and related recoveries are retained by the Group, and settled on a net basis at commutation. The only initial cashflows
during the coverage period are therefore the payment of any reinsurer margin.
Under IFRS 17, the reinsurance assets related to these funds withheld contracts are presented on a cashflow basis i.e. the full proportional
share of ceded premiums and recoveries is not presented in either the Income Statement or the Statement of Financial Position.
Consolidation of the Group\u2019s special purpose entities (\u2018SPEs\u2019)
The Group has set up a number of SPEs in relation to the Admiral Money business, whereby the Group securitises certain loans by the
transfer of the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who thereby
gain the security of the underlying assets as collateral.
The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated into the
Group\u2019s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has control of the
SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs.
The SPEs have therefore been fully consolidated in the Group\u2019s financial statements.
2.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are
discussed below.
Best estimate of future cashflows to fulfil insurance contracts The ultimate cost of outstanding claims that have been incurred prior to the balance sheet date and that remain unsettled at the balance sheet date, for material lines of business, is estimated by internal actuarial teams using a range of standard actuarial claims projection techniques, (such as incurred and paid chain ladder techniques, Bornhuetter-Ferguson methods and initial expected assumptions) to allow an actuarial assessment of their potential outcome. This includes an allowance for unreported claims. The projection of the overall claims reserve is subject to comparison against equivalent outputs produced by an independent external actuarial specialist for material lines of business. Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example bodily injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key sources of estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting claims provisions. Internal and external factors may affect the cost of settling claims in ways that wouldn\u2019t be allowed for by standard actuarial techniques; where this occurs adjustments to the technique, assumptions or result may be applied. Examples of these factors include: \u2022 Changes in the reporting patterns of claims impacting the frequency of bodily injury and damage claims \u2022 Emerging inflationary trends on the average cost of bodily injury and damage claims \u2022 The likelihood of bodily injury claims settling as Periodic Payment Orders \u2022 Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs \u2022 Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the probability weighted expected value outcome from the range of possible outcomes, taking account of all the uncertainties involved. The Group also has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation reimbursements are offset against ultimate claims costs. Other key circumstances affecting the reliability of assumptions include delays in settlement. Outputs of the actuarial projections include ultimate average cost per claim and claim frequency by accident year, implied claims inflation metrics and ultimate loss ratios and burn costs by accident year and underwriting year. These metrics are reviewed and challenged as part of the process for making allowance for the uncertainties noted. Methods used to measure the risk adjustment for non-financial risk The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of cashflows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation for uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a way that reflects the Group\u2019s degree of risk aversion. The Group estimates an adjustment for non-financial risk separately from all other estimates. Applying a confidence level technique (value at risk (\u201cVaR\u201d), the Group estimates the probability distribution of the present value of the future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of the value at risk at the target confidence level over the expected present value of the future cashflows. The Group\u2019s risk adjustment is set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. The level and estimate of risk adjustment required at reporting date is made in a way that reflect the Group\u2019s degree of risk aversion, taking into account both internal factors (such as data quality and trends; diversification across portfolios) and external factors (such as inflation and potential changes in Ogden rate) that are relevant at that point in time. To determine the risk adjustment for non-financial risk for reinsurance contracts, the Group applies these techniques both gross and net of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the difference between the two results. The net of excess of loss risk adjustment is allocated to quota share reinsurance contracts on a proportional basis. The risk adjustment is calculated at the issuing entity level. Diversification benefit is included across portfolios within the entity, to reflect the diversification in contracts sold across entities. The risk adjustment is then allocated down to each portfolio of contracts within the entity using a spread VaR methodology to inform the allocation, to ensure coherence of the gross and excess of loss reinsurance results for risk adjustment across the portfolios within an entity. Allocations of the risk adjustment to each underwriting year (annual cohort) of contracts within a portfolio is performed manually, based on a systematic approach using management judgement. This typically involves allocating a higher proportion of the risk adjustment to the more recent underwriting years that are less developed and therefore more uncertain, compared to the proportion of risk adjustment allocated to older, more developed years. Where a risk adjustment is required for the liability for remaining coverage due to facts and circumstances indicating that contracts are onerous, this is derived using the risk adjustment for the earned portion of the reserves, adjusted for the unearned claims reserves to reflect the difference in exposure/size of reserves and difference in drivers of risk in the reserves.
Calculation of expected credit loss provision
The Group is required to calculate an expected credit loss (\u2018ECL\u2019) allowance in respect of the carrying value of the Admiral Money loan
book in line with the requirements of IFRS 9. Due to the size of the loan book, the calculation of the ECL is deemed to be a critical
accounting judgement and includes key sources of estimation uncertainty.
Management applies judgement in:
\u2022 Determining the appropriate modelling solution for measuring the ECL
\u2022 Calibrating and selecting appropriate assumptions
\u2022 Setting the criteria for what constitutes a significant increase in credit risk
\u2022 Identification of key scenarios to include and determining the credit loss in these instances.
The key areas of estimation uncertainty are in the calculation of the probability of default (\u2018PD\u2019) in the base scenario for stage 1 and 2
assets, and the determination, impact assessment and weighting of the forward-looking scenarios.
Refer to the analysis in note 7 to the financial statements for further detail on the Group\u2019s ECL methodology applied in the period.
(i) Insurance, Reinsurance and Co-insurance contracts classification Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Insurance contracts The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after an insured event with benefits payable if the insured event did not occur. Reinsurance contracts The Group also enters into both excess of loss (\u2018XoL\u2019) and quota share reinsurance contracts. A contract is only accounted for as a reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by management based on the terms and conditions of the contracts. Co-insurance contracts Co-insurance arrangements are contracts entered into by the Group\u2019s intermediaries, under which insurance risks are shared on a proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement. Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly attributable costs in fulfilling the insurance contracts. (ii) Level of aggregation IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are managed together. The Group\u2019s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household etc), and geography (UK, Italy, Spain, France and the US). IFRS 17 requires a further division of the portfolios into a \u2018group\u2019 of contracts (being the lowest unit of account) based on expected profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand- alone contracts. Following the application of the IFRS 17 level of aggregation requirements, each of the Group\u2019s portfolios (which are determined by geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at inception into three categories: a) A group of contracts that are onerous at initial recognition, if any b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any c) A group of the remaining contracts in the portfolio. The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics. To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group considers facts and circumstances to identify whether a group of contracts are onerous based on: \u2022 Pricing information \u2022 Results of similar contracts it has recognised \u2022 Environmental factors, e.g. a change in market experience or regulations. The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to onerous contracts refer to contracts on which there is a net gain on initial recognition. Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group\u2019s reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate the contracts by type of reinsurance (e.g. quota share or XoL) and product. These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially recognised and measured. Such groups are not subsequently reconsidered. (iii) Recognition, modification and derecognition Groups of insurance contracts issued are recognised from the earliest of the following: \u2022 The beginning of the coverage period \u2022 The date when the first payment from the policyholder is due or actually received, if there is no due date \u2022 For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous. A group of reinsurance contracts held is entered into from the earlier of: \u2022 The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held \u2022 The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract held in the group of reinsurance contracts held at or before that date. The Group derecognises an insurance or reinsurance contract when it is: \u2022 Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or \u2022 The contract is modified such that the modification results in a change in the measurement model or the applicable standard for measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract. When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the contract as an adjustment to the relevant liability for remaining coverage. (iv) Contract boundary The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract services ends when: \u2022 The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits that fully reflects those risks, or \u2022 Both of the following criteria are satisfied: i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date. A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised. Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included. For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the Group has a substantive right to receive services from the reinsurer. (v) Presentation The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of reinsurance contracts held that are liabilities. The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance income or expenses. The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the financial statements. The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion. It includes the entire change as part of the insurance service result. (vi) Measurement Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation Subject to specified criteria, the PAA can be adopted Coverage period for the Group\u2019s insurance
approach (\u2018PAA\u2019) as a simplified approach to the IFRS 17 general model. contracts assumed is one year or less and so
eligibility qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
Insurance acquisition Where the coverage period of all contracts within The Group\u2019s insurance contracts are all one year
cashflows for insurance a group is not longer than one year, insurance or less. The Group has therefore taken the option
contracts issued acquisition cashflows can either be expensed as to expense acquisition costs as incurred.
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Liability for Remaining Where there is no significant financing component There is no allowance made for accretion of
Coverage (\u2018LRC\u2019), in relation to the LRC, or where the time between interest on the LRC given that the premiums are
adjusted for financial providing each part of the services and the related received within one year of the coverage period.
risk and time value premium due date is no more than a year, an entity is
of money not required to make an adjustment for accretion of
interest on the LRC.
Liability for Incurred For PAA groups, where claims or directly attributable For some claims, for example within the travel
Claims (\u2018LIC\u2019), adjusted insurance expenses are expected to be paid within product line in the UK, and other immaterial
or time value of money a year of the date that the claim is incurred, it is product lines across the Group, the incurred claims
not required to adjust these amounts for the time are expected to be paid out in less than one year.
value of money. Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group\u2019s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
Insurance finance There is an option to disaggregate part of the The impact on LIC of changes in discount rates will
income and expense movement in the LIC resulting from changes be captured within OCI, in line with the accounting
in discount rates, and present this in Other for assets backing the insurance claims liabilities.
Comprehensive Income (\u2018OCI\u2019).
Interim reporting
Where an entity is required to apply IAS 34 (as for the
The Group has opted to apply the option to use
Group) there is an option as to whether to choose a year-to-date accounting for interim reporting.
year-to-date\u201d basis or a \u201cperiod to date\u201d basis for
financial reporting.
Fulfilment cashflows within the contract boundary The fulfilment cashflows (\u2018FCF\u2019) are the current estimates of the future cashflows within the contract boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the uncertainty of those amounts. The estimates of future cashflows: \u2022 Are based on a probability weighted mean of the full range of possible outcomes \u2022 Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market variables \u2022 Reflect conditions existing at the measurement date. In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group\u2019s view of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable market prices. An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For the Group\u2019s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated and included within the measurement of the liability for incurred claims. Risk of the Group\u2019s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer. The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups of contracts. The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance contracts held and such estimates for the groups of underlying insurance contracts. Discount rates A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and the relevant liability cashflows (known as an illiquidity premium). A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years. For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms that aren\u2019t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield curves, which supports consistency over time. Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement. The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability for incurred claims at the end of the current and prior periods:
31 December 2023
31 December 2022
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.4%
4.3%
4.0%
3.9%
5.1%
5.0%
4.7%
4.4%
International (European motor)
4.0%
3.1%
3.0%
3.0%
3.8%
3.9%
3.8%
3.7%
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption. Insurance revenue The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component) allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time. If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change in accounting estimate. The Group\u2019s insurance revenue is comprised of the following component parts: \u2022 Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance contract that is presented as part of insurance revenue as set out below. \u2022 Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying insurance policy, as set out in note 2 to the financial statements. \u2022 Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are required to fulfil the insurance contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows, i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis. IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13 for further information regarding the disaggregation of insurance revenue. As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Insurance service expenses The following elements are included in insurance service expenses: \u2022 Incurred claims and benefits excluding investment components \u2022 Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme expenses that are attributable to insurance services \u2022 Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims) \u2022 Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components). Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance contracts, such as some product development and training costs, are recognised in other operating expenses as incurred. The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses, as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group\u2019s insurance contracts. Reinsurance net expense/income The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer and an allocation of the premiums paid that together give a net amount equal to that single amount. As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer\u2019s proportional share of the expenses that are incurred in fulfilling the insurance contracts. These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower premium (with no corresponding ceding commission or expense recovery). In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a \u201cminimum recovery\u201d from the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not settled \u201cnet\u201d with premium, the minimum recovery is treated as a non-distinct investment component. As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions from the allocation of reinsurance premiums presented in the notes to the financial statements. Insurance finance income and expense Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: (a) The effect of the time value of money and changes in the time value of money (b) The effect of financial risk and changes in financial risk. The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. The Group\u2019s financial assets backing the insurance portfolios are predominantly measured at Fair Value through Other Comprehensive Income (\u2018FVOCI\u2019). Insurance contracts: Liability for remaining coverage Initial measurement For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: : \u2022 The premiums, if any, received at initial recognition \u2022 Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before the group of insurance contracts is recognised. The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts, but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding insurance premium tax liability is presented within the liability for remaining coverage until paid. There is no allowance for time value of money as the premiums are received within one year of the coverage period. Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for remaining coverage for such onerous group depicting the losses recognised. Subsequent measurement The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as: \u2022 The liability for remaining coverage at the beginning of the period; plus \u2022 Premiums received in the period, minus \u2022 The amount recognised as insurance revenue for the services provided in the period, minus \u2022 Payments to the tax authorities in respect of premium receipts. The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to \u00a3nil. Insurance contracts: Liability for incurred claims The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the risk adjustment). Reinsurance contracts held Initial measurement The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the carrying amount of the asset for remaining coverage. The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required. Subsequent measurement The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from reinsurance contracts held within the Income Statement. Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts held. The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash settlement is recognised in the Consolidated Income Statement. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantJudgementsAndChangesInJudgementsMadeInApplyingIFRS17Explanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-474": { "value": "
2. Critical accounting judgements and estimates
In applying the Group\u2019s accounting policies as described in the notes to the financial statements, the Directors are required to make
judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant, including where
appropriate, weather-related factors. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
2.1 Critical accounting judgements
The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the
Directors have made in the process of applying the Group\u2019s accounting policies and that have the most significant effect on the amounts
recognised in financial statements.
Premium allocation approach (\u2018PAA\u2019)
The Group applies the PAA to all of its insurance and reinsurance contracts.
The coverage period of insurance contracts is typically one year or less, including insurance contract services arising from all premiums
within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to be material.
The Group\u2019s insurance contracts are therefore automatically eligible for the PAA.
However, the Group\u2019s reinsurance contracts are not automatically eligible for the PAA given that the coverage period is greater than one
year. The Group has modelled the expected cashflows and reasonably possible future scenarios for its reinsurance contracts, and as a
result expects that the measurement of the asset for remaining coverage for the group containing those contracts under the PAA does
not differ materially from the measurement that would be produced applying the general model. Its reinsurance contracts are therefore
eligible for the PAA.
The modelling of the cashflows associated with the Group\u2019s reinsurance contracts, and reasonably possible future scenarios, is a key area
of judgement that impacts the PAA eligibility assessment and the resulting measurement of and presentation of reinsurance contracts in
these financial statements.
Classification of the Group\u2019s contracts with reinsurers as reinsurance contracts
A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms and conditions
of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance contracts (both
excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that all contracts transfer
significant insurance risk and have therefore been classified and accounted for as reinsurance contracts within these financial statements.
Unit of account: combination of insurance contracts and separation of distinct components
The lowest unit of account in IFRS 17 is the contract and there is a presumption that a contract with the legal form of a single contract
would generally be considered a single contract in substance. However, there might be certain facts and circumstances where legal
form does not reflect the substance of the arrangement and separation of the contract is required, or alternatively circumstances when
contracts should be combined, such as when a set of insurance contracts with the same or a related counterparty may achieve, or be
designed to achieve, an overall commercial effect.
Overriding the legal contract to reflect substance is not a policy choice; it is a significant judgement requiring careful consideration of all
relevant facts and circumstances. The following considerations, as set out by the IFRS 17 Transition Resource Group, are deemed relevant
in assessing whether the contracts should be separated, or alternatively, combined:
\u2022 whether there is interdependency between the different risks covered
\u2022 whether components lapse together, and
\u2022 whether components can be priced and sold separately.
In addition, any cashflows related to promises to transfer distinct goods or services, other than insurance contract services, that are within the host insurance contract are separated and recognised by applying IFRS 15. In determining whether there are such distinct components, the following is considered: \u2022 whether the policyholder can benefit from the good or service on its own or together with other resources available to the policyholder \u2022 whether the cashflows and risks associated with the good or service are highly interrelated with the cashflows and risks associated with the insurance components in the contract \u2022 whether the Group provides a significant service in integrating the good or service with the insurance components. After separating any such distinct components, IFRS 17 is applied to all remaining components of the (host) insurance contract. The Group has determined that, in applying these requirements to its insurance contracts: \u2022 The individual insurance policies contained in a \u2019multi-cover policy\u2019 are treated as separate contracts, given that the components can be priced and sold separately, there is little interdependency between the risks covered, and the components can lapse separately \u2022 The cashflows associated with administration fees (for changes to the underlying insurance policy), and instalment income (being the additional fees payable by a policyholder associated with paying for an insurance contract over 12 months, rather than in one up-front payment), are non-distinct given that the policyholder cannot benefit from these services separately and the services are highly interrelated with the core insurance policy. These cashflows are therefore treated as insurance revenue under IFRS 17. However, for the component of the insurance policy that is underwritten outside the Group by a third party insurer, the Group is performing an agency service on behalf of the third party insurer, and therefore this component is treated as a separate component of revenue and accounted for under IFRS 15 \u2022 The cashflows associated with ancillary or \u2019add on\u2019 products (which are sold within the same set of contracts as the core product), are separated from the core product in cases where the policyholder can benefit from the product on its own, and where the cashflows are not highly interrelated with the insurance components in the contract or the Group does not provide a significant service in integrating the products. In addition, the Group\u2019s quota share reinsurance contracts contain profit commission arrangements. Under these arrangements, there is a minimum guaranteed amount that the Group, as the policyholder, will always receive \u2013 either in the form of profit commission, or as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment components which are not accounted for separately. Given that the receipt and payment of these non-distinct investment components do not relate to the provision of insurance services, the amounts are excluded from the net reinsurance expenses in the Group\u2019s Income Statement (i.e. both ceded reinsurance premiums and ceded recoveries are presented net of the minimum guaranteed amount that the Group will always receive). Presentation of reinsurance \u2018funds withheld\u2019 contracts The Group has a number of quota share reinsurance contracts that have funds withheld features, whereby the quota share proportion of ceded premiums and related recoveries are retained by the Group, and settled on a net basis at commutation. The only initial cashflows during the coverage period are therefore the payment of any reinsurer margin. Under IFRS 17, the reinsurance assets related to these funds withheld contracts are presented on a cashflow basis i.e. the full proportional share of ceded premiums and recoveries is not presented in either the Income Statement or the Statement of Financial Position. Consolidation of the Group\u2019s special purpose entities (\u2018SPEs\u2019) The Group has set up a number of SPEs in relation to the Admiral Money business, whereby the Group securitises certain loans by the transfer of the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who thereby gain the security of the underlying assets as collateral. The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated into the Group\u2019s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has control of the SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs. The SPEs have therefore been fully consolidated in the Group\u2019s financial statements. 2.2 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Best estimate of future cashflows to fulfil insurance contracts
The ultimate cost of outstanding claims that have been incurred prior to the balance sheet date and that remain unsettled at the
balance sheet date, for material lines of business, is estimated by internal actuarial teams using a range of standard actuarial claims
projection techniques, (such as incurred and paid chain ladder techniques, Bornhuetter-Ferguson methods and initial expected
assumptions) to allow an actuarial assessment of their potential outcome. This includes an allowance for unreported claims.
The projection of the overall claims reserve is subject to comparison against equivalent outputs produced by an independent external
actuarial specialist for material lines of business.
Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example bodily
injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key sources of
estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting claims provisions.
Internal and external factors may affect the cost of settling claims in ways that wouldn\u2019t be allowed for by standard actuarial techniques;
where this occurs adjustments to the technique, assumptions or result may be applied. Examples of these factors include:
\u2022 Changes in the reporting patterns of claims impacting the frequency of bodily injury and damage claims
\u2022 Emerging inflationary trends on the average cost of bodily injury and damage claims
\u2022 The likelihood of bodily injury claims settling as Periodic Payment Orders
\u2022 Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs
\u2022 Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates.
Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to reflect one-off
occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation,
judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order
to arrive at the estimated ultimate cost of claims that present the probability weighted expected value outcome from the range of
possible outcomes, taking account of all the uncertainties involved.
The Group also has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation
reimbursements are offset against ultimate claims costs. Other key circumstances affecting the reliability of assumptions include delays
in settlement.
Outputs of the actuarial projections include ultimate average cost per claim and claim frequency by accident year, implied claims
inflation metrics and ultimate loss ratios and burn costs by accident year and underwriting year. These metrics are reviewed and
challenged as part of the process for making allowance for the uncertainties noted.
Methods used to measure the risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of
cashflows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation for
uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a way that
reflects the Group\u2019s degree of risk aversion. The Group estimates an adjustment for non-financial risk separately from all other estimates.
Applying a confidence level technique (value at risk (\u201cVaR\u201d), the Group estimates the probability distribution of the present value of the
future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of
the value at risk at the target confidence level over the expected present value of the future cashflows.
The Group\u2019s risk adjustment is set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. The level and
estimate of risk adjustment required at reporting date is made in a way that reflect the Group\u2019s degree of risk aversion, taking into account
both internal factors (such as data quality and trends; diversification across portfolios) and external factors (such as inflation and potential
changes in Ogden rate) that are relevant at that point in time.
To determine the risk adjustment for non-financial risk for reinsurance contracts, the Group applies these techniques both gross and net
of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the difference between the two results.
The net of excess of loss risk adjustment is allocated to quota share reinsurance contracts on a proportional basis.
The risk adjustment is calculated at the issuing entity level. Diversification benefit is included across portfolios within the entity, to reflect
the diversification in contracts sold across entities.
The risk adjustment is then allocated down to each portfolio of contracts within the entity using a spread VaR methodology to inform the
allocation, to ensure coherence of the gross and excess of loss reinsurance results for risk adjustment across the portfolios within an entity.
Allocations of the risk adjustment to each underwriting year (annual cohort) of contracts within a portfolio is performed manually, based on a
systematic approach using management judgement. This typically involves allocating a higher proportion of the risk adjustment to the more
recent underwriting years that are less developed and therefore more uncertain, compared to the proportion of risk adjustment allocated to
older, more developed years.
Where a risk adjustment is required for the liability for remaining coverage due to facts and circumstances indicating that contracts are
onerous, this is derived using the risk adjustment for the earned portion of the reserves, adjusted for the unearned claims reserves to reflect
the difference in exposure/size of reserves and difference in drivers of risk in the reserves.
Calculation of expected credit loss provision The Group is required to calculate an expected credit loss (\u2018ECL\u2019) allowance in respect of the carrying value of the Admiral Money loan book in line with the requirements of IFRS 9. Due to the size of the loan book, the calculation of the ECL is deemed to be a critical accounting judgement and includes key sources of estimation uncertainty. Management applies judgement in: \u2022 Determining the appropriate modelling solution for measuring the ECL \u2022 Calibrating and selecting appropriate assumptions \u2022 Setting the criteria for what constitutes a significant increase in credit risk \u2022 Identification of key scenarios to include and determining the credit loss in these instances. The key areas of estimation uncertainty are in the calculation of the probability of default (\u2018PD\u2019) in the base scenario for stage 1 and 2 assets, and the determination, impact assessment and weighting of the forward-looking scenarios. Refer to the analysis in note 7 to the financial statements for further detail on the Group\u2019s ECL methodology applied in the period. ", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-456": { "value": "2. Critical accounting judgements and estimates In applying the Group\u2019s accounting policies as described in the notes to the financial statements, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant, including where appropriate, weather-related factors. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2.1 Critical accounting judgements The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Group\u2019s accounting policies and that have the most significant effect on the amounts recognised in financial statements. Premium allocation approach (\u2018PAA\u2019) The Group applies the PAA to all of its insurance and reinsurance contracts. The coverage period of insurance contracts is typically one year or less, including insurance contract services arising from all premiums within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to be material. The Group\u2019s insurance contracts are therefore automatically eligible for the PAA. However, the Group\u2019s reinsurance contracts are not automatically eligible for the PAA given that the coverage period is greater than one year. The Group has modelled the expected cashflows and reasonably possible future scenarios for its reinsurance contracts, and as a result expects that the measurement of the asset for remaining coverage for the group containing those contracts under the PAA does not differ materially from the measurement that would be produced applying the general model. Its reinsurance contracts are therefore eligible for the PAA. The modelling of the cashflows associated with the Group\u2019s reinsurance contracts, and reasonably possible future scenarios, is a key area of judgement that impacts the PAA eligibility assessment and the resulting measurement of and presentation of reinsurance contracts in these financial statements. Classification of the Group\u2019s contracts with reinsurers as reinsurance contracts A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms and conditions of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance contracts (both excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that all contracts transfer significant insurance risk and have therefore been classified and accounted for as reinsurance contracts within these financial statements. Unit of account: combination of insurance contracts and separation of distinct components The lowest unit of account in IFRS 17 is the contract and there is a presumption that a contract with the legal form of a single contract would generally be considered a single contract in substance. However, there might be certain facts and circumstances where legal form does not reflect the substance of the arrangement and separation of the contract is required, or alternatively circumstances when contracts should be combined, such as when a set of insurance contracts with the same or a related counterparty may achieve, or be designed to achieve, an overall commercial effect. Overriding the legal contract to reflect substance is not a policy choice; it is a significant judgement requiring careful consideration of all relevant facts and circumstances. The following considerations, as set out by the IFRS 17 Transition Resource Group, are deemed relevant in assessing whether the contracts should be separated, or alternatively, combined: \u2022 whether there is interdependency between the different risks covered \u2022 whether components lapse together, and \u2022 whether components can be priced and sold separately. In addition, any cashflows related to promises to transfer distinct goods or services, other than insurance contract services, that are within the host insurance contract are separated and recognised by applying IFRS 15. In determining whether there are such distinct components, the following is considered: \u2022 whether the policyholder can benefit from the good or service on its own or together with other resources available to the policyholder \u2022 whether the cashflows and risks associated with the good or service are highly interrelated with the cashflows and risks associated with the insurance components in the contract \u2022 whether the Group provides a significant service in integrating the good or service with the insurance components. After separating any such distinct components, IFRS 17 is applied to all remaining components of the (host) insurance contract. The Group has determined that, in applying these requirements to its insurance contracts: \u2022 The individual insurance policies contained in a \u2019multi-cover policy\u2019 are treated as separate contracts, given that the components can be priced and sold separately, there is little interdependency between the risks covered, and the components can lapse separately \u2022 The cashflows associated with administration fees (for changes to the underlying insurance policy), and instalment income (being the additional fees payable by a policyholder associated with paying for an insurance contract over 12 months, rather than in one up-front payment), are non-distinct given that the policyholder cannot benefit from these services separately and the services are highly interrelated with the core insurance policy. These cashflows are therefore treated as insurance revenue under IFRS 17. However, for the component of the insurance policy that is underwritten outside the Group by a third party insurer, the Group is performing an agency service on behalf of the third party insurer, and therefore this component is treated as a separate component of revenue and accounted for under IFRS 15 \u2022 The cashflows associated with ancillary or \u2019add on\u2019 products (which are sold within the same set of contracts as the core product), are separated from the core product in cases where the policyholder can benefit from the product on its own, and where the cashflows are not highly interrelated with the insurance components in the contract or the Group does not provide a significant service in integrating the products. In addition, the Group\u2019s quota share reinsurance contracts contain profit commission arrangements. Under these arrangements, there is a minimum guaranteed amount that the Group, as the policyholder, will always receive \u2013 either in the form of profit commission, or as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment components which are not accounted for separately. Given that the receipt and payment of these non-distinct investment components do not relate to the provision of insurance services, the amounts are excluded from the net reinsurance expenses in the Group\u2019s Income Statement (i.e. both ceded reinsurance premiums and ceded recoveries are presented net of the minimum guaranteed amount that the Group will always receive). Presentation of reinsurance \u2018funds withheld\u2019 contracts The Group has a number of quota share reinsurance contracts that have funds withheld features, whereby the quota share proportion of ceded premiums and related recoveries are retained by the Group, and settled on a net basis at commutation. The only initial cashflows during the coverage period are therefore the payment of any reinsurer margin. Under IFRS 17, the reinsurance assets related to these funds withheld contracts are presented on a cashflow basis i.e. the full proportional share of ceded premiums and recoveries is not presented in either the Income Statement or the Statement of Financial Position. Consolidation of the Group\u2019s special purpose entities (\u2018SPEs\u2019) The Group has set up a number of SPEs in relation to the Admiral Money business, whereby the Group securitises certain loans by the transfer of the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who thereby gain the security of the underlying assets as collateral. The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated into the Group\u2019s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has control of the SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs. The SPEs have therefore been fully consolidated in the Group\u2019s financial statements. 2.2 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Best estimate of future cashflows to fulfil insurance contracts The ultimate cost of outstanding claims that have been incurred prior to the balance sheet date and that remain unsettled at the balance sheet date, for material lines of business, is estimated by internal actuarial teams using a range of standard actuarial claims projection techniques, (such as incurred and paid chain ladder techniques, Bornhuetter-Ferguson methods and initial expected assumptions) to allow an actuarial assessment of their potential outcome. This includes an allowance for unreported claims. The projection of the overall claims reserve is subject to comparison against equivalent outputs produced by an independent external actuarial specialist for material lines of business. Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example bodily injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key sources of estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting claims provisions. Internal and external factors may affect the cost of settling claims in ways that wouldn\u2019t be allowed for by standard actuarial techniques; where this occurs adjustments to the technique, assumptions or result may be applied. Examples of these factors include: \u2022 Changes in the reporting patterns of claims impacting the frequency of bodily injury and damage claims \u2022 Emerging inflationary trends on the average cost of bodily injury and damage claims \u2022 The likelihood of bodily injury claims settling as Periodic Payment Orders \u2022 Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs \u2022 Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the probability weighted expected value outcome from the range of possible outcomes, taking account of all the uncertainties involved. The Group also has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation reimbursements are offset against ultimate claims costs. Other key circumstances affecting the reliability of assumptions include delays in settlement. Outputs of the actuarial projections include ultimate average cost per claim and claim frequency by accident year, implied claims inflation metrics and ultimate loss ratios and burn costs by accident year and underwriting year. These metrics are reviewed and challenged as part of the process for making allowance for the uncertainties noted. Methods used to measure the risk adjustment for non-financial risk The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of cashflows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation for uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a way that reflects the Group\u2019s degree of risk aversion. The Group estimates an adjustment for non-financial risk separately from all other estimates. Applying a confidence level technique (value at risk (\u201cVaR\u201d), the Group estimates the probability distribution of the present value of the future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of the value at risk at the target confidence level over the expected present value of the future cashflows. The Group\u2019s risk adjustment is set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. The level and estimate of risk adjustment required at reporting date is made in a way that reflect the Group\u2019s degree of risk aversion, taking into account both internal factors (such as data quality and trends; diversification across portfolios) and external factors (such as inflation and potential changes in Ogden rate) that are relevant at that point in time. To determine the risk adjustment for non-financial risk for reinsurance contracts, the Group applies these techniques both gross and net of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the difference between the two results. The net of excess of loss risk adjustment is allocated to quota share reinsurance contracts on a proportional basis. The risk adjustment is calculated at the issuing entity level. Diversification benefit is included across portfolios within the entity, to reflect the diversification in contracts sold across entities. The risk adjustment is then allocated down to each portfolio of contracts within the entity using a spread VaR methodology to inform the allocation, to ensure coherence of the gross and excess of loss reinsurance results for risk adjustment across the portfolios within an entity. Allocations of the risk adjustment to each underwriting year (annual cohort) of contracts within a portfolio is performed manually, based on a systematic approach using management judgement. This typically involves allocating a higher proportion of the risk adjustment to the more recent underwriting years that are less developed and therefore more uncertain, compared to the proportion of risk adjustment allocated to older, more developed years. Where a risk adjustment is required for the liability for remaining coverage due to facts and circumstances indicating that contracts are onerous, this is derived using the risk adjustment for the earned portion of the reserves, adjusted for the unearned claims reserves to reflect the difference in exposure/size of reserves and difference in drivers of risk in the reserves. Calculation of expected credit loss provision The Group is required to calculate an expected credit loss (\u2018ECL\u2019) allowance in respect of the carrying value of the Admiral Money loan book in line with the requirements of IFRS 9. Due to the size of the loan book, the calculation of the ECL is deemed to be a critical accounting judgement and includes key sources of estimation uncertainty. Management applies judgement in: \u2022 Determining the appropriate modelling solution for measuring the ECL \u2022 Calibrating and selecting appropriate assumptions \u2022 Setting the criteria for what constitutes a significant increase in credit risk \u2022 Identification of key scenarios to include and determining the credit loss in these instances. The key areas of estimation uncertainty are in the calculation of the probability of default (\u2018PD\u2019) in the base scenario for stage 1 and 2 assets, and the determination, impact assessment and weighting of the forward-looking scenarios. Refer to the analysis in note 7 to the financial statements for further detail on the Group\u2019s ECL methodology applied in the period. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-498": { "value": "2. Critical accounting judgements and estimates In applying the Group\u2019s accounting policies as described in the notes to the financial statements, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant, including where appropriate, weather-related factors. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2.1 Critical accounting judgements The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Group\u2019s accounting policies and that have the most significant effect on the amounts recognised in financial statements. Premium allocation approach (\u2018PAA\u2019) The Group applies the PAA to all of its insurance and reinsurance contracts. The coverage period of insurance contracts is typically one year or less, including insurance contract services arising from all premiums within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to be material. The Group\u2019s insurance contracts are therefore automatically eligible for the PAA. However, the Group\u2019s reinsurance contracts are not automatically eligible for the PAA given that the coverage period is greater than one year. The Group has modelled the expected cashflows and reasonably possible future scenarios for its reinsurance contracts, and as a result expects that the measurement of the asset for remaining coverage for the group containing those contracts under the PAA does not differ materially from the measurement that would be produced applying the general model. Its reinsurance contracts are therefore eligible for the PAA. The modelling of the cashflows associated with the Group\u2019s reinsurance contracts, and reasonably possible future scenarios, is a key area of judgement that impacts the PAA eligibility assessment and the resulting measurement of and presentation of reinsurance contracts in these financial statements. Classification of the Group\u2019s contracts with reinsurers as reinsurance contracts A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms and conditions of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance contracts (both excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that all contracts transfer significant insurance risk and have therefore been classified and accounted for as reinsurance contracts within these financial statements. Unit of account: combination of insurance contracts and separation of distinct components The lowest unit of account in IFRS 17 is the contract and there is a presumption that a contract with the legal form of a single contract would generally be considered a single contract in substance. However, there might be certain facts and circumstances where legal form does not reflect the substance of the arrangement and separation of the contract is required, or alternatively circumstances when contracts should be combined, such as when a set of insurance contracts with the same or a related counterparty may achieve, or be designed to achieve, an overall commercial effect. Overriding the legal contract to reflect substance is not a policy choice; it is a significant judgement requiring careful consideration of all relevant facts and circumstances. The following considerations, as set out by the IFRS 17 Transition Resource Group, are deemed relevant in assessing whether the contracts should be separated, or alternatively, combined: \u2022 whether there is interdependency between the different risks covered \u2022 whether components lapse together, and \u2022 whether components can be priced and sold separately. In addition, any cashflows related to promises to transfer distinct goods or services, other than insurance contract services, that are within the host insurance contract are separated and recognised by applying IFRS 15. In determining whether there are such distinct components, the following is considered: \u2022 whether the policyholder can benefit from the good or service on its own or together with other resources available to the policyholder \u2022 whether the cashflows and risks associated with the good or service are highly interrelated with the cashflows and risks associated with the insurance components in the contract \u2022 whether the Group provides a significant service in integrating the good or service with the insurance components. After separating any such distinct components, IFRS 17 is applied to all remaining components of the (host) insurance contract. The Group has determined that, in applying these requirements to its insurance contracts: \u2022 The individual insurance policies contained in a \u2019multi-cover policy\u2019 are treated as separate contracts, given that the components can be priced and sold separately, there is little interdependency between the risks covered, and the components can lapse separately \u2022 The cashflows associated with administration fees (for changes to the underlying insurance policy), and instalment income (being the additional fees payable by a policyholder associated with paying for an insurance contract over 12 months, rather than in one up-front payment), are non-distinct given that the policyholder cannot benefit from these services separately and the services are highly interrelated with the core insurance policy. These cashflows are therefore treated as insurance revenue under IFRS 17. However, for the component of the insurance policy that is underwritten outside the Group by a third party insurer, the Group is performing an agency service on behalf of the third party insurer, and therefore this component is treated as a separate component of revenue and accounted for under IFRS 15 \u2022 The cashflows associated with ancillary or \u2019add on\u2019 products (which are sold within the same set of contracts as the core product), are separated from the core product in cases where the policyholder can benefit from the product on its own, and where the cashflows are not highly interrelated with the insurance components in the contract or the Group does not provide a significant service in integrating the products. In addition, the Group\u2019s quota share reinsurance contracts contain profit commission arrangements. Under these arrangements, there is a minimum guaranteed amount that the Group, as the policyholder, will always receive \u2013 either in the form of profit commission, or as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment components which are not accounted for separately. Given that the receipt and payment of these non-distinct investment components do not relate to the provision of insurance services, the amounts are excluded from the net reinsurance expenses in the Group\u2019s Income Statement (i.e. both ceded reinsurance premiums and ceded recoveries are presented net of the minimum guaranteed amount that the Group will always receive). Presentation of reinsurance \u2018funds withheld\u2019 contracts The Group has a number of quota share reinsurance contracts that have funds withheld features, whereby the quota share proportion of ceded premiums and related recoveries are retained by the Group, and settled on a net basis at commutation. The only initial cashflows during the coverage period are therefore the payment of any reinsurer margin. Under IFRS 17, the reinsurance assets related to these funds withheld contracts are presented on a cashflow basis i.e. the full proportional share of ceded premiums and recoveries is not presented in either the Income Statement or the Statement of Financial Position. Consolidation of the Group\u2019s special purpose entities (\u2018SPEs\u2019) The Group has set up a number of SPEs in relation to the Admiral Money business, whereby the Group securitises certain loans by the transfer of the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who thereby gain the security of the underlying assets as collateral. The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated into the Group\u2019s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has control of the SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs. The SPEs have therefore been fully consolidated in the Group\u2019s financial statements. 2.2 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Best estimate of future cashflows to fulfil insurance contracts The ultimate cost of outstanding claims that have been incurred prior to the balance sheet date and that remain unsettled at the balance sheet date, for material lines of business, is estimated by internal actuarial teams using a range of standard actuarial claims projection techniques, (such as incurred and paid chain ladder techniques, Bornhuetter-Ferguson methods and initial expected assumptions) to allow an actuarial assessment of their potential outcome. This includes an allowance for unreported claims. The projection of the overall claims reserve is subject to comparison against equivalent outputs produced by an independent external actuarial specialist for material lines of business. Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example bodily injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key sources of estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting claims provisions. Internal and external factors may affect the cost of settling claims in ways that wouldn\u2019t be allowed for by standard actuarial techniques; where this occurs adjustments to the technique, assumptions or result may be applied. Examples of these factors include: \u2022 Changes in the reporting patterns of claims impacting the frequency of bodily injury and damage claims \u2022 Emerging inflationary trends on the average cost of bodily injury and damage claims \u2022 The likelihood of bodily injury claims settling as Periodic Payment Orders \u2022 Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs \u2022 Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the probability weighted expected value outcome from the range of possible outcomes, taking account of all the uncertainties involved. The Group also has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation reimbursements are offset against ultimate claims costs. Other key circumstances affecting the reliability of assumptions include delays in settlement. Outputs of the actuarial projections include ultimate average cost per claim and claim frequency by accident year, implied claims inflation metrics and ultimate loss ratios and burn costs by accident year and underwriting year. These metrics are reviewed and challenged as part of the process for making allowance for the uncertainties noted. Methods used to measure the risk adjustment for non-financial risk The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of cashflows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation for uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a way that reflects the Group\u2019s degree of risk aversion. The Group estimates an adjustment for non-financial risk separately from all other estimates. Applying a confidence level technique (value at risk (\u201cVaR\u201d), the Group estimates the probability distribution of the present value of the future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of the value at risk at the target confidence level over the expected present value of the future cashflows. The Group\u2019s risk adjustment is set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. The level and estimate of risk adjustment required at reporting date is made in a way that reflect the Group\u2019s degree of risk aversion, taking into account both internal factors (such as data quality and trends; diversification across portfolios) and external factors (such as inflation and potential changes in Ogden rate) that are relevant at that point in time. To determine the risk adjustment for non-financial risk for reinsurance contracts, the Group applies these techniques both gross and net of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the difference between the two results. The net of excess of loss risk adjustment is allocated to quota share reinsurance contracts on a proportional basis. The risk adjustment is calculated at the issuing entity level. Diversification benefit is included across portfolios within the entity, to reflect the diversification in contracts sold across entities. The risk adjustment is then allocated down to each portfolio of contracts within the entity using a spread VaR methodology to inform the allocation, to ensure coherence of the gross and excess of loss reinsurance results for risk adjustment across the portfolios within an entity. Allocations of the risk adjustment to each underwriting year (annual cohort) of contracts within a portfolio is performed manually, based on a systematic approach using management judgement. This typically involves allocating a higher proportion of the risk adjustment to the more recent underwriting years that are less developed and therefore more uncertain, compared to the proportion of risk adjustment allocated to older, more developed years. Where a risk adjustment is required for the liability for remaining coverage due to facts and circumstances indicating that contracts are onerous, this is derived using the risk adjustment for the earned portion of the reserves, adjusted for the unearned claims reserves to reflect the difference in exposure/size of reserves and difference in drivers of risk in the reserves. Calculation of expected credit loss provision The Group is required to calculate an expected credit loss (\u2018ECL\u2019) allowance in respect of the carrying value of the Admiral Money loan book in line with the requirements of IFRS 9. Due to the size of the loan book, the calculation of the ECL is deemed to be a critical accounting judgement and includes key sources of estimation uncertainty. Management applies judgement in: \u2022 Determining the appropriate modelling solution for measuring the ECL \u2022 Calibrating and selecting appropriate assumptions \u2022 Setting the criteria for what constitutes a significant increase in credit risk \u2022 Identification of key scenarios to include and determining the credit loss in these instances. The key areas of estimation uncertainty are in the calculation of the probability of default (\u2018PD\u2019) in the base scenario for stage 1 and 2 assets, and the determination, impact assessment and weighting of the forward-looking scenarios. Refer to the analysis in note 7 to the financial statements for further detail on the Group\u2019s ECL methodology applied in the period. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-457": { "value": "
3. Insurance and financial risk
The Group\u2019s activities expose it primarily to insurance risk, and financial risks of credit, spread, interest rate, liquidity and foreign exchange
risk. The Board of Directors is ultimately responsible for the management of insurance risk and financial risks, although it has delegated
the detailed oversight of supervising risk management and internal control to the Group Risk Committee.
There are several key elements to the risk management environment throughout the Group. These are detailed in full in the Corporate
Governance Statement. Specific considerations for the risks arising from insurance and financial risk are detailed below.
3.1 Insurance risk
The Group\u2019s primary business is the issuance of insurance contracts that transfer risk from policyholders to the Group and its co-
insurance partners.
Insurance risk involves uncertainty over the occurrence, amount or timing of claims arising on insurance contracts issued.
It is primarily comprised of Reserve risk; the risk that the value of insurance liabilities established is insufficient to cover the ultimate cost
of claims incurred at the balance sheet date, and premium risk; the risk that the claims experience on business written but not earned is
higher than allowed for in the premiums charged to policyholders.
The Board has ultimate responsibility for the management of insurance risk although as set out above, it has delegated the detailed
oversight of risk management to the Group Risk Committee. The Group also has a Group Reserving Committee as well as local Reserving
Committees which are comprised of senior managers within the finance, claims, pricing and actuarial functions in the respective
businesses. The Reserving Committees primarily recommend the approach for claims reserving but also review the systems and controls
in place to support accurate reserving and consider material reserving issues such as large bodily injury claims frequency and severity, the
impact of changes in the claims systems and the external environment.
The Board implements certain policies to mitigate and control the level of insurance risk accepted by the Group. These include
pricing policies and claims management and administration processes, in addition to reserving policies and entering into
reinsurance arrangements.
3.1.1 Reserve risk
Reserve risk arises from:
\u2022 The uncertain nature of claims, in particular the development of large bodily injury claims
\u2022 Unexpected future impact of socioeconomic trends or regulatory changes, for example changes to the Ogden discount rate
\u2022 Data issues and changes to the claims reporting process
\u2022 Failure to recognise claims trends in the market including a slow-down in the processing of recoveries and liabilities with third party
insurers which increases the estimation risk of these amounts
\u2022 Changes in underwriting and business written so that past trends are not necessarily a predictor of the future.
Understatement of reserves may result in not being able to pay claims when they fall due. Alternatively, overstatement of reserves can
lead to a surplus of funds being retained resulting in opportunity cost; for example, lost investment return or insufficient resource to
pursue strategic projects and develop the business.
Reserve risk is mitigated through a series of processes and controls. The key processes are as follows:
\u2022 Regular management and internal actuarial review of individual and aggregate case claim reserves, including regular reporting of
management information and exception reporting of significant movements
\u2022 Regular management and internal actuarial review of large claims, including claims settled or potentially settled by PPOs for which the
uncertainty is increased by factors such as the lifetime of the claimant and movements in the indexation for the cost of future care of
the claimant
\u2022 Bi-annual external actuarial review of best estimate claims reserves using a variety of recognised actuarial techniques
\u2022 Internal actuarial analysis of reserve uncertainty through qualitative analysis, scenario testing and a range of stochastic
reserving techniques
\u2022 Ad hoc external reviews of reserving related processes and assumptions
\u2022 The application of a risk adjustment aligned with Group risk appetite.
As described in note 2, critical accounting judgements and estimates, the Group includes the risk adjustment for non-financial risk within
its measurement of insurance contracts and reinsurance contract assets, using a confidence level technique, with the risk adjustment
being set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis.
Whilst the underlying methods to calibrate the reserve risk distribution from which the percentile is selected are consistent year on year,
a number of developments in the reserve risk modelling in 2023 result in a slightly less volatile distribution than at the end of 2022.
The reserves including risk adjustment at 31 December 2023 equated to a 93rd percentile confidence level position (2022: 95th
percentile) to the nearest whole percentile. The reduction in the confidence level from 2022 is reflective of the Group\u2019s assessment of
uncertainty and the level of adverse risks associated with both internal and external factors, and in particular the Group\u2019s continued
diversification across portfolios.
3.1.2 Premium risk
As noted above, the Group defines premium risk as the risk that claims cost on business written but not yet earned is higher than allowed
for in the premiums charged to policyholders. This also includes catastrophe risk, the risk of incurring significant losses as a result of the
occurrence of manmade catastrophe, or natural weather events.
Key processes and controls operating to mitigate premium risk are as follows:
\u2022 Experienced and focused senior management and teams in relevant business areas including pricing and claims management
\u2022 A data-driven and analytical approach to regular monitoring of claims and underwriting performance
\u2022 Observations of weather events trends to understand climate impacts on frequency and severity
\u2022 Capability to identify and resolve underperformance promptly through changes to key performance drivers, in particular pricing.
3.1.3 Reinsurance risk
The Group purchases reinsurance as part of its risk mitigation programme. Reinsurance held is placed on both an excess of loss basis,
designed to protect the Group against very large individual claims and catastrophe losses, and a proportional basis i.e. quota\u2013share
reinsurance which is taken out to reduce the overall exposure of the Group to its insurance contracts.
Reinsurance risk is the risk of placement of ineffective reinsurance arrangements, or the economic risk of reduced availability of
reinsurance arrangements in future periods.
The Group mitigates these risks by ensuring that it has a diverse range of financially secure reinsurance partners, including a long-term
relationship with Munich Re and a number of other large reinsurers.
Amounts recoverable from reinsurers are estimated in a manner consistent with underlying insurance contract liabilities and in
accordance with the reinsurance contract terms. Although the Group has reinsurance arrangements, it is not relieved of its direct
obligations to its policyholders and thus a credit exposure exists with respect to reinsurance held, to the extent that any reinsurer is
unable to meet its obligations.
Information regarding reinsurance credit risk is provided in note 3.2.1.
3.1.4 Concentration of insurance risk
The Directors do not believe there are significant concentrations of insurance risk. This is because the risks are spread across a large
number of policies across a wide regional base. The International Car Insurance, UK Household, UK Travel and UK Pet businesses further
contribute to the diversification of the Group\u2019s insurance risk.
The Group\u2019s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the
Group substantially dependent upon any single reinsurance contract.
The tables in note 5f(i) show the concentration of net insurance contract liabilities by product type and geographic area.
3.1.5 Sensitivity analysis
The following sensitivity analysis shows the impact on profit for reasonably possible movements in key assumptions with all other
assumptions held constant. The correlation of assumptions will have a significant effect in determining the ultimate impacts, but to
demonstrate the impact due to changes in each assumption, assumptions have been changed on an individual basis. It should be noted
that movements in these assumptions are non-linear.
The sensitivities are shown for UK motor only, being the line of business where such sensitivities could have a material impact at a
Group level. The sensitivities are shown on a gross and net of quota share reinsurance basis to illustrate the impacts on shareholder
profit and equity before and after risk mitigation from quota share reinsurance. The sensitivities (both gross and net) include the
impacts of movements in co-insurance profit commission, given that underwriting year loss ratios including risk adjustment, are a direct
input to the calculation of profit commission. Refer to note 8 to these financial statements for the accounting policy for co-insurance
profit commission.
Ogden discount rate
The sensitivities reflect the impact on profit before tax and equity in 2023 for changes to the Ogden discount rate from the current rate
of minus 0.25%, with all other assumptions (including the absolute value of risk adjustment) remaining unchanged.
2023
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Ogden discount rate increase by 125 bps to +1.00%
133.9
95.3
110.6
77.0
Ogden discount rate increase by 75 bps to +0.50%
82.8
57.4
68.3
46.3
Ogden discount rate increase by 25 bps to 0.00%
29.2
20.0
24.0
16.1
Ogden discount rate decrease by 75 bps to -1.00%
(104.4)
(70.2)
(86.3)
(56.6)
The sensitivities do not reflect the full ultimate impacts of changes in the Ogden rate as some of the impact will flow into future
financial periods.
In addition, should the Ogden discount rate change in future periods, the impacts on profit before tax and equity are likely to be larger
than those set out above, as a result of including the impacts on claims arising in relation to premium written and earned beyond
31 December 2023.
Risk adjustment
The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023 for changes in the selection of the UK
motor risk adjustment confidence level at 31 December 2023, with all other assumptions remaining unchanged.
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Risk adjustment increase to 95th percentile
(54.4)
(25.6)
(45.6)
(20.3)
Risk adjustment decrease to 90th percentile
45.6
24.1
38.3
19.3
Risk adjustment decrease to 85th percentile
108.8
57.6
91.2
46.0
Undiscounted loss ratios, including risk adjustment
The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023, of a change in the booked loss ratios for
individual underwriting years (UWY) as at 31 December 2023, with all other assumptions remaining unchanged.
2023
UWY 2020 impact on:
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
\u00a3m
PBT
Equity
PBT
Equity
PBT
Equity
PBT
Equity
Increase of 1%: gross of reinsurance
(19.8)
(15.2)
(13.9)
(11.1)
(14.5)
(12.6)
(9.6)
(8.4)
Increase of 3%: gross of reinsurance
(59.3)
(45.7)
(41.7)
(33.4)
(43.4)
(37.7)
(28.7)
(25.3)
Increase of 5%: gross of reinsurance
(98.9)
(76.1)
(69.5)
(55.6)
(72.3)
(62.9)
(47.8)
(42.2)
Decrease of 1%: gross of reinsurance
19.8
15.2
13.9
11.1
14.5
12.6
9.6
8.4
Decrease of 3%: gross of reinsurance
59.3
45.7
41.7
33.4
43.4
37.7
28.7
25.3
Decrease of 5%: gross of reinsurance
98.9
76.1
69.5
55.6
72.3
62.9
47.8
42.2
Increase of 1%: net of reinsurance
(19.8)
(15.2)
(6.4)
(5.0)
(4.4)
(3.6)
(3.5)
(2.8)
Increase of 3%: net of reinsurance
(59.3)
(45.7)
(19.1)
(15.1)
(13.1)
(10.8)
(10.4)
(8.5)
Increase of 5%: net of reinsurance
(98.9)
(76.1)
(29.0)
(22.8)
(21.8)
(18.0)
(17.3)
(14.2)
Decrease of 1%: net of reinsurance
19.8
15.2
7.0
5.5
4.4
3.6
3.4
2.8
Decrease of 3%: net of reinsurance
59.3
45.7
27.3
21.7
13.1
10.8
10.4
8.5
Decrease of 5%: net of reinsurance
98.9
76.1
49.0
39.0
24.1
20.0
19.6
16.3
*2. \u2018Booked\u2019 loss ratios are undiscounted underwriting year loss ratios, including risk adjustment.
3.2. Financial risk
The Group\u2019s activities expose it primarily to financial risks of credit, spread, interest rate, liquidity and foreign exchange risk. The detailed
oversight of supervising risk management and internal control has been delegated to the Group Risk Committee.
There is also an Investment Committee that makes recommendations to the Group and subsidiary Boards on investment strategy, and
overseas the Group\u2019s investments, as well as advising on liquidity funding and foreign exchange management.
3.2.1 Credit risk
The Group defines credit risk as the risk of financial loss if another party fails to perform its obligations. The key areas of exposure to
credit risk for the Group result through its reinsurance programme, investments, bank deposits, loans and advances to customers and
policyholder receivables.
The Directors consider credit quality and counterparty exposure frequently and in significant detail. The Directors consider that the
policies and procedures in place to manage credit exposure continue to be appropriate for the Group\u2019s risk appetite and, during 2023,
and historically, no material credit losses have been experienced by the Group.
Financial investments and cash
Credit and counterparty risk is managed by the Group by investing in high quality money market funds, and setting suitable parameters
for asset managers to adhere to when purchasing debt securities. Cash balances and deposits are placed only with highly rated
credit institutions.
The Group primarily invests the following asset types:
\u2022 Debt securities are held within segregated mandates and investment funds. This includes government debt, private debt and asset
backed securities. The guidelines of the investments ensure management of credit risk. Generally, the duration of the securities is
relatively short and similar to the duration of the on book claims liabilities
\u2022 Liquidity funds, which in turn invest in a mixture of short-dated fixed and variable rate securities, such as cash deposits, certificates of
deposits, floating rate notes and other commercial paper
\u2022 Deposits held with well rated institutions and which are short in duration (under three years). These are classified as held at amortised
cost. Therefore, neither the carrying value of the asset, nor the interest return will be impacted by fluctuations in interest rates.
The detailed holdings are reviewed regularly by the Investment Committee.
Reinsurance assets
To mitigate the risk arising from exposure to reinsurers (in the form of reinsurance recoveries), the Group only conducts business with
companies of appropriate financial strength ratings. In addition, many reinsurance contracts are operated on a funds withheld basis,
which substantially reduces credit risk, as the Group retains the cash received from policyholders.
Loans and advances to customers
The risk appetite for the lending business is set to ensure that the risk taken is commensurate with the expected returns.
Management has defined an amber and a red loan loss limit, representing points at which action is required. These limits have been
defined by management to reflect the business maturity, the business\u2019 ambitions and the economic climate. Risk appetite is assessed at
least annually, while the limits are continuously monitored. See note 7 for further information.
Other receivables
A further principal form of credit risk is in respect of amounts due from policyholders, largely due to the potential for default by
instalment payers. The impact of this is mitigated by the large customer base and low average level of balance recoverable. There is also
mitigation by the operation of numerous high- and low-level controls in this area, including payment on policy acceptance as opposed to
inception and automated cancellation procedures for policies whereby payment has not been received.
The amount of bad debt expense relating to policyholder debt charged to the Income Statement in 2023 and 2022 is insignificant.
Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness of all
counterparties prior to them being accepted.
All other assets are assessed as low credit risk under IFRS 9, with no significant amounts past due or impaired. No further disclosure is
provided due to this having an immaterial impact on the financial statements.
Credit exposure and quality analysis
The table below provides information regarding the credit risk exposure of the Group.
31 December 2023
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured
at FVTPL
Money market and other funds
194.9
236.1
355.7
71.2
30.9
888.8
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
12.4
12.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
17.6
17.6
Investment in associate
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Financial investments
classified as FVOCI
Corporate and private debt securities
414.2
235.7
955.3
468.1
210.0
2,283.3
Government debt securities
57.2
455.3
5.2
1.9
\u2013
519.6
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
23.0
23.0
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
116.7
\u2013
\u2013
116.7
Total financial investments
666.3
927.1
1,432.9
541.2
294.9
3,862.4
Cash and cash equivalents
\u2013
12.2
318.2
22.6
0.1
353.1
Reinsurance contract assets
\u2013
913.8
277.4
0.7
\u2013
1,191.9
Other receivables
75.0
75.0
Loans and advances to customers
(note 7)
*2
879.4
879.4
Total exposure
666.3
1,853.1
2,028.5
564.5
1,249.4
6,361.8
*1
31 December 2022
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured at FVTPL
Money market and other funds
66.3
344.2
328.3
89.8
66.7
895.3
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
6.4
6.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
33.0
33.0
Investment in associate
\u2013
\u2013
\u2013
\u2013
2.4
2.4
Financial investments classified as FVOCI
Corporate and private debt securities
258.3
188.5
845.6
451.5
123.9
1,867.8
Government debt securities
266.7
209.3
1.7
2.1
\u2013
479.8
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
25.1
25.1
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
101.3
\u2013
0.1
101.4
Total financial investments
591.3
742.0
1,276.9
543.4
257.6
3,411.2
Cash and cash equivalents
\u2013
23.5
254.1
19.2
0.2
297.0
Reinsurance contract assets
\u2013
586.6
423.4
1.1
4.3
1,015.4
Trade and other receivables
\u2013
\u2013
\u2013
\u2013
87.6
87.6
Loans and advances to customers
(note 7)
*2
\u2013
\u2013
\u2013
\u2013
823.9
823.9
Total exposure
591.3
1,352.1
1,954.4
563.7
1,173.6
5,635.1
*1
*1. \u00a326.8 million (2022: \u00a359.4 million) of the unrated exposure stems from money market funds, which are rated AAA/AA, but the underlying securities are not. The remaining unrated exposure is a
mixture of private debt \u00a3210.0 million (2022: \u00a3123.9 million) and other holdings \u00a357.1 million (2022: \u00a371.8 million).
*2. Loans and advances to customers are assets generated within the Group and hence not externally rated. See note 7 for management\u2019s internal assessment of credit risk.
There were no further significant financial assets that were past due at the close of either 2023 or 2022.
3.2.1.2 Credit Spread risk
Spread risk is the risk of losses arising from changes in the spread between corporate bond yields and the risk-free yield curve.
These losses may not be realized as bonds are typically held to maturity.
Sensitivity to credit spread risk
The impact on equity of 100 and 200 basis point increases in credit spreads on financial investments and cash at the relevant valuation
date, is as follows:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Reduction in equity \u2013 100bps
(75.4)
(64.4)
Reduction in equity \u2013 200bps
(150.8)
(128.7)
The impact on the Income Statement from movements in credit spreads at the valuation date is immaterial.
No sensitivity analysis has been presented in relation to the impact on insurance liabilities and reinsurance assets in respect of changes
in credit spreads, as it has been assumed that there is no direct impact on the illiquidity premium as a result of a movement in
credit spreads.
Also see note 7 for further information on sensitivity in respect of credit risk in relation to loans and advances to customers.
3.2.2 Interest rate risk
The Group considers interest rate risk to be the risk that unfavourable movements in interest rates could adversely impact on the capital
values of financial assets and liabilities.
Interest rate risk on financial instruments arises primarily from the Group\u2019s investments in debt securities. These investments are
exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates.
In addition, the value of insurance contract liabilities and reinsurance contracts assets recognised within the financial statements are
impacted by changes in interest rates, given that these are discounted using a risk-free interest rate, plus illiquidity premium.
The Group manages interest rate risk by closely matching, where possible, the durations of insurance contracts with fixed and guaranteed
terms and the supporting financial assets. The Group monitors its interest rate risk exposure through periodic reviews of asset and
liability positions. Additionally, estimates of cashflows and the impact of interest rate fluctuations are modelled and reviewed every
six months.
Loans and advances to customers
The Group\u2019s consumer loan portfolio consists of fixed rate loans, which are funded at a floating variable rate. The Group has interest
rate swap arrangements in place to eliminate the majority of the interest rate risk variability in the cashflows payable on the loan
backed securities.
Hedge accounting
Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at
the balance sheet date is recognised through Other Comprehensive Income.
This results in a hedging reserve in relation to the interest rate swap.
Financial liabilities
Following the repurchase of the subordinated loan notes and the issuance of new subordinated loan notes, the Group holds two
financial liabilities in the form of a \u00a355.1 million subordinated loan note with a ten year maturity and fixed rate coupon of 5.5% with a
redemption date of 25 July 2024 and a \u00a3250.0 million subordinated loan note with a ten year maturity and fixed rate coupon of 8.5% with
a redemption date of 6 January 2034. The liabilities are valued at amortised cost and therefore neither the carrying value of the deposits,
nor the interest payable, will be impacted by fluctuations in interest rates.
Other financial assets and liabilities
There is no significant exposure to interest rate risk for other financial assets and liabilities due to these being held at amortised cost.
Sensitivity to interest rate risk
The impact on profit and loss (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and
decreases in interest rates on insurance contract liabilities and reinsurance contract assets, is as follows:
31 December 2023
Impact on profit Impact on profit Impact on profit Impact on profit
before tax gross of before tax net of before tax gross of before tax net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Increase of 100 basis points
22.2
15.4
60.1
49.7
Decrease of 100 basis points
(24.3)
(17.0)
(68.4)
(57.4)
Increase of 200 basis points
42.7
29.5
113.9
93.8
Decrease of 200 basis points
(51.2)
(36.2)
(148.5)
(125.9)
The impact on profit before tax of a 100 basis and 200 basis point move in relation to investments and cash is not significant, at
\u00a315.2 million and \u00a330.4 million respectively. The impact on equity is more significant, at \u00a381.7 million and \u00a3163.4 million respectively, as a
result of the gains and losses on the majority of the financial investment portfolio being reflected in Other Comprehensive Income.
Sensitivities for the 2022 comparative period are not significantly different to those provided above.
Changes in interest rates mainly affect the Income Statement and equity as follows:
Income statement
\u2022 Interest revenue and other finance costs on floating-rate financial instruments (assuming that interest rates had varied by 100 basis
points during the year)
\u2022 Changes in the fair value of derivatives and fixed-rate financial instruments measured at FVTPL
\u2022 Changes in the discounted fulfilment cashflows of onerous contracts
\u2022 Insurance claims expenses, reinsurance claims recoveries and finance income or expenses recognised in profit or loss, as a result of
discounting future cashflows at a revised current rate (assuming that interest rates had varied by 100 basis points during the year).
Equity
\u2022 Changes in the fair value of fixed-rate financial assets measured at FVOCI
\u2022 Insurance finance income and expenses recognised in OCI as a result of discounting future cashflows at a revised current rate
\u2022 The effect on profit or loss as above, net of tax.
The Group\u2019s Solvency II balance sheet, which includes technical provisions discounted using Bank of England and EIOPA yield curves
reflects a low sensitivity to interest rates as a result of well-matched durations of assets and liabilities.
3.2.3 Liquidity risk
Liquidity risk is defined as the risk that the Group does not have sufficient available financial resources to enable it to meet its obligations
as they fall due, or can only secure them at excessive cost.
The Group holds appropriate liquidity buffers at the Parent Company and subsidiary levels.
Further, as noted above, a significant portion of insurance funds are invested in investment funds with same day liquidity, meaning that
a large proportion of the Group\u2019s cash and investments are readily available.
Insurance and reinsurance contracts
The following table analyses the undiscounted, best estimate cashflows of the Group\u2019s claims liabilities under its insurance and
reinsurance contracts, which reflects the dates on which the cashflows are expected to occur. Liabilities and assets for remaining
coverage are excluded from this analysis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Insurance contract liabilities \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
667.1
691.2
428.8
791.9
UK Non-motor insurance
152.1
38.8
7.8
0.5
International
277.1
163.1
51.9
123.5
31 December 2022
UK Motor
609.5
643.2
384.6
679.3
UK Non-motor insurance
105.2
31.7
9.8
1.3
International
263.7
120.7
52.4
110.0
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Reinsurance contract assets \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
37.5
56.6
58.4
271.5
UK Non-motor insurance
115.2
40.8
7.9
0.6
International
255.5
90.0
41.2
120.0
31 December 2022
UK Motor
31.4
65.3
33.0
235.6
UK Non-motor insurance
79.7
17.3
4.6
0.6
International
257.3
79.9
35.6
78.7
Financial liabilities
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
79.4
42.5
42.5
366.9
Loan backed securities
258.9
341.6
128.3
30.8
Other borrowings
55.0
\u2013
\u2013
\u2013
Trade and other payables
303.8
1.9
0.1
\u2013
Lease liabilities
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
*1
*1
*1. Maturity analysis has been performed on a cash-settled basis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
11.0
211.0
\u2013
\u2013
Loan backed securities
241.0
326.0
125.5
22.2
Other borrowings
20.0
\u2013
\u2013
\u2013
Trade and other payables
254.9
\u2013
\u2013
\u2013
Lease liabilities
10.2
18.4
16.6
57.7
Total financial liabilities
537.1
555.4
142.1
79.9
*1
*1
*1. Maturity analysis has been performed on a cash-settled basis.
A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade and other
payables will mature within three to six months of the balance sheet date.
Financial assets
The following table analyses the carrying value of financial investments and cash and cash equivalents by contractual maturity, which can
fund the repayment of liabilities as they crystallise, as well as the Group\u2019s other financial assets recognised under IFRS 9. The Group has
disclosed a maturity analysis for financial assets that it holds as part of managing liquidity risk because it considers that this information
is necessary to enable users of financial statements to evaluate the nature and extent of its liquidity risk.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
888.8
\u2013
\u2013
\u2013
Derivative financial instruments
19.1
(0.6)
(0.9)
\u2013
Deposits with credit institutions
116.7
\u2013
\u2013
\u2013
Debt securities
336.7
1,000.6
754.2
711.4
Total financial investments
1,361.3
1,000.0
753.3
711.4
Cash and cash equivalents
353.1
\u2013
\u2013
\u2013
Total financial investments and cash
1,714.4
1,000.0
753.3
711.4
Insurance, trade and other receivables
347.7
\u2013
\u2013
\u2013
Loans and advances to customers
251.4
439.4
167.1
21.5
Total financial assets
2,313.5
1,439.4
920.4
732.9
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
895.3
\u2013
\u2013
\u2013
Derivative financial instruments
19.9
13.1
\u2013
\u2013
Deposits with credit institutions
101.4
\u2013
\u2013
\u2013
Debt securities
431.4
717.3
626.6
572.3
Total financial investments
1,448.0
730.4
626.6
572.3
Cash and cash equivalents
297.0
\u2013
\u2013
\u2013
Total financial investments and cash
1,745.0
730.4
626.6
572.3
Insurance, trade and other receivables
275.2
\u2013
\u2013
\u2013
Loans and advances to customers
235.1
401.1
159.2
28.5
Total financial assets
2,255.3
1,131.5
785.8
600.8
The Group\u2019s Directors believe that the cashflows arising from these assets will be consistent with this profile. Liquidity risk is not,
therefore, considered to be significant.
3.2.4 Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation of
overseas assets and liabilities.
The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international operations
means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential gains or losses.
Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as regulatory capital in
foreign currencies remain exposed.
The Group\u2019s exposure to net assets and profits in currencies other than the reporting currency is immaterial other than for US dollars and
euros. The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a33.9 million (2022: \u00a323.6 million); the exposure to
net assets held in euros was \u00a376.8 million (2022: \u00a369.3 million).
If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would
increase/decrease by \u00a32.0 million (2022: \u00a33.9 million).
If the sterling rates with euros had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease
by \u00a31.3 million (2022: \u00a32.3 million).
3.2.5 Objectives, policies and procedures for managing capital The Group\u2019s capital management policy defines the Board oversight, risk appetite and tier structure of the Group\u2019s capital in addition to management actions that may be taken in respect of capital, such as dividend payments. The Group aims to operate a capital-efficient business model by transferring a significant proportion of underwriting risk to co-insurance and reinsurance partners. This in turn reduces the amount of capital the Group needs to retain to operate and grow and allows the Group to distribute the majority of its earnings as dividends. The Board has determined that it will hold capital as follows: \u2022 Sufficient Solvency II Own Funds to meet all of the Group\u2019s Solvency II capital requirements (over a 1 year and ultimate time horizon) \u2022 An additional contingency to cover unforeseen events and losses that could realistically arise. This risk appetite buffer is assessed via stress testing performed on an annual basis and is calibrated in relation to the one-year regulatory SCR. The Group\u2019s current risk appetite buffer is 50% above the regulatory SCR. The Group\u2019s dividend policy is to: \u2022 Pay a normal dividend equal to 65% of post-tax profits for the period \u2022 Pay a special dividend calculated with reference to distributable reserves and surplus capital held above the risk appetite buffer. This policy gives the Directors flexibility in managing the Group\u2019s capital. As noted above, the Group\u2019s regulatory capital position is calculated under the Solvency II Framework. The Solvency Capital Requirement (SCR) is based on the Solvency II Standard Formula, with a capital-add-on to reflect limitations in the Standard Formula with respect to Admiral\u2019s risk profile (predominately in respect of profit commission arrangements in co-and reinsurance agreements and risks relating to Periodic Payment Order (PPO) claims). Solvency ratio (unaudited) At the date of this report, the Group\u2019s regulatory solvency ratio, calculated using a capital add-on that has not been subject to regulatory approval, is 200% (2022: 180%). This includes the recognition of the 2023 final dividend of 52.0 pence per share (2022: 52.0 pence per share). The Group\u2019s 2023 Solvency and Financial Condition Report (SFCR) will, when published, disclose a solvency ratio that is calculated at the balance sheet date rather than annual report date, using the capital add-on that was most recently subject to regulatory approval. The estimated and unaudited SFCR solvency ratio is 183%, with the reconciliation between this ratio and the 200% noted above being as follows:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Regulatory solvency ratio (estimated and unaudited)
Solvency ratio as reported above
200%
180%
Change in valuation date*
(11%)
(11%)
Other (including impact of updated, unapproved capital add-on)
(6%)
(20%)
Solvency ratio to be reported (SFCR)
183%
149%
*1. The solvency ratio reported above includes additional own funds generated post year-end up to the date of this report. The Group has complied with its regulatory capital requirements throughout the period. Subsidiaries The Group manages the capital of its subsidiaries to ensure that all entities within the Group are able to continue as going concerns and also to ensure that regulated entities meet regulatory requirements with an appropriate risk appetite buffer. Excess capital above these levels within subsidiaries is paid up to the Group Parent Company in the form of dividends on a regular basis. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-475": { "value": "3. Insurance and financial risk The Group\u2019s activities expose it primarily to insurance risk, and financial risks of credit, spread, interest rate, liquidity and foreign exchange risk. The Board of Directors is ultimately responsible for the management of insurance risk and financial risks, although it has delegated the detailed oversight of supervising risk management and internal control to the Group Risk Committee. There are several key elements to the risk management environment throughout the Group. These are detailed in full in the Corporate Governance Statement. Specific considerations for the risks arising from insurance and financial risk are detailed below. 3.1 Insurance risk The Group\u2019s primary business is the issuance of insurance contracts that transfer risk from policyholders to the Group and its co- insurance partners. Insurance risk involves uncertainty over the occurrence, amount or timing of claims arising on insurance contracts issued. It is primarily comprised of Reserve risk; the risk that the value of insurance liabilities established is insufficient to cover the ultimate cost of claims incurred at the balance sheet date, and premium risk; the risk that the claims experience on business written but not earned is higher than allowed for in the premiums charged to policyholders. The Board has ultimate responsibility for the management of insurance risk although as set out above, it has delegated the detailed oversight of risk management to the Group Risk Committee. The Group also has a Group Reserving Committee as well as local Reserving Committees which are comprised of senior managers within the finance, claims, pricing and actuarial functions in the respective businesses. The Reserving Committees primarily recommend the approach for claims reserving but also review the systems and controls in place to support accurate reserving and consider material reserving issues such as large bodily injury claims frequency and severity, the impact of changes in the claims systems and the external environment. The Board implements certain policies to mitigate and control the level of insurance risk accepted by the Group. These include pricing policies and claims management and administration processes, in addition to reserving policies and entering into reinsurance arrangements. 3.1.1 Reserve risk Reserve risk arises from: \u2022 The uncertain nature of claims, in particular the development of large bodily injury claims \u2022 Unexpected future impact of socioeconomic trends or regulatory changes, for example changes to the Ogden discount rate \u2022 Data issues and changes to the claims reporting process \u2022 Failure to recognise claims trends in the market including a slow-down in the processing of recoveries and liabilities with third party insurers which increases the estimation risk of these amounts \u2022 Changes in underwriting and business written so that past trends are not necessarily a predictor of the future. Understatement of reserves may result in not being able to pay claims when they fall due. Alternatively, overstatement of reserves can lead to a surplus of funds being retained resulting in opportunity cost; for example, lost investment return or insufficient resource to pursue strategic projects and develop the business. Reserve risk is mitigated through a series of processes and controls. The key processes are as follows: \u2022 Regular management and internal actuarial review of individual and aggregate case claim reserves, including regular reporting of management information and exception reporting of significant movements \u2022 Regular management and internal actuarial review of large claims, including claims settled or potentially settled by PPOs for which the uncertainty is increased by factors such as the lifetime of the claimant and movements in the indexation for the cost of future care of the claimant \u2022 Bi-annual external actuarial review of best estimate claims reserves using a variety of recognised actuarial techniques \u2022 Internal actuarial analysis of reserve uncertainty through qualitative analysis, scenario testing and a range of stochastic reserving techniques \u2022 Ad hoc external reviews of reserving related processes and assumptions \u2022 The application of a risk adjustment aligned with Group risk appetite. As described in note 2, critical accounting judgements and estimates, the Group includes the risk adjustment for non-financial risk within its measurement of insurance contracts and reinsurance contract assets, using a confidence level technique, with the risk adjustment being set in a range between the 85th and 95th percentile, on a net of excess of loss reinsurance basis. Whilst the underlying methods to calibrate the reserve risk distribution from which the percentile is selected are consistent year on year, a number of developments in the reserve risk modelling in 2023 result in a slightly less volatile distribution than at the end of 2022. The reserves including risk adjustment at 31 December 2023 equated to a 93rd percentile confidence level position (2022: 95th percentile) to the nearest whole percentile. The reduction in the confidence level from 2022 is reflective of the Group\u2019s assessment of uncertainty and the level of adverse risks associated with both internal and external factors, and in particular the Group\u2019s continued diversification across portfolios. 3.1.2 Premium risk As noted above, the Group defines premium risk as the risk that claims cost on business written but not yet earned is higher than allowed for in the premiums charged to policyholders. This also includes catastrophe risk, the risk of incurring significant losses as a result of the occurrence of manmade catastrophe, or natural weather events. Key processes and controls operating to mitigate premium risk are as follows: \u2022 Experienced and focused senior management and teams in relevant business areas including pricing and claims management \u2022 A data-driven and analytical approach to regular monitoring of claims and underwriting performance \u2022 Observations of weather events trends to understand climate impacts on frequency and severity \u2022 Capability to identify and resolve underperformance promptly through changes to key performance drivers, in particular pricing. 3.1.3 Reinsurance risk The Group purchases reinsurance as part of its risk mitigation programme. Reinsurance held is placed on both an excess of loss basis, designed to protect the Group against very large individual claims and catastrophe losses, and a proportional basis i.e. quota\u2013share reinsurance which is taken out to reduce the overall exposure of the Group to its insurance contracts. Reinsurance risk is the risk of placement of ineffective reinsurance arrangements, or the economic risk of reduced availability of reinsurance arrangements in future periods. The Group mitigates these risks by ensuring that it has a diverse range of financially secure reinsurance partners, including a long-term relationship with Munich Re and a number of other large reinsurers. Amounts recoverable from reinsurers are estimated in a manner consistent with underlying insurance contract liabilities and in accordance with the reinsurance contract terms. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to reinsurance held, to the extent that any reinsurer is unable to meet its obligations. Information regarding reinsurance credit risk is provided in note 3.2.1. 3.1.4 Concentration of insurance risk The Directors do not believe there are significant concentrations of insurance risk. This is because the risks are spread across a large number of policies across a wide regional base. The International Car Insurance, UK Household, UK Travel and UK Pet businesses further contribute to the diversification of the Group\u2019s insurance risk. The Group\u2019s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the Group substantially dependent upon any single reinsurance contract. The tables in note 5f(i) show the concentration of net insurance contract liabilities by product type and geographic area. 3.1.5 Sensitivity analysis The following sensitivity analysis shows the impact on profit for reasonably possible movements in key assumptions with all other assumptions held constant. The correlation of assumptions will have a significant effect in determining the ultimate impacts, but to demonstrate the impact due to changes in each assumption, assumptions have been changed on an individual basis. It should be noted that movements in these assumptions are non-linear. The sensitivities are shown for UK motor only, being the line of business where such sensitivities could have a material impact at a Group level. The sensitivities are shown on a gross and net of quota share reinsurance basis to illustrate the impacts on shareholder profit and equity before and after risk mitigation from quota share reinsurance. The sensitivities (both gross and net) include the impacts of movements in co-insurance profit commission, given that underwriting year loss ratios including risk adjustment, are a direct input to the calculation of profit commission. Refer to note 8 to these financial statements for the accounting policy for co-insurance profit commission. Ogden discount rate The sensitivities reflect the impact on profit before tax and equity in 2023 for changes to the Ogden discount rate from the current rate of minus 0.25%, with all other assumptions (including the absolute value of risk adjustment) remaining unchanged.
2023
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Ogden discount rate increase by 125 bps to +1.00%
133.9
95.3
110.6
77.0
Ogden discount rate increase by 75 bps to +0.50%
82.8
57.4
68.3
46.3
Ogden discount rate increase by 25 bps to 0.00%
29.2
20.0
24.0
16.1
Ogden discount rate decrease by 75 bps to -1.00%
(104.4)
(70.2)
(86.3)
(56.6)
The sensitivities do not reflect the full ultimate impacts of changes in the Ogden rate as some of the impact will flow into future financial periods. In addition, should the Ogden discount rate change in future periods, the impacts on profit before tax and equity are likely to be larger than those set out above, as a result of including the impacts on claims arising in relation to premium written and earned beyond 31 December 2023. Risk adjustment The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023 for changes in the selection of the UK motor risk adjustment confidence level at 31 December 2023, with all other assumptions remaining unchanged.
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Risk adjustment increase to 95th percentile
(54.4)
(25.6)
(45.6)
(20.3)
Risk adjustment decrease to 90th percentile
45.6
24.1
38.3
19.3
Risk adjustment decrease to 85th percentile
108.8
57.6
91.2
46.0
Undiscounted loss ratios, including risk adjustment The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023, of a change in the booked loss ratios for individual underwriting years (UWY) as at 31 December 2023, with all other assumptions remaining unchanged.
2023
UWY 2020 impact on:
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
\u00a3m
PBT
Equity
PBT
Equity
PBT
Equity
PBT
Equity
Increase of 1%: gross of reinsurance
(19.8)
(15.2)
(13.9)
(11.1)
(14.5)
(12.6)
(9.6)
(8.4)
Increase of 3%: gross of reinsurance
(59.3)
(45.7)
(41.7)
(33.4)
(43.4)
(37.7)
(28.7)
(25.3)
Increase of 5%: gross of reinsurance
(98.9)
(76.1)
(69.5)
(55.6)
(72.3)
(62.9)
(47.8)
(42.2)
Decrease of 1%: gross of reinsurance
19.8
15.2
13.9
11.1
14.5
12.6
9.6
8.4
Decrease of 3%: gross of reinsurance
59.3
45.7
41.7
33.4
43.4
37.7
28.7
25.3
Decrease of 5%: gross of reinsurance
98.9
76.1
69.5
55.6
72.3
62.9
47.8
42.2
Increase of 1%: net of reinsurance
(19.8)
(15.2)
(6.4)
(5.0)
(4.4)
(3.6)
(3.5)
(2.8)
Increase of 3%: net of reinsurance
(59.3)
(45.7)
(19.1)
(15.1)
(13.1)
(10.8)
(10.4)
(8.5)
Increase of 5%: net of reinsurance
(98.9)
(76.1)
(29.0)
(22.8)
(21.8)
(18.0)
(17.3)
(14.2)
Decrease of 1%: net of reinsurance
19.8
15.2
7.0
5.5
4.4
3.6
3.4
2.8
Decrease of 3%: net of reinsurance
59.3
45.7
27.3
21.7
13.1
10.8
10.4
8.5
Decrease of 5%: net of reinsurance
98.9
76.1
49.0
39.0
24.1
20.0
19.6
16.3
*2. \u2018Booked\u2019 loss ratios are undiscounted underwriting year loss ratios, including risk adjustment. 3.2. Financial risk The Group\u2019s activities expose it primarily to financial risks of credit, spread, interest rate, liquidity and foreign exchange risk. The detailed oversight of supervising risk management and internal control has been delegated to the Group Risk Committee. There is also an Investment Committee that makes recommendations to the Group and subsidiary Boards on investment strategy, and overseas the Group\u2019s investments, as well as advising on liquidity funding and foreign exchange management. 3.2.1 Credit risk The Group defines credit risk as the risk of financial loss if another party fails to perform its obligations. The key areas of exposure to credit risk for the Group result through its reinsurance programme, investments, bank deposits, loans and advances to customers and policyholder receivables. The Directors consider credit quality and counterparty exposure frequently and in significant detail. The Directors consider that the policies and procedures in place to manage credit exposure continue to be appropriate for the Group\u2019s risk appetite and, during 2023, and historically, no material credit losses have been experienced by the Group. Financial investments and cash Credit and counterparty risk is managed by the Group by investing in high quality money market funds, and setting suitable parameters for asset managers to adhere to when purchasing debt securities. Cash balances and deposits are placed only with highly rated credit institutions. The Group primarily invests the following asset types: \u2022 Debt securities are held within segregated mandates and investment funds. This includes government debt, private debt and asset backed securities. The guidelines of the investments ensure management of credit risk. Generally, the duration of the securities is relatively short and similar to the duration of the on book claims liabilities \u2022 Liquidity funds, which in turn invest in a mixture of short-dated fixed and variable rate securities, such as cash deposits, certificates of deposits, floating rate notes and other commercial paper \u2022 Deposits held with well rated institutions and which are short in duration (under three years). These are classified as held at amortised cost. Therefore, neither the carrying value of the asset, nor the interest return will be impacted by fluctuations in interest rates. The detailed holdings are reviewed regularly by the Investment Committee. Reinsurance assets To mitigate the risk arising from exposure to reinsurers (in the form of reinsurance recoveries), the Group only conducts business with companies of appropriate financial strength ratings. In addition, many reinsurance contracts are operated on a funds withheld basis, which substantially reduces credit risk, as the Group retains the cash received from policyholders. Loans and advances to customers The risk appetite for the lending business is set to ensure that the risk taken is commensurate with the expected returns. Management has defined an amber and a red loan loss limit, representing points at which action is required. These limits have been defined by management to reflect the business maturity, the business\u2019 ambitions and the economic climate. Risk appetite is assessed at least annually, while the limits are continuously monitored. See note 7 for further information. Other receivables A further principal form of credit risk is in respect of amounts due from policyholders, largely due to the potential for default by instalment payers. The impact of this is mitigated by the large customer base and low average level of balance recoverable. There is also mitigation by the operation of numerous high- and low-level controls in this area, including payment on policy acceptance as opposed to inception and automated cancellation procedures for policies whereby payment has not been received. The amount of bad debt expense relating to policyholder debt charged to the Income Statement in 2023 and 2022 is insignificant. Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness of all counterparties prior to them being accepted. All other assets are assessed as low credit risk under IFRS 9, with no significant amounts past due or impaired. No further disclosure is provided due to this having an immaterial impact on the financial statements. Credit exposure and quality analysis The table below provides information regarding the credit risk exposure of the Group.
31 December 2023
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured
at FVTPL
Money market and other funds
194.9
236.1
355.7
71.2
30.9
888.8
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
12.4
12.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
17.6
17.6
Investment in associate
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Financial investments
classified as FVOCI
Corporate and private debt securities
414.2
235.7
955.3
468.1
210.0
2,283.3
Government debt securities
57.2
455.3
5.2
1.9
\u2013
519.6
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
23.0
23.0
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
116.7
\u2013
\u2013
116.7
Total financial investments
666.3
927.1
1,432.9
541.2
294.9
3,862.4
Cash and cash equivalents
\u2013
12.2
318.2
22.6
0.1
353.1
Reinsurance contract assets
\u2013
913.8
277.4
0.7
\u2013
1,191.9
Other receivables
75.0
75.0
Loans and advances to customers
(note 7)
*2
879.4
879.4
Total exposure
666.3
1,853.1
2,028.5
564.5
1,249.4
6,361.8
*1
31 December 2022
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured at FVTPL
Money market and other funds
66.3
344.2
328.3
89.8
66.7
895.3
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
6.4
6.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
33.0
33.0
Investment in associate
\u2013
\u2013
\u2013
\u2013
2.4
2.4
Financial investments classified as FVOCI
Corporate and private debt securities
258.3
188.5
845.6
451.5
123.9
1,867.8
Government debt securities
266.7
209.3
1.7
2.1
\u2013
479.8
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
25.1
25.1
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
101.3
\u2013
0.1
101.4
Total financial investments
591.3
742.0
1,276.9
543.4
257.6
3,411.2
Cash and cash equivalents
\u2013
23.5
254.1
19.2
0.2
297.0
Reinsurance contract assets
\u2013
586.6
423.4
1.1
4.3
1,015.4
Trade and other receivables
\u2013
\u2013
\u2013
\u2013
87.6
87.6
Loans and advances to customers
(note 7)
*2
\u2013
\u2013
\u2013
\u2013
823.9
823.9
Total exposure
591.3
1,352.1
1,954.4
563.7
1,173.6
5,635.1
*1 *1. \u00a326.8 million (2022: \u00a359.4 million) of the unrated exposure stems from money market funds, which are rated AAA/AA, but the underlying securities are not. The remaining unrated exposure is a mixture of private debt \u00a3210.0 million (2022: \u00a3123.9 million) and other holdings \u00a357.1 million (2022: \u00a371.8 million). *2. Loans and advances to customers are assets generated within the Group and hence not externally rated. See note 7 for management\u2019s internal assessment of credit risk. There were no further significant financial assets that were past due at the close of either 2023 or 2022. 3.2.1.2 Credit Spread risk Spread risk is the risk of losses arising from changes in the spread between corporate bond yields and the risk-free yield curve. These losses may not be realized as bonds are typically held to maturity. Sensitivity to credit spread risk The impact on equity of 100 and 200 basis point increases in credit spreads on financial investments and cash at the relevant valuation date, is as follows:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Reduction in equity \u2013 100bps
(75.4)
(64.4)
Reduction in equity \u2013 200bps
(150.8)
(128.7)
The impact on the Income Statement from movements in credit spreads at the valuation date is immaterial. No sensitivity analysis has been presented in relation to the impact on insurance liabilities and reinsurance assets in respect of changes in credit spreads, as it has been assumed that there is no direct impact on the illiquidity premium as a result of a movement in credit spreads. Also see note 7 for further information on sensitivity in respect of credit risk in relation to loans and advances to customers. 3.2.2 Interest rate risk The Group considers interest rate risk to be the risk that unfavourable movements in interest rates could adversely impact on the capital values of financial assets and liabilities. Interest rate risk on financial instruments arises primarily from the Group\u2019s investments in debt securities. These investments are exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates. In addition, the value of insurance contract liabilities and reinsurance contracts assets recognised within the financial statements are impacted by changes in interest rates, given that these are discounted using a risk-free interest rate, plus illiquidity premium. The Group manages interest rate risk by closely matching, where possible, the durations of insurance contracts with fixed and guaranteed terms and the supporting financial assets. The Group monitors its interest rate risk exposure through periodic reviews of asset and liability positions. Additionally, estimates of cashflows and the impact of interest rate fluctuations are modelled and reviewed every six months. Loans and advances to customers The Group\u2019s consumer loan portfolio consists of fixed rate loans, which are funded at a floating variable rate. The Group has interest rate swap arrangements in place to eliminate the majority of the interest rate risk variability in the cashflows payable on the loan backed securities. Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. Financial liabilities Following the repurchase of the subordinated loan notes and the issuance of new subordinated loan notes, the Group holds two financial liabilities in the form of a \u00a355.1 million subordinated loan note with a ten year maturity and fixed rate coupon of 5.5% with a redemption date of 25 July 2024 and a \u00a3250.0 million subordinated loan note with a ten year maturity and fixed rate coupon of 8.5% with a redemption date of 6 January 2034. The liabilities are valued at amortised cost and therefore neither the carrying value of the deposits, nor the interest payable, will be impacted by fluctuations in interest rates. Other financial assets and liabilities There is no significant exposure to interest rate risk for other financial assets and liabilities due to these being held at amortised cost. Sensitivity to interest rate risk The impact on profit and loss (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases in interest rates on insurance contract liabilities and reinsurance contract assets, is as follows:
31 December 2023
Impact on profit Impact on profit Impact on profit Impact on profit
before tax gross of before tax net of before tax gross of before tax net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Increase of 100 basis points
22.2
15.4
60.1
49.7
Decrease of 100 basis points
(24.3)
(17.0)
(68.4)
(57.4)
Increase of 200 basis points
42.7
29.5
113.9
93.8
Decrease of 200 basis points
(51.2)
(36.2)
(148.5)
(125.9)
The impact on profit before tax of a 100 basis and 200 basis point move in relation to investments and cash is not significant, at \u00a315.2 million and \u00a330.4 million respectively. The impact on equity is more significant, at \u00a381.7 million and \u00a3163.4 million respectively, as a result of the gains and losses on the majority of the financial investment portfolio being reflected in Other Comprehensive Income. Sensitivities for the 2022 comparative period are not significantly different to those provided above. Changes in interest rates mainly affect the Income Statement and equity as follows: Income statement \u2022 Interest revenue and other finance costs on floating-rate financial instruments (assuming that interest rates had varied by 100 basis points during the year) \u2022 Changes in the fair value of derivatives and fixed-rate financial instruments measured at FVTPL \u2022 Changes in the discounted fulfilment cashflows of onerous contracts \u2022 Insurance claims expenses, reinsurance claims recoveries and finance income or expenses recognised in profit or loss, as a result of discounting future cashflows at a revised current rate (assuming that interest rates had varied by 100 basis points during the year). Equity \u2022 Changes in the fair value of fixed-rate financial assets measured at FVOCI \u2022 Insurance finance income and expenses recognised in OCI as a result of discounting future cashflows at a revised current rate \u2022 The effect on profit or loss as above, net of tax. The Group\u2019s Solvency II balance sheet, which includes technical provisions discounted using Bank of England and EIOPA yield curves reflects a low sensitivity to interest rates as a result of well-matched durations of assets and liabilities. 3.2.3 Liquidity risk Liquidity risk is defined as the risk that the Group does not have sufficient available financial resources to enable it to meet its obligations as they fall due, or can only secure them at excessive cost. The Group holds appropriate liquidity buffers at the Parent Company and subsidiary levels. Further, as noted above, a significant portion of insurance funds are invested in investment funds with same day liquidity, meaning that a large proportion of the Group\u2019s cash and investments are readily available. Insurance and reinsurance contracts The following table analyses the undiscounted, best estimate cashflows of the Group\u2019s claims liabilities under its insurance and reinsurance contracts, which reflects the dates on which the cashflows are expected to occur. Liabilities and assets for remaining coverage are excluded from this analysis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Insurance contract liabilities \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
667.1
691.2
428.8
791.9
UK Non-motor insurance
152.1
38.8
7.8
0.5
International
277.1
163.1
51.9
123.5
31 December 2022
UK Motor
609.5
643.2
384.6
679.3
UK Non-motor insurance
105.2
31.7
9.8
1.3
International
263.7
120.7
52.4
110.0
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Reinsurance contract assets \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
37.5
56.6
58.4
271.5
UK Non-motor insurance
115.2
40.8
7.9
0.6
International
255.5
90.0
41.2
120.0
31 December 2022
UK Motor
31.4
65.3
33.0
235.6
UK Non-motor insurance
79.7
17.3
4.6
0.6
International
257.3
79.9
35.6
78.7
Financial liabilities
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
79.4
42.5
42.5
366.9
Loan backed securities
258.9
341.6
128.3
30.8
Other borrowings
55.0
\u2013
\u2013
\u2013
Trade and other payables
303.8
1.9
0.1
\u2013
Lease liabilities
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
*1 *1 *1. Maturity analysis has been performed on a cash-settled basis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
11.0
211.0
\u2013
\u2013
Loan backed securities
241.0
326.0
125.5
22.2
Other borrowings
20.0
\u2013
\u2013
\u2013
Trade and other payables
254.9
\u2013
\u2013
\u2013
Lease liabilities
10.2
18.4
16.6
57.7
Total financial liabilities
537.1
555.4
142.1
79.9
*1 *1 *1. Maturity analysis has been performed on a cash-settled basis. A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade and other payables will mature within three to six months of the balance sheet date. Financial assets The following table analyses the carrying value of financial investments and cash and cash equivalents by contractual maturity, which can fund the repayment of liabilities as they crystallise, as well as the Group\u2019s other financial assets recognised under IFRS 9. The Group has disclosed a maturity analysis for financial assets that it holds as part of managing liquidity risk because it considers that this information is necessary to enable users of financial statements to evaluate the nature and extent of its liquidity risk.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
888.8
\u2013
\u2013
\u2013
Derivative financial instruments
19.1
(0.6)
(0.9)
\u2013
Deposits with credit institutions
116.7
\u2013
\u2013
\u2013
Debt securities
336.7
1,000.6
754.2
711.4
Total financial investments
1,361.3
1,000.0
753.3
711.4
Cash and cash equivalents
353.1
\u2013
\u2013
\u2013
Total financial investments and cash
1,714.4
1,000.0
753.3
711.4
Insurance, trade and other receivables
347.7
\u2013
\u2013
\u2013
Loans and advances to customers
251.4
439.4
167.1
21.5
Total financial assets
2,313.5
1,439.4
920.4
732.9
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
895.3
\u2013
\u2013
\u2013
Derivative financial instruments
19.9
13.1
\u2013
\u2013
Deposits with credit institutions
101.4
\u2013
\u2013
\u2013
Debt securities
431.4
717.3
626.6
572.3
Total financial investments
1,448.0
730.4
626.6
572.3
Cash and cash equivalents
297.0
\u2013
\u2013
\u2013
Total financial investments and cash
1,745.0
730.4
626.6
572.3
Insurance, trade and other receivables
275.2
\u2013
\u2013
\u2013
Loans and advances to customers
235.1
401.1
159.2
28.5
Total financial assets
2,255.3
1,131.5
785.8
600.8
The Group\u2019s Directors believe that the cashflows arising from these assets will be consistent with this profile. Liquidity risk is not, therefore, considered to be significant. 3.2.4 Foreign exchange risk Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation of overseas assets and liabilities. The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international operations means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential gains or losses. Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as regulatory capital in foreign currencies remain exposed. The Group\u2019s exposure to net assets and profits in currencies other than the reporting currency is immaterial other than for US dollars and euros. The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a33.9 million (2022: \u00a323.6 million); the exposure to net assets held in euros was \u00a376.8 million (2022: \u00a369.3 million). If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a32.0 million (2022: \u00a33.9 million). If the sterling rates with euros had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a31.3 million (2022: \u00a32.3 million).
3.2.5 Objectives, policies and procedures for managing capital
The Group\u2019s capital management policy defines the Board oversight, risk appetite and tier structure of the Group\u2019s capital in addition to
management actions that may be taken in respect of capital, such as dividend payments.
The Group aims to operate a capital-efficient business model by transferring a significant proportion of underwriting risk to co-insurance
and reinsurance partners. This in turn reduces the amount of capital the Group needs to retain to operate and grow and allows the Group
to distribute the majority of its earnings as dividends.
The Board has determined that it will hold capital as follows:
\u2022 Sufficient Solvency II Own Funds to meet all of the Group\u2019s Solvency II capital requirements (over a 1 year and ultimate time horizon)
\u2022 An additional contingency to cover unforeseen events and losses that could realistically arise. This risk appetite buffer is assessed via
stress testing performed on an annual basis and is calibrated in relation to the one-year regulatory SCR.
The Group\u2019s current risk appetite buffer is 50% above the regulatory SCR.
The Group\u2019s dividend policy is to:
\u2022 Pay a normal dividend equal to 65% of post-tax profits for the period
\u2022 Pay a special dividend calculated with reference to distributable reserves and surplus capital held above the risk appetite buffer.
This policy gives the Directors flexibility in managing the Group\u2019s capital.
As noted above, the Group\u2019s regulatory capital position is calculated under the Solvency II Framework. The Solvency Capital Requirement
(SCR) is based on the Solvency II Standard Formula, with a capital-add-on to reflect limitations in the Standard Formula with respect to
Admiral\u2019s risk profile (predominately in respect of profit commission arrangements in co-and reinsurance agreements and risks relating to
Periodic Payment Order (PPO) claims).
Solvency ratio (unaudited)
At the date of this report, the Group\u2019s regulatory solvency ratio, calculated using a capital add-on that has not been subject to regulatory
approval, is 200% (2022: 180%). This includes the recognition of the 2023 final dividend of 52.0 pence per share (2022: 52.0 pence per share).
The Group\u2019s 2023 Solvency and Financial Condition Report (SFCR) will, when published, disclose a solvency ratio that is calculated at
the balance sheet date rather than annual report date, using the capital add-on that was most recently subject to regulatory approval.
The estimated and unaudited SFCR solvency ratio is 183%, with the reconciliation between this ratio and the 200% noted above being
as follows:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Regulatory solvency ratio (estimated and unaudited)
Solvency ratio as reported above
200%
180%
Change in valuation date*
(11%)
(11%)
Other (including impact of updated, unapproved capital add-on)
(6%)
(20%)
Solvency ratio to be reported (SFCR)
183%
149%
*1. The solvency ratio reported above includes additional own funds generated post year-end up to the date of this report.
The Group has complied with its regulatory capital requirements throughout the period.
Subsidiaries
The Group manages the capital of its subsidiaries to ensure that all entities within the Group are able to continue as going concerns and
also to ensure that regulated entities meet regulatory requirements with an appropriate risk appetite buffer. Excess capital above these
levels within subsidiaries is paid up to the Group Parent Company in the form of dividends on a regular basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-499": { "value": "3.1.5 Sensitivity analysis The following sensitivity analysis shows the impact on profit for reasonably possible movements in key assumptions with all other assumptions held constant. The correlation of assumptions will have a significant effect in determining the ultimate impacts, but to demonstrate the impact due to changes in each assumption, assumptions have been changed on an individual basis. It should be noted that movements in these assumptions are non-linear. The sensitivities are shown for UK motor only, being the line of business where such sensitivities could have a material impact at a Group level. The sensitivities are shown on a gross and net of quota share reinsurance basis to illustrate the impacts on shareholder profit and equity before and after risk mitigation from quota share reinsurance. The sensitivities (both gross and net) include the impacts of movements in co-insurance profit commission, given that underwriting year loss ratios including risk adjustment, are a direct input to the calculation of profit commission. Refer to note 8 to these financial statements for the accounting policy for co-insurance profit commission. Ogden discount rate The sensitivities reflect the impact on profit before tax and equity in 2023 for changes to the Ogden discount rate from the current rate of minus 0.25%, with all other assumptions (including the absolute value of risk adjustment) remaining unchanged.
2023
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Ogden discount rate increase by 125 bps to +1.00%
133.9
95.3
110.6
77.0
Ogden discount rate increase by 75 bps to +0.50%
82.8
57.4
68.3
46.3
Ogden discount rate increase by 25 bps to 0.00%
29.2
20.0
24.0
16.1
Ogden discount rate decrease by 75 bps to -1.00%
(104.4)
(70.2)
(86.3)
(56.6)
The sensitivities do not reflect the full ultimate impacts of changes in the Ogden rate as some of the impact will flow into future financial periods. In addition, should the Ogden discount rate change in future periods, the impacts on profit before tax and equity are likely to be larger than those set out above, as a result of including the impacts on claims arising in relation to premium written and earned beyond 31 December 2023. Risk adjustment The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023 for changes in the selection of the UK motor risk adjustment confidence level at 31 December 2023, with all other assumptions remaining unchanged.
Impact on profit Impact on profit Impact on Impact on
before tax gross of before tax net of equity gross of equity net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Risk adjustment increase to 95th percentile
(54.4)
(25.6)
(45.6)
(20.3)
Risk adjustment decrease to 90th percentile
45.6
24.1
38.3
19.3
Risk adjustment decrease to 85th percentile
108.8
57.6
91.2
46.0
Undiscounted loss ratios, including risk adjustment The sensitivities reflect the impact on profit before tax in 2023 and equity as at the end of 2023, of a change in the booked loss ratios for individual underwriting years (UWY) as at 31 December 2023, with all other assumptions remaining unchanged.
2023
UWY 2020 impact on:
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
\u00a3m
PBT
Equity
PBT
Equity
PBT
Equity
PBT
Equity
Increase of 1%: gross of reinsurance
(19.8)
(15.2)
(13.9)
(11.1)
(14.5)
(12.6)
(9.6)
(8.4)
Increase of 3%: gross of reinsurance
(59.3)
(45.7)
(41.7)
(33.4)
(43.4)
(37.7)
(28.7)
(25.3)
Increase of 5%: gross of reinsurance
(98.9)
(76.1)
(69.5)
(55.6)
(72.3)
(62.9)
(47.8)
(42.2)
Decrease of 1%: gross of reinsurance
19.8
15.2
13.9
11.1
14.5
12.6
9.6
8.4
Decrease of 3%: gross of reinsurance
59.3
45.7
41.7
33.4
43.4
37.7
28.7
25.3
Decrease of 5%: gross of reinsurance
98.9
76.1
69.5
55.6
72.3
62.9
47.8
42.2
Increase of 1%: net of reinsurance
(19.8)
(15.2)
(6.4)
(5.0)
(4.4)
(3.6)
(3.5)
(2.8)
Increase of 3%: net of reinsurance
(59.3)
(45.7)
(19.1)
(15.1)
(13.1)
(10.8)
(10.4)
(8.5)
Increase of 5%: net of reinsurance
(98.9)
(76.1)
(29.0)
(22.8)
(21.8)
(18.0)
(17.3)
(14.2)
Decrease of 1%: net of reinsurance
19.8
15.2
7.0
5.5
4.4
3.6
3.4
2.8
Decrease of 3%: net of reinsurance
59.3
45.7
27.3
21.7
13.1
10.8
10.4
8.5
Decrease of 5%: net of reinsurance
98.9
76.1
49.0
39.0
24.1
20.0
19.6
16.3
*2. \u2018Booked\u2019 loss ratios are undiscounted underwriting year loss ratios, including risk adjustment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityToInsuranceRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-500": { "value": "3.2.1 Credit risk The Group defines credit risk as the risk of financial loss if another party fails to perform its obligations. The key areas of exposure to credit risk for the Group result through its reinsurance programme, investments, bank deposits, loans and advances to customers and policyholder receivables. The Directors consider credit quality and counterparty exposure frequently and in significant detail. The Directors consider that the policies and procedures in place to manage credit exposure continue to be appropriate for the Group\u2019s risk appetite and, during 2023, and historically, no material credit losses have been experienced by the Group. Financial investments and cash Credit and counterparty risk is managed by the Group by investing in high quality money market funds, and setting suitable parameters for asset managers to adhere to when purchasing debt securities. Cash balances and deposits are placed only with highly rated credit institutions. The Group primarily invests the following asset types: \u2022 Debt securities are held within segregated mandates and investment funds. This includes government debt, private debt and asset backed securities. The guidelines of the investments ensure management of credit risk. Generally, the duration of the securities is relatively short and similar to the duration of the on book claims liabilities \u2022 Liquidity funds, which in turn invest in a mixture of short-dated fixed and variable rate securities, such as cash deposits, certificates of deposits, floating rate notes and other commercial paper \u2022 Deposits held with well rated institutions and which are short in duration (under three years). These are classified as held at amortised cost. Therefore, neither the carrying value of the asset, nor the interest return will be impacted by fluctuations in interest rates. The detailed holdings are reviewed regularly by the Investment Committee. Reinsurance assets To mitigate the risk arising from exposure to reinsurers (in the form of reinsurance recoveries), the Group only conducts business with companies of appropriate financial strength ratings. In addition, many reinsurance contracts are operated on a funds withheld basis, which substantially reduces credit risk, as the Group retains the cash received from policyholders. Loans and advances to customers The risk appetite for the lending business is set to ensure that the risk taken is commensurate with the expected returns. Management has defined an amber and a red loan loss limit, representing points at which action is required. These limits have been defined by management to reflect the business maturity, the business\u2019 ambitions and the economic climate. Risk appetite is assessed at least annually, while the limits are continuously monitored. See note 7 for further information. Other receivables A further principal form of credit risk is in respect of amounts due from policyholders, largely due to the potential for default by instalment payers. The impact of this is mitigated by the large customer base and low average level of balance recoverable. There is also mitigation by the operation of numerous high- and low-level controls in this area, including payment on policy acceptance as opposed to inception and automated cancellation procedures for policies whereby payment has not been received. The amount of bad debt expense relating to policyholder debt charged to the Income Statement in 2023 and 2022 is insignificant. Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness of all counterparties prior to them being accepted. All other assets are assessed as low credit risk under IFRS 9, with no significant amounts past due or impaired. No further disclosure is provided due to this having an immaterial impact on the financial statements. Credit exposure and quality analysis The table below provides information regarding the credit risk exposure of the Group.
31 December 2023
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured
at FVTPL
Money market and other funds
194.9
236.1
355.7
71.2
30.9
888.8
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
12.4
12.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
17.6
17.6
Investment in associate
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Financial investments
classified as FVOCI
Corporate and private debt securities
414.2
235.7
955.3
468.1
210.0
2,283.3
Government debt securities
57.2
455.3
5.2
1.9
\u2013
519.6
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
23.0
23.0
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
116.7
\u2013
\u2013
116.7
Total financial investments
666.3
927.1
1,432.9
541.2
294.9
3,862.4
Cash and cash equivalents
\u2013
12.2
318.2
22.6
0.1
353.1
Reinsurance contract assets
\u2013
913.8
277.4
0.7
\u2013
1,191.9
Other receivables
75.0
75.0
Loans and advances to customers
(note 7)
*2
879.4
879.4
Total exposure
666.3
1,853.1
2,028.5
564.5
1,249.4
6,361.8
*1
31 December 2022
BBB and
AAA AA A Sub-BBB Not rated To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments measured at FVTPL
Money market and other funds
66.3
344.2
328.3
89.8
66.7
895.3
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
6.4
6.4
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
33.0
33.0
Investment in associate
\u2013
\u2013
\u2013
\u2013
2.4
2.4
Financial investments classified as FVOCI
Corporate and private debt securities
258.3
188.5
845.6
451.5
123.9
1,867.8
Government debt securities
266.7
209.3
1.7
2.1
\u2013
479.8
Equity Investments (designated FVOCI)
\u2013
\u2013
\u2013
\u2013
25.1
25.1
Financial assets measured
at amortised cost
Deposits with credit institutions
\u2013
\u2013
101.3
\u2013
0.1
101.4
Total financial investments
591.3
742.0
1,276.9
543.4
257.6
3,411.2
Cash and cash equivalents
\u2013
23.5
254.1
19.2
0.2
297.0
Reinsurance contract assets
\u2013
586.6
423.4
1.1
4.3
1,015.4
Trade and other receivables
\u2013
\u2013
\u2013
\u2013
87.6
87.6
Loans and advances to customers
(note 7)
*2
\u2013
\u2013
\u2013
\u2013
823.9
823.9
Total exposure
591.3
1,352.1
1,954.4
563.7
1,173.6
5,635.1
*1 *1. \u00a326.8 million (2022: \u00a359.4 million) of the unrated exposure stems from money market funds, which are rated AAA/AA, but the underlying securities are not. The remaining unrated exposure is a mixture of private debt \u00a3210.0 million (2022: \u00a3123.9 million) and other holdings \u00a357.1 million (2022: \u00a371.8 million). *2. Loans and advances to customers are assets generated within the Group and hence not externally rated. See note 7 for management\u2019s internal assessment of credit risk. There were no further significant financial assets that were past due at the close of either 2023 or 2022. 3.2.1.2 Credit Spread risk Spread risk is the risk of losses arising from changes in the spread between corporate bond yields and the risk-free yield curve. These losses may not be realized as bonds are typically held to maturity. Sensitivity to credit spread risk The impact on equity of 100 and 200 basis point increases in credit spreads on financial investments and cash at the relevant valuation date, is as follows:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Reduction in equity \u2013 100bps
(75.4)
(64.4)
Reduction in equity \u2013 200bps
(150.8)
(128.7)
The impact on the Income Statement from movements in credit spreads at the valuation date is immaterial. No sensitivity analysis has been presented in relation to the impact on insurance liabilities and reinsurance assets in respect of changes in credit spreads, as it has been assumed that there is no direct impact on the illiquidity premium as a result of a movement in credit spreads. Also see note 7 for further information on sensitivity in respect of credit risk in relation to loans and advances to customers. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-501": { "value": "3.2.2 Interest rate risk The Group considers interest rate risk to be the risk that unfavourable movements in interest rates could adversely impact on the capital values of financial assets and liabilities. Interest rate risk on financial instruments arises primarily from the Group\u2019s investments in debt securities. These investments are exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates. In addition, the value of insurance contract liabilities and reinsurance contracts assets recognised within the financial statements are impacted by changes in interest rates, given that these are discounted using a risk-free interest rate, plus illiquidity premium. The Group manages interest rate risk by closely matching, where possible, the durations of insurance contracts with fixed and guaranteed terms and the supporting financial assets. The Group monitors its interest rate risk exposure through periodic reviews of asset and liability positions. Additionally, estimates of cashflows and the impact of interest rate fluctuations are modelled and reviewed every six months. Loans and advances to customers The Group\u2019s consumer loan portfolio consists of fixed rate loans, which are funded at a floating variable rate. The Group has interest rate swap arrangements in place to eliminate the majority of the interest rate risk variability in the cashflows payable on the loan backed securities. Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. Financial liabilities Following the repurchase of the subordinated loan notes and the issuance of new subordinated loan notes, the Group holds two financial liabilities in the form of a \u00a355.1 million subordinated loan note with a ten year maturity and fixed rate coupon of 5.5% with a redemption date of 25 July 2024 and a \u00a3250.0 million subordinated loan note with a ten year maturity and fixed rate coupon of 8.5% with a redemption date of 6 January 2034. The liabilities are valued at amortised cost and therefore neither the carrying value of the deposits, nor the interest payable, will be impacted by fluctuations in interest rates. Other financial assets and liabilities There is no significant exposure to interest rate risk for other financial assets and liabilities due to these being held at amortised cost. Sensitivity to interest rate risk The impact on profit and loss (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases in interest rates on insurance contract liabilities and reinsurance contract assets, is as follows:
31 December 2023
Impact on profit Impact on profit Impact on profit Impact on profit
before tax gross of before tax net of before tax gross of before tax net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Increase of 100 basis points
22.2
15.4
60.1
49.7
Decrease of 100 basis points
(24.3)
(17.0)
(68.4)
(57.4)
Increase of 200 basis points
42.7
29.5
113.9
93.8
Decrease of 200 basis points
(51.2)
(36.2)
(148.5)
(125.9)
The impact on profit before tax of a 100 basis and 200 basis point move in relation to investments and cash is not significant, at \u00a315.2 million and \u00a330.4 million respectively. The impact on equity is more significant, at \u00a381.7 million and \u00a3163.4 million respectively, as a result of the gains and losses on the majority of the financial investment portfolio being reflected in Other Comprehensive Income. Sensitivities for the 2022 comparative period are not significantly different to those provided above. Changes in interest rates mainly affect the Income Statement and equity as follows: Income statement \u2022 Interest revenue and other finance costs on floating-rate financial instruments (assuming that interest rates had varied by 100 basis points during the year) \u2022 Changes in the fair value of derivatives and fixed-rate financial instruments measured at FVTPL \u2022 Changes in the discounted fulfilment cashflows of onerous contracts \u2022 Insurance claims expenses, reinsurance claims recoveries and finance income or expenses recognised in profit or loss, as a result of discounting future cashflows at a revised current rate (assuming that interest rates had varied by 100 basis points during the year). Equity \u2022 Changes in the fair value of fixed-rate financial assets measured at FVOCI \u2022 Insurance finance income and expenses recognised in OCI as a result of discounting future cashflows at a revised current rate \u2022 The effect on profit or loss as above, net of tax. The Group\u2019s Solvency II balance sheet, which includes technical provisions discounted using Bank of England and EIOPA yield curves reflects a low sensitivity to interest rates as a result of well-matched durations of assets and liabilities. 3.2.4 Foreign exchange risk Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation of overseas assets and liabilities. The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international operations means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential gains or losses. Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as regulatory capital in foreign currencies remain exposed. The Group\u2019s exposure to net assets and profits in currencies other than the reporting currency is immaterial other than for US dollars and euros. The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a33.9 million (2022: \u00a323.6 million); the exposure to net assets held in euros was \u00a376.8 million (2022: \u00a369.3 million). If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a32.0 million (2022: \u00a33.9 million). If the sterling rates with euros had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a31.3 million (2022: \u00a32.3 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-574": { "value": "Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-560": { "value": "Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-542": { "value": "Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-519": { "value": "Hedge accounting Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position as at the balance sheet date is recognised through Other Comprehensive Income. This results in a hedging reserve in relation to the interest rate swap. ", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-520": { "value": "Sensitivity to interest rate risk The impact on profit and loss (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases in interest rates on insurance contract liabilities and reinsurance contract assets, is as follows:
31 December 2023
Impact on profit Impact on profit Impact on profit Impact on profit
before tax gross of before tax net of before tax gross of before tax net of
\u00a3m reinsurance reinsurance reinsurance reinsurance
Increase of 100 basis points
22.2
15.4
60.1
49.7
Decrease of 100 basis points
(24.3)
(17.0)
(68.4)
(57.4)
Increase of 200 basis points
42.7
29.5
113.9
93.8
Decrease of 200 basis points
(51.2)
(36.2)
(148.5)
(125.9)
The impact on profit before tax of a 100 basis and 200 basis point move in relation to investments and cash is not significant, at \u00a315.2 million and \u00a330.4 million respectively. The impact on equity is more significant, at \u00a381.7 million and \u00a3163.4 million respectively, as a result of the gains and losses on the majority of the financial investment portfolio being reflected in Other Comprehensive Income. Sensitivities for the 2022 comparative period are not significantly different to those provided above. ", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-502": { "value": "3.2.3 Liquidity risk Liquidity risk is defined as the risk that the Group does not have sufficient available financial resources to enable it to meet its obligations as they fall due, or can only secure them at excessive cost. The Group holds appropriate liquidity buffers at the Parent Company and subsidiary levels. Further, as noted above, a significant portion of insurance funds are invested in investment funds with same day liquidity, meaning that a large proportion of the Group\u2019s cash and investments are readily available. Insurance and reinsurance contracts The following table analyses the undiscounted, best estimate cashflows of the Group\u2019s claims liabilities under its insurance and reinsurance contracts, which reflects the dates on which the cashflows are expected to occur. Liabilities and assets for remaining coverage are excluded from this analysis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Insurance contract liabilities \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
667.1
691.2
428.8
791.9
UK Non-motor insurance
152.1
38.8
7.8
0.5
International
277.1
163.1
51.9
123.5
31 December 2022
UK Motor
609.5
643.2
384.6
679.3
UK Non-motor insurance
105.2
31.7
9.8
1.3
International
263.7
120.7
52.4
110.0
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Reinsurance contract assets \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
37.5
56.6
58.4
271.5
UK Non-motor insurance
115.2
40.8
7.9
0.6
International
255.5
90.0
41.2
120.0
31 December 2022
UK Motor
31.4
65.3
33.0
235.6
UK Non-motor insurance
79.7
17.3
4.6
0.6
International
257.3
79.9
35.6
78.7
Financial liabilities
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
79.4
42.5
42.5
366.9
Loan backed securities
258.9
341.6
128.3
30.8
Other borrowings
55.0
\u2013
\u2013
\u2013
Trade and other payables
303.8
1.9
0.1
\u2013
Lease liabilities
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
*1 *1 *1. Maturity analysis has been performed on a cash-settled basis.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial liabilities
Subordinated notes
11.0
211.0
\u2013
\u2013
Loan backed securities
241.0
326.0
125.5
22.2
Other borrowings
20.0
\u2013
\u2013
\u2013
Trade and other payables
254.9
\u2013
\u2013
\u2013
Lease liabilities
10.2
18.4
16.6
57.7
Total financial liabilities
537.1
555.4
142.1
79.9
*1 *1 *1. Maturity analysis has been performed on a cash-settled basis. A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade and other payables will mature within three to six months of the balance sheet date. Financial assets The following table analyses the carrying value of financial investments and cash and cash equivalents by contractual maturity, which can fund the repayment of liabilities as they crystallise, as well as the Group\u2019s other financial assets recognised under IFRS 9. The Group has disclosed a maturity analysis for financial assets that it holds as part of managing liquidity risk because it considers that this information is necessary to enable users of financial statements to evaluate the nature and extent of its liquidity risk.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
888.8
\u2013
\u2013
\u2013
Derivative financial instruments
19.1
(0.6)
(0.9)
\u2013
Deposits with credit institutions
116.7
\u2013
\u2013
\u2013
Debt securities
336.7
1,000.6
754.2
711.4
Total financial investments
1,361.3
1,000.0
753.3
711.4
Cash and cash equivalents
353.1
\u2013
\u2013
\u2013
Total financial investments and cash
1,714.4
1,000.0
753.3
711.4
Insurance, trade and other receivables
347.7
\u2013
\u2013
\u2013
Loans and advances to customers
251.4
439.4
167.1
21.5
Total financial assets
2,313.5
1,439.4
920.4
732.9
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
895.3
\u2013
\u2013
\u2013
Derivative financial instruments
19.9
13.1
\u2013
\u2013
Deposits with credit institutions
101.4
\u2013
\u2013
\u2013
Debt securities
431.4
717.3
626.6
572.3
Total financial investments
1,448.0
730.4
626.6
572.3
Cash and cash equivalents
297.0
\u2013
\u2013
\u2013
Total financial investments and cash
1,745.0
730.4
626.6
572.3
Insurance, trade and other receivables
275.2
\u2013
\u2013
\u2013
Loans and advances to customers
235.1
401.1
159.2
28.5
Total financial assets
2,255.3
1,131.5
785.8
600.8
The Group\u2019s Directors believe that the cashflows arising from these assets will be consistent with this profile. Liquidity risk is not, therefore, considered to be significant. ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-521": { "value": "
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Insurance contract liabilities \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
667.1
691.2
428.8
791.9
UK Non-motor insurance
152.1
38.8
7.8
0.5
International
277.1
163.1
51.9
123.5
31 December 2022
UK Motor
609.5
643.2
384.6
679.3
UK Non-motor insurance
105.2
31.7
9.8
1.3
International
263.7
120.7
52.4
110.0
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
Reinsurance contract assets \u00a3m \u00a3m \u00a3m \u00a3m
31 December 2023
UK Motor
37.5
56.6
58.4
271.5
UK Non-motor insurance
115.2
40.8
7.9
0.6
International
255.5
90.0
41.2
120.0
31 December 2022
UK Motor
31.4
65.3
33.0
235.6
UK Non-motor insurance
79.7
17.3
4.6
0.6
International
257.3
79.9
35.6
78.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisForLiquidityRiskThatArisesFromContractsWithinScopeOfIFRS17Explanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-522": { "value": "Financial assets The following table analyses the carrying value of financial investments and cash and cash equivalents by contractual maturity, which can fund the repayment of liabilities as they crystallise, as well as the Group\u2019s other financial assets recognised under IFRS 9. The Group has disclosed a maturity analysis for financial assets that it holds as part of managing liquidity risk because it considers that this information is necessary to enable users of financial statements to evaluate the nature and extent of its liquidity risk.
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2023 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
888.8
\u2013
\u2013
\u2013
Derivative financial instruments
19.1
(0.6)
(0.9)
\u2013
Deposits with credit institutions
116.7
\u2013
\u2013
\u2013
Debt securities
336.7
1,000.6
754.2
711.4
Total financial investments
1,361.3
1,000.0
753.3
711.4
Cash and cash equivalents
353.1
\u2013
\u2013
\u2013
Total financial investments and cash
1,714.4
1,000.0
753.3
711.4
Insurance, trade and other receivables
347.7
\u2013
\u2013
\u2013
Loans and advances to customers
251.4
439.4
167.1
21.5
Total financial assets
2,313.5
1,439.4
920.4
732.9
< 1 year 1 \u20133 years 3 \u20135 years > 5 years
At December 2022 \u00a3m \u00a3m \u00a3m \u00a3m
Financial investments
Money market funds
895.3
\u2013
\u2013
\u2013
Derivative financial instruments
19.9
13.1
\u2013
\u2013
Deposits with credit institutions
101.4
\u2013
\u2013
\u2013
Debt securities
431.4
717.3
626.6
572.3
Total financial investments
1,448.0
730.4
626.6
572.3
Cash and cash equivalents
297.0
\u2013
\u2013
\u2013
Total financial investments and cash
1,745.0
730.4
626.6
572.3
Insurance, trade and other receivables
275.2
\u2013
\u2013
\u2013
Loans and advances to customers
235.1
401.1
159.2
28.5
Total financial assets
2,255.3
1,131.5
785.8
600.8
The Group\u2019s Directors believe that the cashflows arising from these assets will be consistent with this profile. Liquidity risk is not, therefore, considered to be significant. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisForFinancialAssetsHeldForManagingLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-523": { "value": "3.2.4 Foreign exchange risk Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation of overseas assets and liabilities. The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international operations means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential gains or losses. Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as regulatory capital in foreign currencies remain exposed. The Group\u2019s exposure to net assets and profits in currencies other than the reporting currency is immaterial other than for US dollars and euros. The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a33.9 million (2022: \u00a323.6 million); the exposure to net assets held in euros was \u00a376.8 million (2022: \u00a369.3 million). If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a32.0 million (2022: \u00a33.9 million). If the sterling rates with euros had strengthened/weakened by 10%, the Group\u2019s profit before tax for the year would increase/decrease by \u00a31.3 million (2022: \u00a32.3 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-503": { "value": "3.2.5 Objectives, policies and procedures for managing capital The Group\u2019s capital management policy defines the Board oversight, risk appetite and tier structure of the Group\u2019s capital in addition to management actions that may be taken in respect of capital, such as dividend payments. The Group aims to operate a capital-efficient business model by transferring a significant proportion of underwriting risk to co-insurance and reinsurance partners. This in turn reduces the amount of capital the Group needs to retain to operate and grow and allows the Group to distribute the majority of its earnings as dividends. The Board has determined that it will hold capital as follows: \u2022 Sufficient Solvency II Own Funds to meet all of the Group\u2019s Solvency II capital requirements (over a 1 year and ultimate time horizon) \u2022 An additional contingency to cover unforeseen events and losses that could realistically arise. This risk appetite buffer is assessed via stress testing performed on an annual basis and is calibrated in relation to the one-year regulatory SCR. The Group\u2019s current risk appetite buffer is 50% above the regulatory SCR. The Group\u2019s dividend policy is to: \u2022 Pay a normal dividend equal to 65% of post-tax profits for the period \u2022 Pay a special dividend calculated with reference to distributable reserves and surplus capital held above the risk appetite buffer. This policy gives the Directors flexibility in managing the Group\u2019s capital. As noted above, the Group\u2019s regulatory capital position is calculated under the Solvency II Framework. The Solvency Capital Requirement (SCR) is based on the Solvency II Standard Formula, with a capital-add-on to reflect limitations in the Standard Formula with respect to Admiral\u2019s risk profile (predominately in respect of profit commission arrangements in co-and reinsurance agreements and risks relating to Periodic Payment Order (PPO) claims).", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-458": { "value": "
4. Operating segments
4a. Accounting policies
(i) Group consolidation
The consolidated financial statements comprise the results and balances of the Company and all entities controlled by the Company,
being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2023 and comparative figures for
the year ended 31 December 2022. The financial statements of the Company\u2019s subsidiaries and its SPEs are consolidated in the Group
financial statements.
The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited.
An SPE is fully consolidated into the Group financial statements under IFRS 10, where the Group has control over the SPE.
The Parent Company financial statements present information about the Company as a separate entity and not about its Group.
In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are not
reported as related party transactions in the consolidated financial statements.
(ii) Foreign currency translation
Items included in the financial records of each of the Group\u2019s entities are measured using the currency of the primary economic
environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in pounds
sterling, the Group\u2019s presentational currency, rounded to the nearest \u00a30.1 million.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.
Non-monetary items measured at cost are translated at their historic rate and non-monetary items held at fair value are translated using
the foreign exchange rate on the date that the fair value was established.
The financial statements of foreign operations whose functional currency is not pounds sterling are translated into the Group
presentation currency (pound sterling) as follows:
\u2022 Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
\u2022 Income and expenses for each Income Statement are translated at an average exchange rate (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the date of the transaction)
\u2022 All resulting exchange differences are recognised in Other Comprehensive Income and in a separate component of equity except to
the extent that the translation differences are attributable to non-controlling interests.
On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular operation is recognised in the
Income Statement.
4b. Segment reporting
The Group has four reportable segments, as described below. These segments represent the principal split of business that is regularly
reported to the Group\u2019s Board of Directors, which is considered to be the Group\u2019s chief operating decision maker in line with IFRS 8
Operating Segments.
UK Insurance
The segment consists of the underwriting of Motor, Household, Pet and Travel insurance and other products that supplement these
insurance policies within the UK. It also includes the generation of revenue from additional products and fees from underwriting
insurance in the UK. The Directors consider the results of these activities to be reportable as one segment as the activities carried out
in generating the revenue are not independent of each other and are performed as one business. This mirrors the approach taken in
management reporting.
International Insurance
The segment consists of the underwriting of car and home insurance and the generation of revenue from additional products and fees
from underwriting car insurance outside of the UK. It specifically covers the Group operations Admiral Seguros in Spain, ConTe in Italy,
L\u2019olivier Assurance in France and Elephant Auto in the US. None of these operations are reportable on an individual basis, based on the
threshold requirements in IFRS 8.
Admiral Money
The segment relates to the Admiral Money business launched in 2017, which provides unsecured personal loans and car finance products
in the UK, primarily through the comparison channel, credit scoring applications and direct channels.
Other
The \u2018Other\u2019 segment is designed to be comprised of all other operating segments that are not separately reported to the Group\u2019s Board
of Directors and do not meet the threshold requirements for individual reporting. It includes the results of Admiral Pioneer, and compare.
com prior to its disposal on 27 March 2023.
Taxes are not allocated across the segments and, as with the corporate activities, are included in the reconciliation to the Consolidated
Income Statement and Consolidated Statement of Financial Position.
An analysis of the Group\u2019s revenue and results for the year ended 31 December 2023, by reportable segment, is shown below.
The accounting policies of the reportable segments are materially consistent with those presented in the notes to the financial
statements for the Group.
Year ended 31 December 2023
International Admiral
UK Insurance Insurance Money Other Eliminations To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Turnover
3,776.0
894.9
92.1
48.5
\u2013
4,811.5
Insurance revenue
2,596.8
842.6
\u2013
46.7
\u2013
3,486.1
Insurance revenue net of XoL
2,517.3
811.8
\u2013
44.4
\u2013
3,373.5
Insurance expenses
(559.6)
(249.4)
\u2013
(27.9)
\u2013
(836.9)
Insurance claims net of XoL
(1,560.2)
(565.2)
\u2013
(33.1)
\u2013
(2,158.5)
Quota share reinsurance result
(18.4)
(22.1)
\u2013
0.1
\u2013
(40.4)
Net movement in onerous loss component
4.3
0.6
\u2013
\u2013
\u2013
4.9
Underwriting result
383.4
(24.3)
\u2013
(16.5)
\u2013
342.6
Net investment income
55.2
4.3
\u2013
0.3
(3.2)
56.6
Net interest income from financial services
\u2013
\u2013
66.4
0.2
1.5
68.1
Net other revenue and operating expenses
157.9
2.0
(56.2)
(12.4)
\u2013
91.3
Segment profit/(loss) before tax
596.5
(18.0)
10.2
(28.4)
(1.7)
558.6
Other central revenue and expenses,
including share scheme charges
(101.8)
Investment and interest income
4.6
Finance costs
(18.6)
Consolidated profit before tax
442.8
Taxation expense
(105.6)
Consolidated profit after tax
337.2
*3
*1
*2
*4
*4
Revenue and results for the corresponding reportable segments for the year ended 31 December 2022 are shown below.
Year ended 31 December 2022
International Admiral
UK Insurance Insurance Money Other Eliminations To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Turnover
2,784.3
795.9
59.0
41.7
(0.3)
3,680.6
Insurance revenue
2,174.2
750.0
\u2013
32.7
\u2013
2,956.9
Insurance revenue net of XoL
2,115.7
732.0
\u2013
31.3
\u2013
2,879.0
Insurance expenses
(475.7)
(254.6)
\u2013
(24.8)
\u2013
(755.1)
Insurance claims net of XoL
(1,466.6)
(547.1)
\u2013
(17.5)
\u2013
(2,031.2)
Quota share reinsurance result
104.5
13.9
\u2013
(1.0)
\u2013
117.4
Net movement in onerous loss
component
5.1
(1.0)
\u2013
\u2013
\u2013
4.1
Underwriting result
283.0
(56.8)
\u2013
(12.0)
\u2013
214.2
Net investment income
18.6
1.1
\u2013
0.1
(2.2)
17.6
Net interest income from
financial services
\u2013
\u2013
44.6
\u2013
1.5
46.1
Net other revenue and
operating expenses
208.1
(0.5)
(42.5)
(5.6)
\u2013
159.5
Segment profit/(loss) before tax
509.7
(56.2)
2.1
(17.5)
(0.7)
437.4
Other central revenue and expenses,
including share scheme charges
(74.9)
Investment and interest income
10.1
Finance costs
(11.4)
Consolidated profit before tax
361.2
Taxation expense
(75.9)
Consolidated profit after tax
285.3
*3
*1
*2
*4
*4
*1. Turnover is an Alternative Performance Measure presented before intra-group eliminations. Refer to the glossary and note 13 for further information.
*2. Net investment income is reported net of impairment of financial assets, in line with management reporting.
*3. Eliminations are in respect of the intra-group trading between the Group\u2019s comparison and UK and International Insurance entities and intra-group interest charges related to the UK Insurance and
Admiral Money segment.
*4. Segment results are presented net of gross share scheme charges, and any quota share reinsurance recoveries; these net share scheme charges are presented within \u2018Other central revenue and
expenses, including share scheme charges\u2019 in line with internal management reporting.
Segment revenues
The UK and International Insurance reportable segments derive all insurance revenue from external policyholders. Revenue within these
segments is not derived from an individual policyholder that represents 10% or more of the Group\u2019s total revenue.
Revenues from external customers for products and services are consistent with the split of reportable segment revenues.
Information about geographical locations
All material revenues from external customers, and net assets attributed to a foreign country, are shown within the International
Insurance reportable segment shown on the previous pages.
Segment assets and liabilities
The identifiable segment assets and liabilities at 31 December 2023 are as follows:
Year ended 31 December 2023
International Admiral
UK Insurance Insurance Money Other Eliminations To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Reportable segment assets
5,128.1
1,045.8
980.1
256.5
(610.8)
6,799.7
Reportable segment liabilities
(3,981.6)
(958.3)
(969.2)
(419.7)
610.8
(5,718.0)
Reportable segment net assets
1,146.5
87.5
10.9
(163.2)
\u2013
1,081.7
Unallocated assets and liabilities
(88.9)
Consolidated net assets
992.8
Unallocated assets and liabilities consist of other central assets and liabilities, plus deferred and current corporation tax balances.
These assets and liabilities are not regularly reviewed by the Board of Directors in the reportable segment format.
Eliminations represent inter-segment funding, balances included in insurance and other receivables and deemed loan receivables in
respect of securitised loan receivables.
The segment assets and liabilities at 31 December 2022 are as follows:
Year ended 31 December 2022 (restated)
International Admiral
UK Insurance Insurance Money Other Eliminations To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Reportable segment assets
4,579.0
955.3
929.1
218.0
(682.7)
5,998.7
Reportable segment liabilities
(3,508.4)
(863.4)
(902.0)
(485.2)
682.7
(5,076.3)
Reportable segment net assets
1,070.6
91.9
27.1
(267.2)
\u2013
922.4
Unallocated assets and liabilities
(35.4)
Consolidated net assets
887.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-453": { "value": "4a. Accounting policies (i) Group consolidation The consolidated financial statements comprise the results and balances of the Company and all entities controlled by the Company, being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2023 and comparative figures for the year ended 31 December 2022. The financial statements of the Company\u2019s subsidiaries and its SPEs are consolidated in the Group financial statements. The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited. An SPE is fully consolidated into the Group financial statements under IFRS 10, where the Group has control over the SPE. The Parent Company financial statements present information about the Company as a separate entity and not about its Group. In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are not reported as related party transactions in the consolidated financial statements. (ii) Foreign currency translation Items included in the financial records of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in pounds sterling, the Group\u2019s presentational currency, rounded to the nearest \u00a30.1 million. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Non-monetary items measured at cost are translated at their historic rate and non-monetary items held at fair value are translated using the foreign exchange rate on the date that the fair value was established. The financial statements of foreign operations whose functional currency is not pounds sterling are translated into the Group presentation currency (pound sterling) as follows: \u2022 Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet \u2022 Income and expenses for each Income Statement are translated at an average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the date of the transaction) \u2022 All resulting exchange differences are recognised in Other Comprehensive Income and in a separate component of equity except to the extent that the translation differences are attributable to non-controlling interests. On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular operation is recognised in the Income Statement. a) Accounting policies (i) Insurance, Reinsurance and Co-insurance contracts classification Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Insurance contracts The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after an insured event with benefits payable if the insured event did not occur. Reinsurance contracts The Group also enters into both excess of loss (\u2018XoL\u2019) and quota share reinsurance contracts. A contract is only accounted for as a reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by management based on the terms and conditions of the contracts. Co-insurance contracts Co-insurance arrangements are contracts entered into by the Group\u2019s intermediaries, under which insurance risks are shared on a proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement. Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly attributable costs in fulfilling the insurance contracts. (ii) Level of aggregation IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are managed together. The Group\u2019s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household etc), and geography (UK, Italy, Spain, France and the US). IFRS 17 requires a further division of the portfolios into a \u2018group\u2019 of contracts (being the lowest unit of account) based on expected profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand- alone contracts. Following the application of the IFRS 17 level of aggregation requirements, each of the Group\u2019s portfolios (which are determined by geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at inception into three categories: a) A group of contracts that are onerous at initial recognition, if any b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any c) A group of the remaining contracts in the portfolio. The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics. To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group considers facts and circumstances to identify whether a group of contracts are onerous based on: \u2022 Pricing information \u2022 Results of similar contracts it has recognised \u2022 Environmental factors, e.g. a change in market experience or regulations. The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to onerous contracts refer to contracts on which there is a net gain on initial recognition. Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group\u2019s reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate the contracts by type of reinsurance (e.g. quota share or XoL) and product. These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially recognised and measured. Such groups are not subsequently reconsidered. (iii) Recognition, modification and derecognition Groups of insurance contracts issued are recognised from the earliest of the following: \u2022 The beginning of the coverage period \u2022 The date when the first payment from the policyholder is due or actually received, if there is no due date \u2022 For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous. A group of reinsurance contracts held is entered into from the earlier of: \u2022 The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held \u2022 The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract held in the group of reinsurance contracts held at or before that date. The Group derecognises an insurance or reinsurance contract when it is: \u2022 Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or \u2022 The contract is modified such that the modification results in a change in the measurement model or the applicable standard for measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract. When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the contract as an adjustment to the relevant liability for remaining coverage. (iv) Contract boundary The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract services ends when: \u2022 The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits that fully reflects those risks, or \u2022 Both of the following criteria are satisfied: i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date. A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised. Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included. For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the Group has a substantive right to receive services from the reinsurer. (v) Presentation The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of reinsurance contracts held that are liabilities. The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance income or expenses. The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the financial statements. The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion. It includes the entire change as part of the insurance service result. (vi) Measurement Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation Subject to specified criteria, the PAA can be adopted Coverage period for the Group\u2019s insurance
approach (\u2018PAA\u2019) as a simplified approach to the IFRS 17 general model. contracts assumed is one year or less and so
eligibility qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
Insurance acquisition Where the coverage period of all contracts within The Group\u2019s insurance contracts are all one year
cashflows for insurance a group is not longer than one year, insurance or less. The Group has therefore taken the option
contracts issued acquisition cashflows can either be expensed as to expense acquisition costs as incurred.
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Liability for Remaining Where there is no significant financing component There is no allowance made for accretion of
Coverage (\u2018LRC\u2019), in relation to the LRC, or where the time between interest on the LRC given that the premiums are
adjusted for financial providing each part of the services and the related received within one year of the coverage period.
risk and time value premium due date is no more than a year, an entity is
of money not required to make an adjustment for accretion of
interest on the LRC.
Liability for Incurred For PAA groups, where claims or directly attributable For some claims, for example within the travel
Claims (\u2018LIC\u2019), adjusted insurance expenses are expected to be paid within product line in the UK, and other immaterial
or time value of money a year of the date that the claim is incurred, it is product lines across the Group, the incurred claims
not required to adjust these amounts for the time are expected to be paid out in less than one year.
value of money. Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group\u2019s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
Insurance finance There is an option to disaggregate part of the The impact on LIC of changes in discount rates will
income and expense movement in the LIC resulting from changes be captured within OCI, in line with the accounting
in discount rates, and present this in Other for assets backing the insurance claims liabilities.
Comprehensive Income (\u2018OCI\u2019).
Interim reporting
Where an entity is required to apply IAS 34 (as for the
The Group has opted to apply the option to use
Group) there is an option as to whether to choose a year-to-date accounting for interim reporting.
year-to-date\u201d basis or a \u201cperiod to date\u201d basis for
financial reporting.
Fulfilment cashflows within the contract boundary The fulfilment cashflows (\u2018FCF\u2019) are the current estimates of the future cashflows within the contract boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the uncertainty of those amounts. The estimates of future cashflows: \u2022 Are based on a probability weighted mean of the full range of possible outcomes \u2022 Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market variables \u2022 Reflect conditions existing at the measurement date. In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group\u2019s view of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable market prices. An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For the Group\u2019s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated and included within the measurement of the liability for incurred claims. Risk of the Group\u2019s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer. The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups of contracts. The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance contracts held and such estimates for the groups of underlying insurance contracts. Discount rates A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and the relevant liability cashflows (known as an illiquidity premium). A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years. For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms that aren\u2019t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield curves, which supports consistency over time. Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement. The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability for incurred claims at the end of the current and prior periods:
31 December 2023
31 December 2022
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.4%
4.3%
4.0%
3.9%
5.1%
5.0%
4.7%
4.4%
International (European motor)
4.0%
3.1%
3.0%
3.0%
3.8%
3.9%
3.8%
3.7%
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption. Insurance revenue The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component) allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time. If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change in accounting estimate. The Group\u2019s insurance revenue is comprised of the following component parts: \u2022 Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance contract that is presented as part of insurance revenue as set out below. \u2022 Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying insurance policy, as set out in note 2 to the financial statements. \u2022 Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are required to fulfil the insurance contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows, i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis. IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13 for further information regarding the disaggregation of insurance revenue. As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Insurance service expenses The following elements are included in insurance service expenses: \u2022 Incurred claims and benefits excluding investment components \u2022 Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme expenses that are attributable to insurance services \u2022 Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims) \u2022 Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components). Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance contracts, such as some product development and training costs, are recognised in other operating expenses as incurred. The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses, as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group\u2019s insurance contracts. Reinsurance net expense/income The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer and an allocation of the premiums paid that together give a net amount equal to that single amount. As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer\u2019s proportional share of the expenses that are incurred in fulfilling the insurance contracts. These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower premium (with no corresponding ceding commission or expense recovery). In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a \u201cminimum recovery\u201d from the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not settled \u201cnet\u201d with premium, the minimum recovery is treated as a non-distinct investment component. As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions from the allocation of reinsurance premiums presented in the notes to the financial statements. Insurance finance income and expense Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: (a) The effect of the time value of money and changes in the time value of money (b) The effect of financial risk and changes in financial risk. The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. The Group\u2019s financial assets backing the insurance portfolios are predominantly measured at Fair Value through Other Comprehensive Income (\u2018FVOCI\u2019). Insurance contracts: Liability for remaining coverage Initial measurement For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: : \u2022 The premiums, if any, received at initial recognition \u2022 Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before the group of insurance contracts is recognised. The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts, but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding insurance premium tax liability is presented within the liability for remaining coverage until paid. There is no allowance for time value of money as the premiums are received within one year of the coverage period. Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for remaining coverage for such onerous group depicting the losses recognised. Subsequent measurement The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as: \u2022 The liability for remaining coverage at the beginning of the period; plus \u2022 Premiums received in the period, minus \u2022 The amount recognised as insurance revenue for the services provided in the period, minus \u2022 Payments to the tax authorities in respect of premium receipts. The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to \u00a3nil. Insurance contracts: Liability for incurred claims The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the risk adjustment). Reinsurance contracts held Initial measurement The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the carrying amount of the asset for remaining coverage. The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required. Subsequent measurement The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from reinsurance contracts held within the Income Statement. Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts held. The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash settlement is recognised in the Consolidated Income Statement. 6a. Accounting policies i) Financial assets Classification and measurement The classification and subsequent measurement of the financial asset under IFRS 9 depends on: a. The Group\u2019s business model for managing the financial assets, and b. The contractual cashflow characteristics of the financial asset. Based on these factors, the financial asset is classified into one of the following categories: Amortised cost These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as fair value through profit or loss (FVTPL). For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other receivables and loans and advances to customers. The interest income generated from these assets is included in investment returns, with the exception of loans and advances to customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income. Fair value through Other Comprehensive Income (FVOCI) These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL. For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement. In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for trading and are strategic investments to be designated as being reported through FVOCI. Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss. A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises. Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available . The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. Derecognition A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset and all the attached substantial risks and rewards relating to the asset to a third party . ii) Financial liabilities Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability . 7a. Accounting policies Loans and advances to customers consist of unsecured personal loans and car finance products. Classification Loans and advances to customers are measured at amortised cost. This is because assets are held in order to collect contractual cashflows and the contractual terms of the financial asset demand cash inflows which are solely payments of principal and interest on the principal amount outstanding. Interest income and expense Interest income received in relation to loans and advances to customers is calculated using the effective interest method which allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been no change in recognition of interest income from the comparative period. Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts. Finance leases Included within loans and advances to customers are personal contract purchase (PCP) and hire purchase (HP) arrangements which are classified as finance leases under IFRS 16. A receivable equal to the net investment in the lease has been recognised. The net investment is equal to the gross investment in the lease discounted at the rate implicit in the lease. Lease interest income is recognised within interest income in the Income Statement over the term of the lease using the effective interest rate method. The title to the underlying vehicle remains with the Group until the lessee has made all contractual payments, at which point ownership is transferred to the lessee. In the event of breach of contract, such as non-payment, the vehicle itself acts as collateral for the finance lease, becoming available for repossession in most cases. Some of the ways in which the Group maintains its rights to the vehicle, and thus manages the risk of loss associated with the finance lease, include: \u2022 The Group does not enter into any finance leases with a maximum loan-to-value limit, reducing the risk of shortfall on termination of the contract \u2022 The Group requires the lessee to insure the underlying vehicle at all times, reducing the risk of non-recovery if the asset is stolen or destroyed \u2022 The estimated future value of each vehicle, which is sourced externally, is considered in the pricing of the lease contracts to provide protection against deterioration in that value. 7b. Loans and advances to customers
31 December 2023 31 December 2022
\u00a3m \u00a3m
Loans and advances to customers \u2013 gross carrying amount
956.8
887.4
Loans and advances to customers \u2013 provision
(81.7)
(63.7)
Total loans and advances to customers \u2013 Admiral Money
875.1
823.7
Total loans and advances to customers \u2013 Other
4.3
0.2
Total loans and advances to customers
879.4
823.9
Loans and advances to customers are comprised of the following:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Unsecured personal loans
937.7
855.8
Finance leases
19.1
31.6
Other
4.4
0.2
Total loans and advances to customers, gross
961.2
887.6
Fair value measurement The loans and advances are recognised at fair value at the point of origination and then subsequently on an amortised cost basis. This carrying value is deemed a reasonable approximation of fair value, which is calculated based on estimates using the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Expected credit losses The expected credit loss model is a three-stage model based on forward looking information regarding changes in the credit quality since origination. Credit risk is measured using a Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) defined as follows: \u2022 Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic customer behaviour. Where customers have already met the definition of default this is 100%. For customers that are not in default the PD is determined through analysis of historic default data using external and internal data sources available at the reporting date. \u2022 Exposure at Default (EAD): The amount of balance at the time of default. For loans that are in arrears the EAD is taken as the current balance plus any expected interest arrears. For up-to-date loans the EAD is calculated as the expected balance 3 months prior to each period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears. \u2022 Loss Given Default (LGD): The amount of the asset not recovered following a borrower\u2019s default, determined through analysis of historic recovery performance. The PD is applied to the EAD to calculate the expected loss excluding recoveries. The LGD is then applied to this loss to calculate the total expected loss including recoveries. A forward-looking provision is also calculated, as set out later in this note. Loan assets are segmented into three stages of credit impairment: \u2022 Stage 1 \u2013 no significant increase in credit risk of the financial asset since inception; \u2022 Stage 2 \u2013 significant increase in credit risk of the financial asset since inception; \u2022 Stage 3 \u2013 financial asset is credit impaired. For assets in stage 1, the allowance is calculated as the expected credit losses from events within 12 months after the reporting date. For assets in stages 2 and 3 the allowance is calculated as the expected credit loss from events in the remaining lifetime of each asset. The allowance is calculated for each loan at an individual level. Significant increase in credit risk (SICR) (stage 2) As explained above, stage 1 assets have an ECL allowing for losses in the next twelve months, and stage 2 or 3 assets have an ECL allowing for losses over the remaining lifetime of the contract. An asset moves to stage 2 when its credit risk has increased significantly since initial recognition. IFRS 9 does not prescribe a definition of significant increase in credit risk but does include a rebuttable presumption that this does occur for loan assets which are 30 days past due (which the Group does not rebut). The Group has deemed a significant increase in credit risk to have occurred where: \u2022 The loan is in arrears, or \u2022 The behavioural PD has moved outside a specified threshold from the application PD \u2022 The customer is identified as being two or more payments in arrears on a credit product with a third party and reported to the credit reference agency. The Group maintains two probation periods: \u2022 Where a customer is up to date but previously has been 30+ days past due they will be held in stage 2 for 6 months; \u2022 Where a customer is up to date but previously Credit impaired (stage 3) they will be held in stage 2 for 12 months. A range of metrics including accuracy rates, false positive rates, oscillation rates and the Mathews corelation are monitored in relation to loans which are held in the above probation periods. Credit impaired (stage 3) The Group does not rebut the presumption within IFRS 9 that default has occurred when an exposure is greater than 90 days past due, which is consistent with a customer being three or more payments in arrears. In addition, a loan is deemed to be credit impaired where: \u2022 There is an Individual Voluntary Arrangement (IVA) agreement confirmed or proposed, or \u2022 Customer has started or progressed bankruptcy action, or \u2022 A repayment plan is in place, or \u2022 A customer is deceased. As at 31 December 2023, there were 7,300 loans totalling \u00a340.1m that were subject to forbearance (2022: 4,400 loans totalling \u00a321.5m). Significant categories of forbearance arrangements include Bankruptcy, Debt Management Plans and Individual Voluntary Arrangements. 8a. Accounting policy (i) Composition of Other revenue and co-insurer profit commission Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from: \u2022 Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5) \u2022 Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are distinct, the revenue is recognised applying IFRS 15 \u2022 Revenue from the Group\u2019s law firm \u2022 Comparison income Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17 (see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the effective interest rate method, and as such is not within the scope of IFRS 15. Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a contractual arrangement between the Group\u2019s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited. (ii) Nature of goods and services The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Nature, timing of satisfaction of performance obligations and significant payment terms
Fee and commission revenue, The performance obligation is the provision of insurance intermediary services, at which point
including administration fees: the performance obligation is met. Revenue is therefore recognised at a point in time, matching
where the income is separable the Group\u2019s provision of services. Where the Group has no remaining obligations, the revenue is
from the underlying recognised immediately. An allowance is made for expected cancellations where the customer may
insurance contract be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
Revenue from The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
law firm on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission Profit commission is generated if an individual year is profitable, based on the premiums written,
from co-insurers and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
\u2022
Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
\u2022
Insurance expenses incurred
\u2022
Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
\u2022
The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
\u2022
The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
Comparison
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with Customers due to the nature of the income. The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of \u201cOther revenue\u201d is now recognised under IFRS 17. The prior year comparatives have been restated from those previously reported as a result. During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss ratios in line with the Group\u2019s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period and in future is not expected to have a material impact on the Group\u2019s financial statements. There has been no further change in revenue recognition from the restated comparative period. 9a. Accounting policies (i) Directly attributable insurance expenses Directly attributable expenses are cashflows that are directly attributable to a portfolio of insurance contracts and recognised as incurred insurance service expenses. See note 5a for details of the types of expenses recognised as directly attributable insurance expenses. (ii) Other operating expenses All other operating expenses are charged to the Income Statement in the period that they are incurred. (iii) Employee benefits As detailed in the Remuneration Committee Report, the key elements of employee remuneration are: \u2022 Base salaries and pension contributions; \u2022 Share based incentive plans; \u2022 A discretionary bonus, (the \u2018DFSS Bonus\u2019), rather than an annual cash bonus, that is based on the number of DFSS awards held and actual dividends paid out to shareholders. Within note 9b, the charges for base salaries and pension contributions (and the related social security costs) are recognised within Administration and acquisition expenses, Expenses relating to additional products and fees and Other expenses based on the role of the employee. Charges for the share-based incentive plans (and related social security costs) and discretionary bonus are included within share scheme charges. These charges are not shown as part of the result for each reportable segment, or within the expense ratio, due to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result in a cash payment to employees but instead results in an issue of new shares (resulting in a dilution of existing shares). The rules of the share schemes ensure that the actual dilution level does not exceed 10% in any rolling ten-year period. Base salaries and pension contributions Base salaries and the related employer social security costs are charged to the Income Statement in the period that they are incurred. The Group contributes to defined contribution personal pension plans for its employees. The contributions payable to these schemes are charged in the accounting period to which they relate. Share based incentive plans and related social security costs The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being: \u2022 A Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and \u2022 The Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees 50% of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% are guaranteed with continued employment. For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise the shares are forfeited. The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash) as consideration for the services provided. For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grant of the free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement of changes in equity (2023: \u00a363.3 million; 2022: \u00a357.3 million). For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase in liabilities. The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are: \u2022 The number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for each scheme where shares remain unvested is set out in note 9f (iii) \u2022 The fair value of the shares; \u2013 For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled to receive dividends, and hence no adjustment is made to this fair value \u2013 For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid equivalent to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised downwards to take account of these expected dividends \u2013 For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at the end of each reporting period is used as an approximation for the closing price at the end of the vesting period. \u2022 Employee attrition rates, which impact the ultimate number of shares that vest. \u2022 In the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number of shares that vest. The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv). At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on the latest forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. Social security costs on share-based incentive plans Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised over the vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting (typically 3\u20135 years after the grant date). For the DFSS, the costs are paid immediately upon vesting. The total social security costs are calculated based on the following: \u2022 The taxable value of the shares, being: \u2013 For the SIP, the lower of the share price at award date and the share price at the balance sheet date \u2013 For the DFSS, the share price at the balance sheet date \u2022 The number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the DFSS, the vesting rate based on performance conditions \u2022 The appropriate social security rate. These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. Discretionary bonus on shares allocated but unvested The cost of the DFSS bonus is recognised and paid in each period equivalent to the dividends on shares allocated to employees that are still entitled to vest but have not yet vested. The cost shown also includes the social security costs on the discretionary bonus. No accrual is made for future discretionary bonus payments due to there being no contractual obligation for such a bonus at the balance sheet date. 10a. Accounting policy Income tax on the profit or loss for the periods presented comprise of current and deferred tax. (i) Current tax Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods. Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in the Income Statement. (ii) Deferred tax Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are expected to apply in the period when the liability is settled, or the asset is realised. The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of property, plant and equipment, reserve movements and share scheme charges. The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or directly in equity respectively. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable temporary differences and reviewing future profit projections for the businesses. (i) Property and equipment, and depreciation All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements. The right-of-use asset is measured at cost, which comprises the following: \u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements) \u2022 Any lease payments made at or before the commencement date less any lease incentives received \u2022 Any initial direct costs, and \u2022 Restoration costs. The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis. The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption. (ii) Impairment of property and equipment In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are recognised through the Income Statement. (iii) Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has ceased as required by IAS 38. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to business segment and is reviewed annually for impairment. The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. Software Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems and amortisation commences when the software is available for use. The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. Customer contracts and relationships Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the term of the contract), amortisation commences when the contract begins. The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. (iv) Provisions, contingent liabilities and contingent assets Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably. Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation arising from a past event that is contingent on a future event, a contingent liability is disclosed. Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non- occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed. 12a. Accounting policies (i) Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets. (ii) Fair value reserve For investments recognised as Fair Value through Other Comprehensive Income (FVOCI), changes in fair value are accumulated within the fair value reserve within equity. The accumulated changes in fair value are transferred to profit or loss when the investment is derecognised or impaired. (iii) Hedging reserve The hedging reserve includes the cash flow hedge reserve. The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently reclassified to profit or loss as appropriate. (iv) Insurance finance reserve The insurance finance reserve relates to the impact of changes in market interest rates on the value of the insurance and reinsurance assets and liabilities. These changes are reflected in the insurance finance reserve in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. (v) Dividends Dividends are recorded in the period in which they are declared and paid . (vi) Earnings per share Basic earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company, Admiral Group plc by the weighted average number of ordinary shares during the period. Diluted earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company by the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-543": { "value": "(i) Group consolidation The consolidated financial statements comprise the results and balances of the Company and all entities controlled by the Company, being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2023 and comparative figures for the year ended 31 December 2022. The financial statements of the Company\u2019s subsidiaries and its SPEs are consolidated in the Group financial statements. The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited. An SPE is fully consolidated into the Group financial statements under IFRS 10, where the Group has control over the SPE. The Parent Company financial statements present information about the Company as a separate entity and not about its Group. In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are not reported as related party transactions in the consolidated financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-561": { "value": "The consolidated financial statements comprise the results and balances of the Company and all entities controlled by the Company, being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2023 and comparative figures for the year ended 31 December 2022. The financial statements of the Company\u2019s subsidiaries and its SPEs are consolidated in the Group financial statements. The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-544": { "value": "(ii) Foreign currency translation Items included in the financial records of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in pounds sterling, the Group\u2019s presentational currency, rounded to the nearest \u00a30.1 million. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Non-monetary items measured at cost are translated at their historic rate and non-monetary items held at fair value are translated using the foreign exchange rate on the date that the fair value was established. The financial statements of foreign operations whose functional currency is not pounds sterling are translated into the Group presentation currency (pound sterling) as follows: \u2022 Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet \u2022 Income and expenses for each Income Statement are translated at an average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the date of the transaction) \u2022 All resulting exchange differences are recognised in Other Comprehensive Income and in a separate component of equity except to the extent that the translation differences are attributable to non-controlling interests. On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular operation is recognised in the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-562": { "value": "Items included in the financial records of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in pounds sterling, the Group\u2019s presentational currency, rounded to the nearest \u00a30.1 million. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-545": { "value": "The Group has four reportable segments, as described below. These segments represent the principal split of business that is regularly reported to the Group\u2019s Board of Directors, which is considered to be the Group\u2019s chief operating decision maker in line with IFRS 8 Operating Segments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-459": { "value": "
5. Insurance service result
a) Accounting policies
(i) Insurance, Reinsurance and Co-insurance contracts classification
Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from
another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event)
adversely affects the policyholder.
Insurance contracts
The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its
policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after
an insured event with benefits payable if the insured event did not occur.
Reinsurance contracts
The Group also enters into both excess of loss (\u2018XoL\u2019) and quota share reinsurance contracts. A contract is only accounted for as a
reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by
management based on the terms and conditions of the contracts.
Co-insurance contracts
Co-insurance arrangements are contracts entered into by the Group\u2019s intermediaries, under which insurance risks are shared on a
proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion
of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the
claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating
to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement.
Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly
attributable costs in fulfilling the insurance contracts.
(ii) Level of aggregation
IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group
is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are
managed together.
The Group\u2019s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household
etc), and geography (UK, Italy, Spain, France and the US).
IFRS 17 requires a further division of the portfolios into a \u2018group\u2019 of contracts (being the lowest unit of account) based on expected
profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation
of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and
supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand-
alone contracts.
Following the application of the IFRS 17 level of aggregation requirements, each of the Group\u2019s portfolios (which are determined by
geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at
inception into three categories:
a) A group of contracts that are onerous at initial recognition, if any
b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
c) A group of the remaining contracts in the portfolio.
The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically
constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics.
To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable
information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and
circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant
possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group
considers facts and circumstances to identify whether a group of contracts are onerous based on:
\u2022 Pricing information
\u2022 Results of similar contracts it has recognised
\u2022 Environmental factors, e.g. a change in market experience or regulations.
The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to
onerous contracts refer to contracts on which there is a net gain on initial recognition.
Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group\u2019s
reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate
the contracts by type of reinsurance (e.g. quota share or XoL) and product.
These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially
recognised and measured. Such groups are not subsequently reconsidered.
(iii) Recognition, modification and derecognition
Groups of insurance contracts issued are recognised from the earliest of the following:
\u2022 The beginning of the coverage period
\u2022 The date when the first payment from the policyholder is due or actually received, if there is no due date
\u2022 For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous.
A group of reinsurance contracts held is entered into from the earlier of:
\u2022 The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group
of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially
recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held
\u2022 The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance
contract held in the group of reinsurance contracts held at or before that date.
The Group derecognises an insurance or reinsurance contract when it is:
\u2022 Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or
\u2022 The contract is modified such that the modification results in a change in the measurement model or the applicable standard for
measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in
a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the
contract as an adjustment to the relevant liability for remaining coverage.
(iv) Contract boundary
The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract
in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that
exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has
a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance
contract services ends when:
\u2022 The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits
that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a
result, can set a price or level of benefits that fully reflects the risk of that portfolio
ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods
after the reassessment date.
A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised.
Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to
the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included.
For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations
of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the
Group has a substantive right to receive services from the reinsurer.
(v) Presentation
The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that
are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of
reinsurance contracts held that are liabilities.
The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other
Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance
income or expenses.
The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts
issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the
financial statements.
The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion.
It includes the entire change as part of the insurance service result.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation Subject to specified criteria, the PAA can be adopted Coverage period for the Group\u2019s insurance
approach (\u2018PAA\u2019) as a simplified approach to the IFRS 17 general model. contracts assumed is one year or less and so
eligibility qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
Insurance acquisition Where the coverage period of all contracts within The Group\u2019s insurance contracts are all one year
cashflows for insurance a group is not longer than one year, insurance or less. The Group has therefore taken the option
contracts issued acquisition cashflows can either be expensed as to expense acquisition costs as incurred.
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Liability for Remaining Where there is no significant financing component There is no allowance made for accretion of
Coverage (\u2018LRC\u2019), in relation to the LRC, or where the time between interest on the LRC given that the premiums are
adjusted for financial providing each part of the services and the related received within one year of the coverage period.
risk and time value premium due date is no more than a year, an entity is
of money not required to make an adjustment for accretion of
interest on the LRC.
Liability for Incurred For PAA groups, where claims or directly attributable For some claims, for example within the travel
Claims (\u2018LIC\u2019), adjusted insurance expenses are expected to be paid within product line in the UK, and other immaterial
or time value of money a year of the date that the claim is incurred, it is product lines across the Group, the incurred claims
not required to adjust these amounts for the time are expected to be paid out in less than one year.
value of money. Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group\u2019s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
Insurance finance There is an option to disaggregate part of the The impact on LIC of changes in discount rates will
income and expense movement in the LIC resulting from changes be captured within OCI, in line with the accounting
in discount rates, and present this in Other for assets backing the insurance claims liabilities.
Comprehensive Income (\u2018OCI\u2019).
Interim reporting
Where an entity is required to apply IAS 34 (as for the
The Group has opted to apply the option to use
Group) there is an option as to whether to choose a year-to-date accounting for interim reporting.
year-to-date\u201d basis or a \u201cperiod to date\u201d basis for
financial reporting.
Fulfilment cashflows within the contract boundary
The fulfilment cashflows (\u2018FCF\u2019) are the current estimates of the future cashflows within the contract boundary of a group of contracts
that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the
uncertainty of those amounts. The estimates of future cashflows:
\u2022 Are based on a probability weighted mean of the full range of possible outcomes
\u2022 Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for
market variables
\u2022 Reflect conditions existing at the measurement date.
In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available
without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and
other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group\u2019s view
of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable
market prices.
An explicit risk adjustment for non-financial risk is estimated separately from the other estimates.
For the Group\u2019s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for
non-financial risk is only estimated and included within the measurement of the liability for incurred claims.
Risk of the Group\u2019s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement
of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses
and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer.
The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups
of contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance
contracts held and such estimates for the groups of underlying insurance contracts.
Discount rates
A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as
the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and
the relevant liability cashflows (known as an illiquidity premium).
A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield
curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the
EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years.
For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms
that aren\u2019t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between
the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield
curves, which supports consistency over time.
Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing
internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement.
The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability
for incurred claims at the end of the current and prior periods:
31 December 2023
31 December 2022
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.4%
4.3%
4.0%
3.9%
5.1%
5.0%
4.7%
4.4%
International (European motor)
4.0%
3.1%
3.0%
3.0%
3.8%
3.9%
3.8%
3.7%
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant
changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be
performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption.
Insurance revenue
The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component)
allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of
the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage
of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance
service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time.
If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change
in accounting estimate.
The Group\u2019s insurance revenue is comprised of the following component parts:
\u2022 Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on
the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance
contract that is presented as part of insurance revenue as set out below.
\u2022 Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within
the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying
insurance policy, as set out in note 2 to the financial statements.
\u2022 Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance
obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are required to fulfil the insurance
contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows,
i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis.
IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13
for further information regarding the disaggregation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance
coverage under the co-insurance arrangements where the Group bears no risks.
Insurance service expenses
The following elements are included in insurance service expenses:
\u2022 Incurred claims and benefits excluding investment components
\u2022 Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme
expenses that are attributable to insurance services
\u2022 Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims)
\u2022 Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components).
Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance
contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance
contracts, such as some product development and training costs, are recognised in other operating expenses as incurred.
The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses,
as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group\u2019s
insurance contracts.
Reinsurance net expense/income
The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income
or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer
and an allocation of the premiums paid that together give a net amount equal to that single amount.
As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer\u2019s
proportional share of the expenses that are incurred in fulfilling the insurance contracts.
These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the
expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower
premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a \u201cminimum recovery\u201d from
the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not
settled \u201cnet\u201d with premium, the minimum recovery is treated as a non-distinct investment component.
As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that
are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions
from the allocation of reinsurance premiums presented in the notes to the financial statements.
Insurance finance income and expense
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from:
(a) The effect of the time value of money and changes in the time value of money
(b) The effect of financial risk and changes in financial risk.
The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income
Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the
value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches
between the accounting for financial assets and insurance assets and liabilities. The Group\u2019s financial assets backing the insurance
portfolios are predominantly measured at Fair Value through Other Comprehensive Income (\u2018FVOCI\u2019).
Insurance contracts: Liability for remaining coverage
Initial measurement
For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: :
\u2022 The premiums, if any, received at initial recognition
\u2022 Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before
the group of insurance contracts is recognised.
The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts,
but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding
insurance premium tax liability is presented within the liability for remaining coverage until paid.
There is no allowance for time value of money as the premiums are received within one year of the coverage period.
Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped
from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount
of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for
remaining coverage for such onerous group depicting the losses recognised.
Subsequent measurement
The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as:
\u2022 The liability for remaining coverage at the beginning of the period; plus
\u2022 Premiums received in the period, minus
\u2022 The amount recognised as insurance revenue for the services provided in the period, minus
\u2022 Payments to the tax authorities in respect of premium receipts.
The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to \u00a3nil.
Insurance contracts: Liability for incurred claims
The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related
to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the
risk adjustment).
Reinsurance contracts held
Initial measurement
The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that
it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued.
Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous
underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining
coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component
by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance
contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method
to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the
case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the
carrying amount of the asset for remaining coverage.
The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with
reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required.
Subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and
has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in
the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from
reinsurance contracts held within the Income Statement.
Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in
line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not
exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity
expects to recover from the group of reinsurance contracts held.
The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities
related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a
result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash
settlement is recognised in the Consolidated Income Statement.
5b. Insurance revenue
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
1,909.7
264.5
750.0
32.7
2,956.9
The Group\u2019s share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company
Limited, Admiral Europe Compa\u00f1ia Seguros (\u2018AECS\u2019) and Elephant Insurance Company. The majority of contracts are short term in
duration, lasting for between 6 and 12 months.
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,755.5
255.0
618.2
36.4
2,665.1
Changes to liabilities for incurred claims
(406.9)
(9.1)
(21.3)
(3.3)
(440.6)
Total incurred claims
1,348.6
245.9
596.9
33.1
2,224.5
Movement in onerous contracts
(18.6)
(2.4)
(2.4)
\u2013
(23.4)
Directly attributable expenses
Administration expenses
377.8
73.5
184.0
19.0
654.3
Acquisition expenses
73.4
34.8
65.4
8.9
182.5
Insurance expenses
451.2
108.3
249.4
27.9
836.8
Share scheme expenses
43.2
2.4
8.9
0.8
55.3
Total insurance expenses and share scheme expenses
494.4
110.7
258.3
28.7
892.1
Total insurance service expenses
1,824.4
354.2
852.8
61.8
3,093.2
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,620.4
214.8
516.0
21.1
2,372.3
Changes to liabilities for incurred claims
(437.2)
(16.9)
37.2
(3.6)
(420.5)
Total incurred claims
1,183.2
197.9
553.2
17.5
1,951.8
Movement in onerous contracts
(19.1)
0.4
(3.9)
\u2013
(22.6)
Directly attributable expenses
Administration expenses
327.7
54.6
182.5
16.0
580.8
Acquisition expenses
61.9
31.5
72.1
8.7
174.2
Insurance expenses
389.6
86.1
254.6
24.7
755.0
Share scheme expenses
39.4
4.2
9.4
\u2013
53.0
Total insurance expenses and share scheme expenses
429.0
90.3
264.0
24.7
808.0
Total insurance service expenses
1,593.1
288.6
813.3
42.2
2,737.2
5d. Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2023
are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
93.6
49.5
190.0
2.2
335.3
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(173.8)
(52.0)
(270.3)
\u2013
(496.1)
Changes to liabilities for incurred claims
135.1
(1.4)
95.9
(0.1)
229.5
Net expense from reinsurance contracts excluding
movement in onerous loss component
54.9
(3.9)
15.6
2.1
68.7
Other reinsurance recoveries including movement in loss
recovery component
14.5
2.2
1.7
\u2013
18.4
Net expenses/(income) from reinsurance contracts held
69.4
(1.7)
17.3
2.1
87.1
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2022
are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
69.8
44.4
161.3
1.4
276.9
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(182.8)
(43.5)
(232.6)
0.2
(458.7)
Changes to liabilities for incurred claims
136.7
0.8
64.2
\u2013
201.7
Net expense from reinsurance contracts excluding
movement in onerous loss component
23.7
1.7
(7.1)
1.6
19.9
Other reinsurance recoveries including movement in loss
recovery component
13.9
(0.3)
4.9
\u2013
18.5
Net expenses/(income) from reinsurance contracts held
37.6
1.4
(2.2)
1.6
38.4
5e. Finance (expenses)/income from insurance contracts held and reinsurance contracts issued
31 December 2023 31 December 2022
\u00a3m \u00a3m
Amounts recognised through the Income Statement
Insurance finance expenses from insurance contracts issued
(94.5)
(52.0)
Finance expenses from insurance contracts issued
(94.5)
(52.0)
Insurance finance income from reinsurance contracts held
28.9
13.6
Finance income from reinsurance contracts issued
28.9
13.6
Net finance expense from insurance / reinsurance contracts issued
(65.6)
(38.4)
Amounts recognised in Other Comprehensive Income
(Losses)/gains due to changes in discount rates \u2013 insurance contracts
(128.1)
274.0
Gains/ (losses) due to changes in discount rates \u2013 reinsurance contracts
49.2
(96.2)
Total gains before tax recognised in Other Comprehensive Income
(78.9)
177.8
5f. Insurance Liabilities and Reinsurance assets
(i) Analysis of recognised amounts
2023
2022
Assets Liabilities Net Assets Liabilities Net
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance contracts issued
UK Motor
\u2013
3,315.7
3,315.7
\u2013
2,953.3
2,953.3
UK Non-Motor
\u2013
353.7
353.7
\u2013
267.7
267.7
International Motor
\u2013
862.5
862.5
\u2013
776.7
776.7
Other
\u2013
49.8
49.8
\u2013
27.7
27.7
Total insurance contracts issued
\u2013
4,581.7
4,581.7
\u2013
4,025.4
4,025.4
Reinsurance contracts held
UK Motor
519.9
\u2013
519.9
457.5
\u2013
457.5
UK Non-Motor
191.6
\u2013
191.6
126.5
\u2013
126.5
International Motor
481.8
\u2013
481.8
432.2
\u2013
432.2
Other
\u2013
(1.4)
(1.4)
\u2013
(0.8)
(0.8)
Total reinsurance contracts held
1,193.3
(1.4)
1,191.9
1,016.2
(0.8)
1,015.4
Net
UK Motor
\u2013
2,795.8
2,795.8
\u2013
2,495.8
2,495.8
UK Non-Motor
\u2013
162.1
162.1
\u2013
141.2
141.2
International Motor
\u2013
380.7
380.7
\u2013
344.5
344.5
Other
\u2013
51.2
51.2
\u2013
28.5
28.5
Total insurance contracts issued
\u2013
3,389.8
3,389.8
\u2013
3,010.0
3,010.0
(ii) Roll-forward of net asset or liability for insurance contracts issued
UK Motor
The following tables reconcile the opening and closing balances of the LRC and LIC for UK Motor.
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Net opening balance
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Insurance revenue
2,250.2
\u2013
2,250.2
\u2013
\u2013
\u2013
2,250.2
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(2,105.1)
(144.8)
(2,249.9)
(2,249.9)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
140.1
266.8
406.9
406.9
Losses and reversals of losses
on onerous contracts
\u2013
18.6
18.6
\u2013
\u2013
\u2013
18.6
Insurance service result
2,250.2
18.6
2,268.8
(1,965.0)
122.0
(1,843.0)
425.8
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(4.1)
(4.1)
(59.0)
(12.3)
(71.3)
(75.4)
Insurance finance income/
(expense) recognised in OCI
\u2013
(9.4)
(9.4)
(60.5)
(27.0)
(87.5)
(96.9)
Total changes in
comprehensive income
2,250.2
5.1
2,255.3
(2,084.5)
82.7
(2,001.8)
253.5
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(2,482.1)
\u2013
(2,482.1)
\u2013
\u2013
\u2013
(2,482.1)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
1,866.2
\u2013
1,866.2
1,866.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(2,482.1)
\u2013
(2,482.1)
1,866.2
\u2013
1,866.2
(615.9)
Net closing balance
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(473.1)
(28.8)
(501.9)
(1,993.7)
(507.8)
(2,501.5)
(3,003.4)
Net opening balance
(473.1)
(28.8)
(501.9)
(1,993.7)
(507.8)
(2,501.5)
(3,003.4)
Insurance revenue
1,909.7
\u2013
1,909.7
\u2013
\u2013
\u2013
1,909.7
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(1,836.9)
(212.5)
(2,049.4)
(2,049.4)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
175.6
261.6
437.2
437.2
Losses and reversals of losses
on onerous contracts
\u2013
19.1
19.1
\u2013
\u2013
\u2013
19.1
Insurance service result
1,909.7
19.1
1,928.8
(1,661.3)
49.1
(1,612.2)
316.6
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(1.8)
(1.8)
(36.5)
(8.4)
(44.9)
(46.7)
Insurance finance income/
(expense) recognised in OCI
\u2013
3.4
3.4
191.9
40.5
232.4
235.8
Total changes in
comprehensive income
1,909.7
20.7
1,930.4
(1,505.9)
81.2
(1,424.7)
505.7
Other changes
\u2013
\u2013
\u2013
(1.7)
\u2013
(1.7)
(1.7)
Cashflows
Premiums received
(2,000.8)
\u2013
(2,000.8)
\u2013
\u2013
\u2013
(2,000.8)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
1,516.8
\u2013
1,516.8
1,516.8
Other movements
30.1
\u2013
30.1
\u2013
\u2013
\u2013
30.1
Total cashflows
(1,970.7)
\u2013
(1,970.7)
1,516.8
\u2013
1,516.8
(453.9)
Net closing balance
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411,1)
(2,953.3)
UK Non-Motor
The following tables reconcile the opening and closing balances of the LRC and LIC for other UK insurance (UK Household, Pet and Travel).
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Net opening balance
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Insurance revenue
346.6
\u2013
346.6
\u2013
\u2013
\u2013
346.6
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(363.6)
(2.1)
(365.7)
(365.7)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
4.3
4.8
9.1
9.1
Losses and reversals of losses
on onerous contracts
\u2013
2.4
2.4
\u2013
\u2013
\u2013
2.4
Insurance service result
346.6
2.4
349.0
(359.3)
2.7
(356.6)
(7.6)
Insurance finance income/
(expense) recognised in profit
or loss
\u2013
\u2013
\u2013
(5.4)
(0.9)
(6.3)
(6.3)
Insurance finance income/
(expense) recognised in OCI
\u2013
(2.3)
(2.3)
(1.4)
(0.2)
(1.6)
(3.9)
Total changes in
comprehensive income
346.6
0.1
346.7
(366.1)
1.6
(364.5)
(17.8)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(381.9)
\u2013
(381.9)
\u2013
\u2013
\u2013
(381.9)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
313.7
\u2013
313.7
313.7
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(381.9)
\u2013
(381.9)
313.7
\u2013
313.7
(68.2)
Net closing balance
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(125.6)
\u2013
(125.6)
(74.2)
(16.0)
(90.2)
(215.8)
Net opening balance
(125.6)
\u2013
(125.6)
(74.2)
(16.0)
(90.2)
(215.8)
Insurance revenue
264.5
\u2013
264.5
\u2013
\u2013
\u2013
264.5
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(281.4)
(23.7)
(305.1)
(305.1)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
2.5
14.4
16.9
16.9
Losses and reversals of losses
on onerous contracts
\u2013
(0.4)
(0.4)
\u2013
\u2013
\u2013
(0.4)
Insurance service result
264.5
(0.4)
264.1
(278.9)
(9.3)
(288.2)
(24.1)
Insurance finance income/
(expense) recognised in profit
or loss
\u2013
(0.4)
(0.4)
(2.0)
(0.4)
(2.4)
(2.8)
Insurance finance income/
(expense) recognised in OCI
\u2013
0.7
0.7
1.4
0.2
1.6
2.3
Total changes in
comprehensive income
264.5
(0.1)
264.4
(279.5)
(9.5)
(289.0)
(24.6)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(239.8)
\u2013
(239.8)
\u2013
\u2013
\u2013
(239.8)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
212.5
\u2013
212.5
212.5
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(239.8)
\u2013
(239.8)
212.5
\u2013
212.5
(27.3)
Net closing balance
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
International Insurance
The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Net opening balance
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Insurance revenue
842.6
\u2013
842.6
\u2013
\u2013
\u2013
842.6
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(835.7)
(40.8)
(876.5)
(876.5)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(22.6)
43.9
21.3
21.3
Losses and reversals of losses
on onerous contracts
\u2013
2.4
2.4
\u2013
\u2013
\u2013
2.4
Insurance service result
842.6
2.4
845.0
(858.3)
3.1
(855.2)
(10.2)
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
(8.2)
(1.7)
(9.9)
(9.9)
Insurance finance income/
(expense) recognised in OCI
\u2013
(0.7)
(0.7)
(12.7)
(3.4)
(16.1)
(16.8)
Foreign exchange impact
2.3
0.1
2.4
15.7
2.0
17.7
20.1
Total changes in
comprehensive income
844.9
1.8
846.7
(863.5)
\u2013
(863.5)
(16.8)
Other changes
\u2013
\u2013
\u2013
\u2013
0.1
0.1
0.1
Cashflows
Premiums received
(862.3)
\u2013
(862.3)
\u2013
\u2013
\u2013
(862.3)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
793.2
\u2013
793.2
793.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(862.3)
\u2013
(862.3)
793.2
\u2013
793.2
(69.1)
Net closing balance
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(164.6)
(8.4)
(173.0)
(421.8)
(58.4)
(480.2)
(653.2)
Net opening balance
(164.6)
(8.4)
(173.0)
(421.8)
(58.4)
(480.2)
(653.2)
Insurance revenue
750.0
\u2013
750.0
\u2013
\u2013
\u2013
750.0
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(794.8)
(12.4)
(807.2)
(807.2)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(3.8)
(4.7)
(8.5)
(8.5)
Losses and reversals of losses
on onerous contracts
\u2013
3.9
3.9
\u2013
\u2013
\u2013
3.9
Insurance service result
750.0
3.9
753.9
(798.6)
(17.1)
(815.7)
(61.8)
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(0.1)
(0.1)
(2.2)
(0.3)
(2.5)
(2.6)
Insurance finance income/
(expense) recognised in OCI
\u2013
0.2
0.2
27.4
3.8
31.2
31.4
(iii) Roll-forward of net asset or liability for reinsurance contracts held
UK Motor
The following tables reconcile the opening and closing balances of the ARC and AIC for UK Motor.
2023
Asset for remaining coverage
Asset for incurred claims
Excluding loss Loss-recovery Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
20.2
6.3
26.5
255.4
175.6
431.0
457.5
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
20.2
6.3
26.5
255.4
175.6
431.0
457.5
Allocation of reinsurance
premiums
(93.6)
\u2013
(93.6)
\u2013
\u2013
\u2013
(93.6)
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
\u2013
\u2013
\u2013
96.7
77.1
173.8
173.8
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(43.1)
(92.0)
(135.1)
(135.1)
Changes in the loss recovery
component
\u2013
(14.5)
(14.5)
\u2013
\u2013
\u2013
(14.5)
Net income/(expense) from
reinsurance contracts held
(93.6)
(14.5)
(108.1)
53.6
(14.9)
38.7
(69.4)
Reinsurance finance income/
(expense) recognised in profit
or loss
\u2013
3.2
3.2
9.4
7.5
16.9
20.1
Reinsurance finance income/
(expense) recognised in OCI
\u2013
7.3
7.3
12.5
15.4
27.9
35.2
Total changes in
comprehensive income
(93.6)
(4.0)
(97.6)
75.5
8.0
83.5
(14.1)
Cashflows
Premiums paid
94.2
\u2013
94.2
\u2013
\u2013
\u2013
94.2
Claims recoveries
\u2013
\u2013
\u2013
(2.2)
\u2013
(2.2)
(2.2)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
(15.5)
\u2013
(15.5)
(15.5)
Total cashflows
94.2
\u2013
94.2
(17.7)
\u2013
(17.7)
76.5
Net closing balance
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Closing assets
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Closing liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Foreign exchange impact
(6.9)
(0.3)
(7.2)
(32.2)
(4.1)
(36.3)
(43.5)
Total changes in
comprehensive income
743.1
3.7
746.8
(805.6)
(17.7)
(823.3)
(76.5)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(779.2)
\u2013
(779.2)
\u2013
\u2013
\u2013
(779.2)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
732.2
\u2013
732.2
732.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(779.2)
\u2013
(779.2)
732.2
\u2013
732.2
(47.0)
Net closing balance
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
2022 Asset for remaining coverage Asset for incurred claims Excluding loss Loss-recovery Present value of Risk adj. for non- \u00a3 million component component Total future cashflows financial risk Total Total Opening assets 24.7 21.7 46.4 250.7 203.1 453.8 500.2 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 24.7 21.7 46.4 250.7 203.1 453.8 500.2 Allocation of reinsurance premiums (69.8) \u2013 (69.8) \u2013 \u2013 \u2013 (69.8) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 91.9 90.9 182.8 182.8 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 (36.7) (100.0) (136.7) (136.7) Changes in the loss recovery component \u2013 (13.9) (13.9) \u2013 \u2013 \u2013 (13.9) Net income/(expense) from reinsurance contracts held (69.8) (13.9) (83.7) 55.2 (9.1) 46.1 (37.6) Reinsurance finance income/ (expense) recognised in profit or loss \u2013 1.3 1.3 5.1 3.9 9.0 10.3 Reinsurance finance income/ (expense) recognised in OCI \u2013 (2.8) (2.8) (44.8) (22.3) (67.1) (69.9) Total changes in comprehensive income (69.8) (15.4) (85.2) 15.5 (27.5) (12.0) (97.2) Other changes \u2013 \u2013 \u2013 1.8 \u2013 1.8 1.8 Cashflows Premiums paid 65.3 \u2013 65.3 \u2013 \u2013 \u2013 65.3 Amounts received \u2013 \u2013 \u2013 (12.6) \u2013 (12.6) (12.6) Total cashflows 65.3 \u2013 65.3 (12.6) \u2013 (12.6) 52.7 Net closing balance 20.2 6.3 26.5 255.4 175.6 431.0 457.5 Closing assets 20.2 6.3 26.5 255.4 175.6 431.0 457.5 Closing liabilities UK Non-Motor The following tables reconcile the opening and closing balances of the ARC and AIC for UK Non-motor insurance (Household, Travel and Pet). 2023 Asset for remaining coverage Asset for incurred claims Excluding loss Loss-recovery Present value of Risk adj. for non- \u00a3 million component component Total future cashflows financial risk Total Total Opening assets 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Allocation of reinsurance premiums (49.5) \u2013 (49.5) \u2013 \u2013 \u2013 (49.5) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 53.3 (1.3) 52.0 52.0 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 1.7 (0.3) 1.4 1.4 Changes in the loss recovery component \u2013 (2.2) (2.2) \u2013 \u2013 \u2013 (2.2) Net income/(expense) from reinsurance contracts held (49.5) (2.2) (51.7) 55.0 (1.6) 53.4 1.7 Reinsurance finance income/ (expense) recognised in profit or loss \u2013 \u2013 \u2013 3.6 0.6 4.2 4.2 Reinsurance finance income/ (expense) recognised in OCI \u2013 2.1 2.1 0.9 0.2 1.1 3.2 Total changes in comprehensive income (49.5) (0.1) (49.6) 59.5 (0.8) 58.7 9.1 Reinsurance investment components (111.7) \u2013 (111.7) 111.7 \u2013 111.7 \u2013 Cashflows Premiums paid 170.9 \u2013 170.9 \u2013 \u2013 \u2013 170.9 Claims recovered \u2013 \u2013 \u2013 (91.2) \u2013 (91.2) (91.2) Recoveries as a result of commutations \u2013 \u2013 \u2013 (23.7) \u2013 (23.7) (23.7) Total cash flows 170.9 \u2013 170.9 (114.9) \u2013 (114.9) 56.0 Net closing balance 21.4 \u2013 21.4 154.9 15.3 170.2 191.6 Closing assets 21.4 \u2013 21.4 154.9 15.3 170.2 191.6 Closing liabilities 2022 Asset for remaining coverage Asset for incurred claims Excluding loss Present value of Risk adj. for non- \u00a3 million component Loss component Total future cashflows financial risk Total Total Opening assets 8.4 \u2013 8.4 66.6 3.1 69.7 78.1 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 8.4 \u2013 8.4 66.6 3.1 69.7 78.1 Allocation of reinsurance premiums (44.4) \u2013 (44.4) \u2013 \u2013 \u2013 (44.4) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 31.6 11.9 43.5 43.5 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 (1.8) 1.0 (0.8) (0.8) Changes in the loss recovery component \u2013 0.3 0.3 \u2013 \u2013 \u2013 0.3 Net income/(expense) from reinsurance contracts held (44.4) 0.3 (44.1) 29.8 12.9 42.7 (1.4) Reinsurance finance income/ (expense) recognised in profit or loss \u2013 0.3 0.3 1.4 0.2 1.6 1.9 Reinsurance finance income/ (expense) recognised in OCI \u2013 (0.5) (0.5) (0.7) (0.1) (0.8) (1.3) Total changes in comprehensive income (44.4) 0.1 (44.3) 30.5 13.0 43.5 (0.8) Reinsurance investment components (78.4) \u2013 (78.4) 78.4 \u2013 78.4 \u2013 Cashflows Premiums paid 126.1 \u2013 126.1 \u2013 \u2013 \u2013 126.1 Amounts received \u2013 \u2013 \u2013 (76.9) \u2013 (76.9) (76.9) Total cashflows 126.1 \u2013 126.1 (76.9) \u2013 (76.9) 49.2 Net closing balance 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Closing assets 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Closing liabilities
International Insurance
The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Asset for remaining coverage
Asset for incurred claims
Excluding loss Loss-recovery Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
3.4
3.4
412.7
35.1
447.8
451.2
Opening liabilities
(19.0)
\u2013
(19.0)
\u2013
\u2013
\u2013
(19.0)
Net opening balance
(19.0)
3.4
(15.6)
412.7
35.1
447.8
432.2
Allocation of reinsurance
premiums
(190.0)
\u2013
(190.0)
\u2013
\u2013
\u2013
(190.0)
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
\u2013
\u2013
\u2013
243.7
26.6
270.3
270.3
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(69.8)
(26.1)
(95.9)
(95.9)
Changes in the loss recovery
component
\u2013
(1.7)
(1.7)
\u2013
\u2013
\u2013
(1.7)
Net income/(expense) from
reinsurance contracts held
(190.0)
(1.7)
(191.7)
173.9
0.5
174.4
(17.3)
Reinsurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
4.0
0.6
4.6
4.6
Reinsurance finance income/
(expense) recognised in OCI
\u2013
0.5
0.5
7.4
1.9
9.3
9.8
Foreign exchange impact
6.3
\u2013
6.3
(11.7)
(0.7)
(12.4)
(6.1)
Total changes in
comprehensive income
(183.7)
(1.2)
(184.9)
173.6
2.3
175.9
(9.0)
Reinsurance investment
components
(148.9)
\u2013
(148.9)
148.9
\u2013
148.9
\u2013
Cashflows
Premiums paid
328.4
\u2013
328.4
\u2013
\u2013
\u2013
328.4
Amounts received
\u2013
\u2013
\u2013
(269.8)
\u2013
(269.8)
(269.8)
Total cashflows
328.4
\u2013
328.4
(269.8)
\u2013
(269.8)
58.6
Net closing balance
(23.2)
2.2
(21.0)
465.4
37.4
502.8
481.8
Closing assets
\u2013
2.2
2.2
465.4
37.4
502.8
505.0
Closing liabilities
(23.2)
\u2013
(23.2)
\u2013
\u2013
\u2013
(23.2)
2022
Asset for remaining coverage
Asset for incurred claims
Risk adj. for
Excluding loss Loss recovery Present value of non-financial
\u00a3 million component
component
Total
future cashflows
risk
Total
Total
Opening assets
13.8
8.0
21.8
322.8
25.4
348.2
370.0
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
13.8
8.0
21.8
322.8
25.4
348.2
370.0
Allocation of reinsurance
premiums
(161.3)
\u2013
(161.3)
\u2013
\u2013
\u2013
(161.3)
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
\u2013
\u2013
\u2013
227.0
5.6
232.6
232.6
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(69.2)
5.0
(64.2)
(64.2)
Changes in the loss recovery
component
\u2013
(4.9)
(4.9)
\u2013
\u2013
\u2013
(4.9)
Net income/(expense) from
reinsurance contracts held
(161.3)
(4.9)
(166.2)
157.8
10.6
168.4
2.2
Reinsurance finance income/
(expense) recognised in profit
or loss
\u2013
0.1
0.1
1.3
0.1
1.4
1.5
Reinsurance finance income/
(expense) recognised in OCI
\u2013
\u2013
\u2013
(18.6)
(2.0)
(20.6)
(20.6)
Foreign exchange impact
(11.4)
0.2
(11.2)
28.1
1.0
29.1
17.9
Total changes in
comprehensive income
(172.7)
(4.6)
(177.3)
168.6
9.7
178.3
1.0
Reinsurance investment
component
(129.6)
\u2013
(129.6)
129.6
\u2013
129.6
\u2013
Cashflows
Premiums paid
269.5
\u2013
269.5
\u2013
\u2013
\u2013
269.5
Amounts received
\u2013
\u2013
\u2013
(208.3)
\u2013
(208.3)
(208.3)
Total cashflows
269.5
\u2013
269.5
(208.3)
\u2013
(208.3)
61.2
Net closing balance
(19.0)
3.4
(15.6)
412.7
35.1
447.8
432.2
Closing assets
\u2013
3.4
3.4
412.7
35.1
447.8
451.2
Closing liabilities
(19.0)
\u2013
(19.0)
\u2013
\u2013
\u2013
(19.0)
(iv) Claims development
The tables below illustrate how estimates of cumulative claims for UK Motor, UK Non-Motor and International Insurance have developed
over time on a gross and net of reinsurance basis.
Each table shows how the Group\u2019s estimates of total claims for each underwriting year have developed over time and reconciles the
cumulative claims to the amount included in the Statement of Financial Position. Balances have been translated at the exchange rates
prevailing at the reporting date. The Group has not disclosed information for underwriting years 2017 and prior for the international
insurance and UK Non-Motor insurance businesses, given that the claims that remain outstanding on those years are immaterial.
IFRS 17 does not require an entity to disclose claims development information for which uncertainty about the amount and timing of
the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims in its other
lines of business or related directly attributable expenses.
Gross claims development
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
382
394
436
552
686
701
552
688
845
973
At end of year two
675
701
829
1,144
1,175
1,067
985
1,326
1,584
At end of year three
659
707
788
994
1,109
1,010
954
1,294
At end of year four
689
680
727
947
1,064
996
921
At end of year five
643
636
713
912
1,008
981
At end of year six
635
619
690
890
1,000
At end of year seven
619
606
656
865
At end of year eight
604
594
652
At end of year nine
593
585
Ten years later
590
Gross best
estimates of
undiscounted
claims
3,225
590
585
652
865
1,000
981
921
1,294
1,584
973
12,670
Cumulative gross
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Gross undiscounted
best estimate
liabilities
150
14
25
36
118
107
211
259
468
613
578
2,579
Risk adjustment
(undiscounted)
411
Effect of
discounting
(537)
Gross claims
liabilities
2,453
Ancillary claims
liabilities and
expense liabilities
94
UK Motor Gross
liabilities for
incurred claims
2,547
UK Non-motor
(core)
At end of year one
26
29
56
55
53
58
116
146
At end of year two
34
50
78
102
105
96
128
224
At end of year three
18
35
47
76
102
103
95
124
At end of year four
19
34
47
75
102
102
90
At end of year five
19
33
47
76
102
93
At end of year six
19
33
47
76
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
5
19
33
48
75
100
93
90
124
224
146
957
Cumulative gross
claims paid
(5)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(147)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gross undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
77
96
199
Risk adjustment
(undiscounted)
22
Effect of
discounting
(7)
Gross claims
liabilities
214
Ancillary claims
liabilities and
expense liabilities
4
UK Non-motor
Gross liabilities for
incurred claims
218
International
Insurance
At end of year one
177
236
204
270
313
338
At end of year two
259
356
382
368
496
601
At end of year three
237
304
349
388
364
498
At end of year four
181
253
300
350
384
365
At end of year five
138
211
251
300
350
364
At end of year six
143
211
251
300
339
At end of year seven
143
211
251
296
At end of year eight
143
212
248
At end of year nine
143
233
Ten years later
151
Gross best
estimates of
undiscounted
claims
399
151
233
248
296
339
364
365
498
601
338
3,832
Cumulative gross
claims paid
(398)
(149)
(193)
(244)
(281)
(320)
(336)
(316)
(412)
(414)
(155)
(3,218)
Gross undiscounted
best estimate
liabilities
1
2
40
4
15
19
28
49
86
187
183
614
Risk adjustment
(undiscounted)
88
Effect of
discounting
(98)
Gross claims
liabilities
604
Ancillary claims
liabilities and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
642
Claims development net of XoL reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
510
646
675
520
661
825
951
At end of year two
659
682
783
1,053
1,123
1,033
949
1,292
1,550
At end of year three
644
667
743
917
1,053
986
927
1,257
At end of year four
659
637
692
883
1,024
969
892
At end of year five
623
607
677
860
974
950
At end of year six
619
599
663
840
978
At end of year seven
606
586
640
820
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net of XoL best
estimates of
undiscounted
claims
3,190
589
577
635
820
978
950
892
1,257
1,550
951
12,389
Cumulative
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Net of XoL
undiscounted best
estimate liabilities
115
13
17
19
73
85
180
230
431
579
556
2,298
Risk adjustment
(undiscounted)
331
Effect of
discounting
(420)
Net of XoL claims
liabilities
2,209
Ancillary claims
liabilities and
expenses
94
UK Motor Net of
XoL liabilities for
incurred claims
2,303
UK Non-motor
(core)
At end of year one
26
29
56
54
50
57
116
127
At end of year two
34
50
78
102
96
91
126
220
At end of year three
18
35
47
75
101
94
90
124
At end of year four
19
34
47
75
101
93
90
At end of year five
19
33
47
76
101
93
At end of year six
19
33
47
75
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
4
19
33
48
75
100
93
90
124
220
127
933
Cumulative
claims paid
(4)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(148)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
72
77
175
Risk adjustment
(undiscounted)
19
Effect of
discounting
(7)
Net of XoL claims
liabilities
187
Ancillary claims
liabilities and
expense liabilities
3
UK Non-motor Net
of XoL liabilities for
incurred claims
190
International
Insurance
At end of year one
177
236
204
270
313
335
At end of year two
259
356
382
368
496
559
At end of year three
237
304
349
388
364
477
At end of year four
181
253
300
350
384
355
At end of year five
138
211
251
300
350
360
At end of year six
143
211
251
300
337
At end of year seven
143
211
251
290
At end of year eight
143
212
248
At end of year nine
143
210
Ten years later
397
151
Gross best
estimates of
undiscounted
claims
397
151
210
248
290
337
360
355
477
559
335
3,719
Cumulative gross
claims paid
(397)
(149)
(193)
(244)
(280)
(320)
(336)
(316)
(412)
(414)
(155)
(3,216)
Gross undiscounted
best estimate
liabilities
\u2013
2
17
4
10
17
24
39
65
145
180
503
Risk adjustment
(undiscounted)
73
Effect of
discounting
(46)
Gross claims
liabilities
530
Ancillary claims and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
568
Claims development net of reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
493
625
626
520
657
762
939
At end of year two
659
682
783
1,016
1,086
1,033
949
1,259
1,442
At end of year three
644
667
743
886
1,018
986
927
1,239
At end of year four
659
637
692
853
990
969
892
At end of year five
623
607
677
830
957
950
At end of year six
619
599
663
811
944
At end of year seven
606
586
640
793
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net best estimates
of undiscounted
claims
3,190
589
577
635
793
944
950
892
1,239
1,442
939
12,190
Cumulative net
claims paid
(3,076)
(576)
(560)
(616)
(719)
(864)
(770)
(662)
(826)
(971)
(395)
(10,035)
Net undiscounted
best estimate
liabilities
114
13
17
19
74
80
180
230
413
471
544
2,155
Risk adjustment
(undiscounted)
172
Effect of
discounting
(365)
Net claims
liabilities
1,962
Ancillary claims
liabilities and
expenses
88
UK Motor Net
liabilities for
incurred claims
2,050
UK Non-motor
(core)
At end of year one
7
6
20
18
16
16
43
68
At end of year two
10
14
22
34
25
12
41
94
At end of year three
5
10
12
24
33
31
19
36
At end of year four
6
9
12
22
37
30
18
At end of year five
6
9
12
24
37
29
At end of year six
6
8
12
24
36
At end of year seven
6
9
12
24
At end of year eight
6
9
13
At end of year nine
6
9
Ten years later
6
Net best estimates
of undiscounted
claims
2
6
9
13
24
36
29
18
36
94
68
335
Cumulative net
claims paid
(2)
(6)
(9)
(13)
(23)
(34)
(28)
(16)
(28)
(87)
(55)
(301)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
1
2
1
2
8
7
13
34
Risk adjustment
(undiscounted)
6
Effect of
discounting
(2)
Net claims
liabilities
38
Ancillary claims
liabilities
and expenses
8
UK Non-motor
Net liabilities for
incurred claims
46
International
Insurance
At end of year one
61
79
83
100
114
140
At end of year two
85
120
129
145
185
218
At end of year three
115
97
117
129
144
187
At end of year four
92
132
96
119
130
144
At end of year five
71
82
131
101
119
123
At end of year six
76
83
86
101
115
At end of year seven
77
70
86
99
At end of year eight
47
70
85
At end of year nine
46
83
Ten years later
52
Net best estimates
of undiscounted
claims
295
52
83
85
99
115
123
144
187
218
140
1,541
Cumulative net
claims paid
(298)
(51)
(68)
(83)
(95)
(109)
(114)
(129)
(163)
(223)
(100)
(1,433)
Net undiscounted
best estimate
liabilities
(3)
1
15
2
4
6
9
15
24
(5)
40
108
Risk adjustment
(undiscounted)
24
Effect of
discounting
(20)
Net claims
liabilities
112
Ancillary claims
liabilities and
expenses
27
International
Insurance net
liabilities for
incurred claims
139
(v) UK Motor loss ratios and changes to liabilities for incurred claims
The table below shows the development of UK Motor Insurance loss ratios for the past three financial periods, presented on an
underwriting year basis, both using undiscounted amounts (i.e. cashflows) and discounted amounts.
UK Motor Insurance loss ratio development \u2013 31 December
undiscounted, gross net of excess of loss reinsurance
2021
2022
2023
Underwriting year
2018
73%
68%
65%
2019
73%
71%
67%
2020
68%
65%
58%
2021
95%
91%
86%
2022
\u2013
104%
96%
2023
\u2013
\u2013
94%
* Booked undiscounted loss ratios presented from the transition date of IFRS 17 (1 January 2022) onwards.
31 December
UK Motor Insurance loss ratio development \u2013
discounted*, gross net of excess of loss reinsurance
2021
2022
2023
Underwriting year
2018
71%
67%
64%
2019
71%
69%
65%
2020
67%
63%
57%
2021
92%
86%
81%
2022
\u2013
97%
88%
2023
\u2013
\u2013
86%
* Loss ratios using discounted locked-in curves, excluding finance expenses are presented from the transition date of IFRS 17 (1 January 2022) onwards.
The following table analyses the impact of movements in changes to liabilities from incurred claims by underwriting year on a gross and
net of excess of loss reinsurance basis for UK Motor.
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Gross
Underwriting year
2018 & prior
91.5
262.4
2019
61.4
34.3
2020
98.2
84.4
2021
76.4
56.1
2022
79.4
\u2013
2023
\u2013
\u2013
Total UK Motor gross changes to liabilities for incurred claims
406.9
437.2
Net
Underwriting year
2018 & prior
80.6
187.2
2019
65.0
29.0
2020
97.7
62.8
2021
80.1
48.2
2022
69.4
\u2013
2023
\u2013
\u2013
Total UK Motor net of excess of loss changes to liabilities for incurred claims
392.8
327.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-563": { "value": "(i) Insurance, Reinsurance and Co-insurance contracts classification Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Insurance contracts The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after an insured event with benefits payable if the insured event did not occur. Reinsurance contracts The Group also enters into both excess of loss (\u2018XoL\u2019) and quota share reinsurance contracts. A contract is only accounted for as a reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by management based on the terms and conditions of the contracts. Co-insurance contracts Co-insurance arrangements are contracts entered into by the Group\u2019s intermediaries, under which insurance risks are shared on a proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement. Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly attributable costs in fulfilling the insurance contracts. (ii) Level of aggregation IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are managed together. The Group\u2019s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household etc), and geography (UK, Italy, Spain, France and the US). IFRS 17 requires a further division of the portfolios into a \u2018group\u2019 of contracts (being the lowest unit of account) based on expected profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand- alone contracts. Following the application of the IFRS 17 level of aggregation requirements, each of the Group\u2019s portfolios (which are determined by geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at inception into three categories: a) A group of contracts that are onerous at initial recognition, if any b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any c) A group of the remaining contracts in the portfolio. The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics. To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group considers facts and circumstances to identify whether a group of contracts are onerous based on: \u2022 Pricing information \u2022 Results of similar contracts it has recognised \u2022 Environmental factors, e.g. a change in market experience or regulations. The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to onerous contracts refer to contracts on which there is a net gain on initial recognition. Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group\u2019s reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate the contracts by type of reinsurance (e.g. quota share or XoL) and product. These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially recognised and measured. Such groups are not subsequently reconsidered. (iii) Recognition, modification and derecognition Groups of insurance contracts issued are recognised from the earliest of the following: \u2022 The beginning of the coverage period \u2022 The date when the first payment from the policyholder is due or actually received, if there is no due date \u2022 For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous. A group of reinsurance contracts held is entered into from the earlier of: \u2022 The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held \u2022 The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract held in the group of reinsurance contracts held at or before that date. The Group derecognises an insurance or reinsurance contract when it is: \u2022 Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or \u2022 The contract is modified such that the modification results in a change in the measurement model or the applicable standard for measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract. When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the contract as an adjustment to the relevant liability for remaining coverage. (iv) Contract boundary The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract services ends when: \u2022 The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits that fully reflects those risks, or \u2022 Both of the following criteria are satisfied: i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date. A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised. Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included. For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the Group has a substantive right to receive services from the reinsurer. (v) Presentation The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of reinsurance contracts held that are liabilities. The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance income or expenses. The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the financial statements. The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion. It includes the entire change as part of the insurance service result. (vi) Measurement Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation Subject to specified criteria, the PAA can be adopted Coverage period for the Group\u2019s insurance
approach (\u2018PAA\u2019) as a simplified approach to the IFRS 17 general model. contracts assumed is one year or less and so
eligibility qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
Insurance acquisition Where the coverage period of all contracts within The Group\u2019s insurance contracts are all one year
cashflows for insurance a group is not longer than one year, insurance or less. The Group has therefore taken the option
contracts issued acquisition cashflows can either be expensed as to expense acquisition costs as incurred.
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Liability for Remaining Where there is no significant financing component There is no allowance made for accretion of
Coverage (\u2018LRC\u2019), in relation to the LRC, or where the time between interest on the LRC given that the premiums are
adjusted for financial providing each part of the services and the related received within one year of the coverage period.
risk and time value premium due date is no more than a year, an entity is
of money not required to make an adjustment for accretion of
interest on the LRC.
Liability for Incurred For PAA groups, where claims or directly attributable For some claims, for example within the travel
Claims (\u2018LIC\u2019), adjusted insurance expenses are expected to be paid within product line in the UK, and other immaterial
or time value of money a year of the date that the claim is incurred, it is product lines across the Group, the incurred claims
not required to adjust these amounts for the time are expected to be paid out in less than one year.
value of money. Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group\u2019s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
Insurance finance There is an option to disaggregate part of the The impact on LIC of changes in discount rates will
income and expense movement in the LIC resulting from changes be captured within OCI, in line with the accounting
in discount rates, and present this in Other for assets backing the insurance claims liabilities.
Comprehensive Income (\u2018OCI\u2019).
Interim reporting
Where an entity is required to apply IAS 34 (as for the
The Group has opted to apply the option to use
Group) there is an option as to whether to choose a year-to-date accounting for interim reporting.
year-to-date\u201d basis or a \u201cperiod to date\u201d basis for
financial reporting.
Fulfilment cashflows within the contract boundary The fulfilment cashflows (\u2018FCF\u2019) are the current estimates of the future cashflows within the contract boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the uncertainty of those amounts. The estimates of future cashflows: \u2022 Are based on a probability weighted mean of the full range of possible outcomes \u2022 Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market variables \u2022 Reflect conditions existing at the measurement date. In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group\u2019s view of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable market prices. An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For the Group\u2019s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated and included within the measurement of the liability for incurred claims. Risk of the Group\u2019s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer. The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups of contracts. The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance contracts held and such estimates for the groups of underlying insurance contracts. Discount rates A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and the relevant liability cashflows (known as an illiquidity premium). A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years. For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms that aren\u2019t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield curves, which supports consistency over time. Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement. The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability for incurred claims at the end of the current and prior periods:
31 December 2023
31 December 2022
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.4%
4.3%
4.0%
3.9%
5.1%
5.0%
4.7%
4.4%
International (European motor)
4.0%
3.1%
3.0%
3.0%
3.8%
3.9%
3.8%
3.7%
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption. Insurance revenue The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component) allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time. If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change in accounting estimate. The Group\u2019s insurance revenue is comprised of the following component parts: \u2022 Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance contract that is presented as part of insurance revenue as set out below. \u2022 Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying insurance policy, as set out in note 2 to the financial statements. \u2022 Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are required to fulfil the insurance contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows, i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis. IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13 for further information regarding the disaggregation of insurance revenue. As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Insurance service expenses The following elements are included in insurance service expenses: \u2022 Incurred claims and benefits excluding investment components \u2022 Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme expenses that are attributable to insurance services \u2022 Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims) \u2022 Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components). Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance contracts, such as some product development and training costs, are recognised in other operating expenses as incurred. The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses, as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group\u2019s insurance contracts. Reinsurance net expense/income The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer and an allocation of the premiums paid that together give a net amount equal to that single amount. As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer\u2019s proportional share of the expenses that are incurred in fulfilling the insurance contracts. These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower premium (with no corresponding ceding commission or expense recovery). In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a \u201cminimum recovery\u201d from the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not settled \u201cnet\u201d with premium, the minimum recovery is treated as a non-distinct investment component. As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions from the allocation of reinsurance premiums presented in the notes to the financial statements. Insurance finance income and expense Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: (a) The effect of the time value of money and changes in the time value of money (b) The effect of financial risk and changes in financial risk. The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. The Group\u2019s financial assets backing the insurance portfolios are predominantly measured at Fair Value through Other Comprehensive Income (\u2018FVOCI\u2019). Insurance contracts: Liability for remaining coverage Initial measurement For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: : \u2022 The premiums, if any, received at initial recognition \u2022 Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before the group of insurance contracts is recognised. The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts, but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding insurance premium tax liability is presented within the liability for remaining coverage until paid. There is no allowance for time value of money as the premiums are received within one year of the coverage period. Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for remaining coverage for such onerous group depicting the losses recognised. Subsequent measurement The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as: \u2022 The liability for remaining coverage at the beginning of the period; plus \u2022 Premiums received in the period, minus \u2022 The amount recognised as insurance revenue for the services provided in the period, minus \u2022 Payments to the tax authorities in respect of premium receipts. The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to \u00a3nil. Insurance contracts: Liability for incurred claims The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the risk adjustment). Reinsurance contracts held Initial measurement The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the carrying amount of the asset for remaining coverage. The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required. Subsequent measurement The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from reinsurance contracts held within the Income Statement. Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts held. The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash settlement is recognised in the Consolidated Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-546": { "value": "(i) Insurance, Reinsurance and Co-insurance contracts classification Under IFRS 17, an insurance contract is defined as a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Insurance contracts The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its policyholders. As a general guideline, the Group determines whether it has significant insurance risk by comparing benefits payable after an insured event with benefits payable if the insured event did not occur. Reinsurance contracts The Group also enters into both excess of loss (\u2018XoL\u2019) and quota share reinsurance contracts. A contract is only accounted for as a reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made by management based on the terms and conditions of the contracts. Co-insurance contracts Co-insurance arrangements are contracts entered into by the Group\u2019s intermediaries, under which insurance risks are shared on a proportional basis, with the co-insurer taking a specific percentage of premium written and being responsible for the same proportion of each claim. The co-insurer therefore takes direct insurance risk from the policyholder and is subsequently directly responsible to the claimant for its proportion of the claim. As the contractual liability is several and not joint, neither the premiums nor the claims relating to any external co-insurance contract (i.e. outside the Group) are included in the Income Statement. Under the terms of these arrangements, the co-insurers reimburse the Group for the same proportionate share of the directly attributable costs in fulfilling the insurance contracts. (ii) Level of aggregation IFRS 17 requires an entity to determine the level of aggregation for applying its requirements. The level of aggregation for the Group is determined firstly by dividing the business written into portfolios, which comprise contracts subject to similar risks and which are managed together. The Group\u2019s insurance business is therefore divided into portfolios based on both the product (line of business such as motor, household etc), and geography (UK, Italy, Spain, France and the US). IFRS 17 requires a further division of the portfolios into a \u2018group\u2019 of contracts (being the lowest unit of account) based on expected profitability, and also requires that no group contains contracts issued more than one year apart. However, the Group makes an evaluation of the smallest unit of account, i.e. whether a series of contracts need to be treated together as one unit based on reasonable and supportable information, or whether a single contract contains components that need to be separated and treated as if they were stand- alone contracts. Following the application of the IFRS 17 level of aggregation requirements, each of the Group\u2019s portfolios (which are determined by geography and line of business) is further disaggregated by year of issue into a group of contracts based on expected profitability at inception into three categories: a) A group of contracts that are onerous at initial recognition, if any b) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any c) A group of the remaining contracts in the portfolio. The Group has elected to group together those contracts that would fall into different groups only because law or regulation specifically constrains its practical ability to set a different price or level of benefits for policyholders with different characteristics. To assess the profitability of groups of contracts, the Group determines the appropriate level at which reasonable and supportable information is available. The Group assumes that no contracts in the portfolio are onerous at initial recognition unless facts and circumstances indicate otherwise. For contracts that are not onerous, the Group assesses, at initial recognition, that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. The Group considers facts and circumstances to identify whether a group of contracts are onerous based on: \u2022 Pricing information \u2022 Results of similar contracts it has recognised \u2022 Environmental factors, e.g. a change in market experience or regulations. The Group divides portfolios of reinsurance contracts held applying the same principles set out above, except that the references to onerous contracts refer to contracts on which there is a net gain on initial recognition. Reinsurance contracts held are assessed for aggregation requirements on an individual contract basis. For many of the Group\u2019s reinsurance contracts held, a group comprises a single contract. The Group reports its reinsurance contracts by portfolio, which aggregate the contracts by type of reinsurance (e.g. quota share or XoL) and product. These groups represent the level of aggregation at which insurance contracts issued and reinsurance contracts held are initially recognised and measured. Such groups are not subsequently reconsidered. (iii) Recognition, modification and derecognition Groups of insurance contracts issued are recognised from the earliest of the following: \u2022 The beginning of the coverage period \u2022 The date when the first payment from the policyholder is due or actually received, if there is no due date \u2022 For a group of onerous contracts, when the Group determines that facts and circumstances indicate that the group is onerous. A group of reinsurance contracts held is entered into from the earlier of: \u2022 The beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held \u2022 The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract held in the group of reinsurance contracts held at or before that date. The Group derecognises an insurance or reinsurance contract when it is: \u2022 Extinguished i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled, or \u2022 The contract is modified such that the modification results in a change in the measurement model or the applicable standard for measuring a component of the contract, substantially changes the contract boundary, or requires the modified contract to be included in a different group. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract. When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with the contract as an adjustment to the relevant liability for remaining coverage. (iv) Contract boundary The Group includes in the measurement of a group of insurance contracts all the future cashflows within the boundary of each contract in the group. Cashflows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract services ends when: \u2022 The Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits that fully reflects those risks, or \u2022 Both of the following criteria are satisfied: i. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio ii. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date. A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised. Such amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk, are not included. For groups of reinsurance contracts held, cashflows are within the contract boundary if they arise from substantive rights and obligations of the Group that exist during the reporting period in which the Group is compelled to pay amounts to the reinsurer or in which the Group has a substantive right to receive services from the reinsurer. (v) Presentation The Group presents separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued that are assets, portfolios of insurance contracts issued that are liabilities, portfolios of reinsurance contracts held that are assets and portfolios of reinsurance contracts held that are liabilities. The Group disaggregates the total amount recognised in the Consolidated Income Statement and Consolidated Statement of Other Comprehensive Income into an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance income or expenses. The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts issued. This is presented as one single amount in the Consolidated Income Statement, with additional disclosure provided in the notes to the financial statements. The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion. It includes the entire change as part of the insurance service result. (vi) Measurement Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation Subject to specified criteria, the PAA can be adopted Coverage period for the Group\u2019s insurance
approach (\u2018PAA\u2019) as a simplified approach to the IFRS 17 general model. contracts assumed is one year or less and so
eligibility qualifies automatically for PAA.
Reinsurance contracts (both XoL and quota share)
include contracts with a coverage period greater
than one year. However, there is no material
difference in the measurement of the asset for
remaining coverage between PAA and the general
model, therefore these qualify for PAA.
Insurance acquisition Where the coverage period of all contracts within The Group\u2019s insurance contracts are all one year
cashflows for insurance a group is not longer than one year, insurance or less. The Group has therefore taken the option
contracts issued acquisition cashflows can either be expensed as to expense acquisition costs as incurred.
incurred, or allocated, using a systematic and rational
method, to groups of insurance contracts (including
future groups containing insurance contracts that are
expected to arise from renewals) and then amortised
over the coverage period of the related group. For
groups containing contracts longer than one year,
insurance acquisition cashflows must be allocated to
related groups of insurance contracts and amortised
over the coverage period of the related group.
Liability for Remaining Where there is no significant financing component There is no allowance made for accretion of
Coverage (\u2018LRC\u2019), in relation to the LRC, or where the time between interest on the LRC given that the premiums are
adjusted for financial providing each part of the services and the related received within one year of the coverage period.
risk and time value premium due date is no more than a year, an entity is
of money not required to make an adjustment for accretion of
interest on the LRC.
Liability for Incurred For PAA groups, where claims or directly attributable For some claims, for example within the travel
Claims (\u2018LIC\u2019), adjusted insurance expenses are expected to be paid within product line in the UK, and other immaterial
or time value of money a year of the date that the claim is incurred, it is product lines across the Group, the incurred claims
not required to adjust these amounts for the time are expected to be paid out in less than one year.
value of money. Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses, no
adjustment is made for the time value of money.
In addition, given the impact of discounting
outstanding claims in the Group\u2019s US insurance
operation is immaterial, no discounting has
been applied.
For all other business, the LIC is adjusted for the
time value of money.
Insurance finance There is an option to disaggregate part of the The impact on LIC of changes in discount rates will
income and expense movement in the LIC resulting from changes be captured within OCI, in line with the accounting
in discount rates, and present this in Other for assets backing the insurance claims liabilities.
Comprehensive Income (\u2018OCI\u2019).
Interim reporting
Where an entity is required to apply IAS 34 (as for the
The Group has opted to apply the option to use
Group) there is an option as to whether to choose a year-to-date accounting for interim reporting.
year-to-date\u201d basis or a \u201cperiod to date\u201d basis for
financial reporting.
Fulfilment cashflows within the contract boundary The fulfilment cashflows (\u2018FCF\u2019) are the current estimates of the future cashflows within the contract boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the uncertainty of those amounts. The estimates of future cashflows: \u2022 Are based on a probability weighted mean of the full range of possible outcomes \u2022 Are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market variables \u2022 Reflect conditions existing at the measurement date. In estimating future cashflows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and other experience, updated to reflect current expectations of future events. The estimates of future cashflows reflect the Group\u2019s view of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable market prices. An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For the Group\u2019s contracts which are measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated and included within the measurement of the liability for incurred claims. Risk of the Group\u2019s non-performance is not included in the measurement of groups of insurance contracts issued. In the measurement of reinsurance contracts held, the probability weighted estimates of the present value of future cashflows include potential credit losses and other disputes of the reinsurer to reflect the non-performance risk of the reinsurer. The Group estimates certain fulfilment cashflows at the portfolio level or higher and then allocates such estimates to groups of contracts. The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group of reinsurance contracts held and such estimates for the groups of underlying insurance contracts. Discount rates A bottom-up approach has been applied in the determination of discount rates. Under this approach, the discount rate is determined as the risk-free yield adjusted for differences in liquidity characteristics between the financial assets used to derive the risk-free yield and the relevant liability cashflows (known as an illiquidity premium). A separate risk-free yield is obtained for each currency, where a material amount of business is written in that currency. The risk-free yield curve is obtained using rates published by the Prudential Regulation Authority (PRA) for the UK insurance business, whilst for AECS the EIOPA risk free term structures are used. These curves are available from October 2015 and provides rates for terms up to 150 years. For periods prior to October 2015, observable market data is available for terms up to 25 years for GBP (30 years for EUR). For terms that aren\u2019t directly observable from market data, the Smith-Wilson approach is used to derive the rates which extrapolates between the observable data and an assumed ultimate forward rate. The Smith-Wilson approach is used to derive the published Solvency II yield curves, which supports consistency over time. Similarly to the approach to risk-free rates, an illiquidity premium will be set by currency. The illiquidity premium will be set by reviewing internal illiquidity benchmarks and, when required, performing quantitative analysis to support qualitative judgement. The following weighted average rates, based on the yield curves derived using the above methodology, were used to discount the liability for incurred claims at the end of the current and prior periods:
31 December 2023
31 December 2022
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.4%
4.3%
4.0%
3.9%
5.1%
5.0%
4.7%
4.4%
International (European motor)
4.0%
3.1%
3.0%
3.0%
3.8%
3.9%
3.8%
3.7%
Generally, the illiquidity premium is expected to be stable over time and re-assessment of the assumption will be triggered by significant changes in internal illiquidity benchmarks and/or changes in the illiquidity of the liabilities (e.g. claims mix). Quantitative analysis will be performed when the illiquidity premium changes, including performing sensitivity analysis on the assumption. Insurance revenue The insurance revenue for the period is comprised of the amount of expected premium receipts (excluding any investment component) allocated to the period. The Group allocates the expected premium receipts to each period of insurance contract services on the basis of the passage of time. However, if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, for example due to seasonality of claims, then the allocation is made on the basis of the expected timing of incurred insurance service expenses. For the periods presented, all insurance premium revenue has been recognised based on the passage of time. If a change in allocation is necessary due to a change of facts and circumstances, the change is accounted for prospectively as a change in accounting estimate. The Group\u2019s insurance revenue is comprised of the following component parts: \u2022 Insurance premium revenue: Insurance premium revenue reflects the expected premium receipts allocated to the period based on the passage of time, adjusted for seasonality if required. It excludes any additional income that arises from the writing of the insurance contract that is presented as part of insurance revenue as set out below. \u2022 Instalment income: In contrast to IFRS 4, instalment income related to the risk attaching part of the premium that is retained within the Group is recognised as part of the insurance revenue cashflows due to it being considered non-distinct from the underlying insurance policy, as set out in note 2 to the financial statements. \u2022 Administration fees: Administration fees are costs charged to the customer for arranging a change to their policy. The performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are required to fulfil the insurance contract and the policyholder cannot benefit from the service by itself, it is considered as part of fulfilment cashflows, i.e. the full transaction price is therefore recognised as part of insurance revenue on a point in time basis. IFRS 17 does not require separate insurance revenue analysis for insurance contracts measured under PAA. See Appendix 1 and note 13 for further information regarding the disaggregation of insurance revenue. As stated in note 2, the Group has excluded any instalment income and administration fees derived from the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Insurance service expenses The following elements are included in insurance service expenses: \u2022 Incurred claims and benefits excluding investment components \u2022 Other incurred directly attributable insurance service expenses, including administration and acquisition expenses, and share scheme expenses that are attributable to insurance services \u2022 Changes that relate to past service (i.e. changes in the fulfilment cashflows relating to the Liability for Incurred Claims) \u2022 Changes that relate to future service (i.e. losses/reversals on onerous groups of contracts from changes in the loss components). Only items that reflect insurance service expenses (i.e. incurred claims and other insurance service expenses arising from insurance contracts the Group issues) are reported as insurance expenses. Cashflows that are not directly attributable to a portfolio of insurance contracts, such as some product development and training costs, are recognised in other operating expenses as incurred. The total costs incurred in relation to the co-insurance share of insurance business are presented within other operating expenses, as is the reimbursement of these costs, given that they are not related to the costs directly attributable to fulfilling the Group\u2019s insurance contracts. Reinsurance net expense/income The Group has presented the income or expenses from a group of reinsurance contracts held separately from insurance finance income or expenses as a single amount and has provided in the disclosure note a separate analysis of the amounts recovered from the reinsurer and an allocation of the premiums paid that together give a net amount equal to that single amount. As part of its quota share arrangements, the Group typically recovers either a set ceding commission, or the quota share reinsurer\u2019s proportional share of the expenses that are incurred in fulfilling the insurance contracts. These amounts are typically settled net with the premium charged and are not contingent on claims. As a result, under IFRS 17 the expenses and ceding commissions recovered are considered to reflect a reduction in the transaction price equivalent to charging a lower premium (with no corresponding ceding commission or expense recovery). In addition, as set out in note 2 to these financial statements, where the reinsurance arrangements result in a \u201cminimum recovery\u201d from the reinsurer due to profit commission or sliding scale commission arrangements that is not contingent on claims, and the amount is not settled \u201cnet\u201d with premium, the minimum recovery is treated as a non-distinct investment component. As a result, the Group treats reinsurance cashflows that are contingent on claims on the underlying contracts as part of the claims that are expected to be reimbursed under the reinsurance contract held, and excludes non-distinct investment components and commissions from the allocation of reinsurance premiums presented in the notes to the financial statements. Insurance finance income and expense Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: (a) The effect of the time value of money and changes in the time value of money (b) The effect of financial risk and changes in financial risk. The Group disaggregates insurance finance income or expenses on insurance contracts issued between the Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income. The impact of changes in market interest rates on the value of the insurance assets and liabilities are reflected in Other Comprehensive Income in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. The Group\u2019s financial assets backing the insurance portfolios are predominantly measured at Fair Value through Other Comprehensive Income (\u2018FVOCI\u2019). Insurance contracts: Liability for remaining coverage Initial measurement For a group of contracts that is not onerous at initial recognition, the Group measures the liability for remaining coverage as: : \u2022 The premiums, if any, received at initial recognition \u2022 Any other asset or liability previously recognised for cashflows related to the group of contracts that the Group pays or receives before the group of insurance contracts is recognised. The Group recognises any insurance premium tax collected in relation to the premiums received as part of the premium receipts, but given it is acting as an agent, these taxes are not included as either insurance revenue or an insurance expense. Any outstanding insurance premium tax liability is presented within the liability for remaining coverage until paid. There is no allowance for time value of money as the premiums are received within one year of the coverage period. Where facts and circumstances indicate that contracts are onerous at initial recognition, the onerous contracts are separately grouped from other contracts and a loss is recognised in the Consolidated Income Statement for the net outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment cashflows. A loss component is established by the Group for the liability for remaining coverage for such onerous group depicting the losses recognised. Subsequent measurement The Group measures the carrying amount of the liability for remaining coverage at the end of each reporting period as: \u2022 The liability for remaining coverage at the beginning of the period; plus \u2022 Premiums received in the period, minus \u2022 The amount recognised as insurance revenue for the services provided in the period, minus \u2022 Payments to the tax authorities in respect of premium receipts. The onerous loss component is remeasured over the coverage period so that at the end of the coverage period, it is reduced to \u00a3nil. Insurance contracts: Liability for incurred claims The Group estimates the liability for incurred claims as the fulfilment cashflows related to incurred claims, including any creditors related to directly attributable insurance expenses. The liability for incurred claims also includes an explicit adjustment for non-financial risk (the risk adjustment). Reinsurance contracts held Initial measurement The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues. However, they are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued. Where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous underlying insurance contracts are added to a group, the Group establishes a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts held depicting the recovery of losses. The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts held. The Group uses a systematic and rational method to determine the portion of losses recognised on the group of insurance contracts covered by the reinsurance contracts held, in the case that there is partial coverage of underlying insurance contracts by reinsurance contracts. The loss-recovery component adjusts the carrying amount of the asset for remaining coverage. The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer and is calculated with reference to the gross risk adjustment, adjusted for any excess of loss risk adjustment, as required. Subsequent measurement The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued and has been adapted to reflect the specific features and terms and conditions of the reinsurance contracts held. In addition, changes in the fulfilment cashflows that arise from changes in the risk of non-performance of the reinsurer are reflected within net expenses from reinsurance contracts held within the Income Statement. Where the Group has established a loss-recovery component, the Group subsequently reduces the loss recovery component to zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts held. The extinguishment or commutation of a reinsurance arrangement results in a derecognition of any reinsurance assets or liabilities related to the commuted contract from the balance sheet, so that the Group retains the full future risk of claims development. As a result of commutation, any difference arising between the present carrying value of reinsurance assets or liabilities and the cash settlement is recognised in the Consolidated Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-476": { "value": "5b. Insurance revenue Insurance revenue for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
1,909.7
264.5
750.0
32.7
2,956.9
The Group\u2019s share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company Limited, Admiral Europe Compa\u00f1ia Seguros (\u2018AECS\u2019) and Elephant Insurance Company. The majority of contracts are short term in duration, lasting for between 6 and 12 months. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInsurancePremiumRevenueExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-504": { "value": "5b. Insurance revenue Insurance revenue for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
Insurance revenue for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance revenue related movement in liability
for remaining coverage
1,909.7
264.5
750.0
32.7
2,956.9
The Group\u2019s share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company Limited, Admiral Europe Compa\u00f1ia Seguros (\u2018AECS\u2019) and Elephant Insurance Company. The majority of contracts are short term in duration, lasting for between 6 and 12 months. 5c. Insurance service expenses Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,755.5
255.0
618.2
36.4
2,665.1
Changes to liabilities for incurred claims
(406.9)
(9.1)
(21.3)
(3.3)
(440.6)
Total incurred claims
1,348.6
245.9
596.9
33.1
2,224.5
Movement in onerous contracts
(18.6)
(2.4)
(2.4)
\u2013
(23.4)
Directly attributable expenses
Administration expenses
377.8
73.5
184.0
19.0
654.3
Acquisition expenses
73.4
34.8
65.4
8.9
182.5
Insurance expenses
451.2
108.3
249.4
27.9
836.8
Share scheme expenses
43.2
2.4
8.9
0.8
55.3
Total insurance expenses and share scheme expenses
494.4
110.7
258.3
28.7
892.1
Total insurance service expenses
1,824.4
354.2
852.8
61.8
3,093.2
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,620.4
214.8
516.0
21.1
2,372.3
Changes to liabilities for incurred claims
(437.2)
(16.9)
37.2
(3.6)
(420.5)
Total incurred claims
1,183.2
197.9
553.2
17.5
1,951.8
Movement in onerous contracts
(19.1)
0.4
(3.9)
\u2013
(22.6)
Directly attributable expenses
Administration expenses
327.7
54.6
182.5
16.0
580.8
Acquisition expenses
61.9
31.5
72.1
8.7
174.2
Insurance expenses
389.6
86.1
254.6
24.7
755.0
Share scheme expenses
39.4
4.2
9.4
\u2013
53.0
Total insurance expenses and share scheme expenses
429.0
90.3
264.0
24.7
808.0
Total insurance service expenses
1,593.1
288.6
813.3
42.2
2,737.2
5d. Net expenses from reinsurance contracts held Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
93.6
49.5
190.0
2.2
335.3
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(173.8)
(52.0)
(270.3)
\u2013
(496.1)
Changes to liabilities for incurred claims
135.1
(1.4)
95.9
(0.1)
229.5
Net expense from reinsurance contracts excluding
movement in onerous loss component
54.9
(3.9)
15.6
2.1
68.7
Other reinsurance recoveries including movement in loss
recovery component
14.5
2.2
1.7
\u2013
18.4
Net expenses/(income) from reinsurance contracts held
69.4
(1.7)
17.3
2.1
87.1
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
69.8
44.4
161.3
1.4
276.9
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(182.8)
(43.5)
(232.6)
0.2
(458.7)
Changes to liabilities for incurred claims
136.7
0.8
64.2
\u2013
201.7
Net expense from reinsurance contracts excluding
movement in onerous loss component
23.7
1.7
(7.1)
1.6
19.9
Other reinsurance recoveries including movement in loss
recovery component
13.9
(0.3)
4.9
\u2013
18.5
Net expenses/(income) from reinsurance contracts held
37.6
1.4
(2.2)
1.6
38.4
5e. Finance (expenses)/income from insurance contracts held and reinsurance contracts issued
31 December 2023 31 December 2022
\u00a3m \u00a3m
Amounts recognised through the Income Statement
Insurance finance expenses from insurance contracts issued
(94.5)
(52.0)
Finance expenses from insurance contracts issued
(94.5)
(52.0)
Insurance finance income from reinsurance contracts held
28.9
13.6
Finance income from reinsurance contracts issued
28.9
13.6
Net finance expense from insurance / reinsurance contracts issued
(65.6)
(38.4)
Amounts recognised in Other Comprehensive Income
(Losses)/gains due to changes in discount rates \u2013 insurance contracts
(128.1)
274.0
Gains/ (losses) due to changes in discount rates \u2013 reinsurance contracts
49.2
(96.2)
Total gains before tax recognised in Other Comprehensive Income
(78.9)
177.8
5f. Insurance Liabilities and Reinsurance assets (i) Analysis of recognised amounts
2023
2022
Assets Liabilities Net Assets Liabilities Net
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Insurance contracts issued
UK Motor
\u2013
3,315.7
3,315.7
\u2013
2,953.3
2,953.3
UK Non-Motor
\u2013
353.7
353.7
\u2013
267.7
267.7
International Motor
\u2013
862.5
862.5
\u2013
776.7
776.7
Other
\u2013
49.8
49.8
\u2013
27.7
27.7
Total insurance contracts issued
\u2013
4,581.7
4,581.7
\u2013
4,025.4
4,025.4
Reinsurance contracts held
UK Motor
519.9
\u2013
519.9
457.5
\u2013
457.5
UK Non-Motor
191.6
\u2013
191.6
126.5
\u2013
126.5
International Motor
481.8
\u2013
481.8
432.2
\u2013
432.2
Other
\u2013
(1.4)
(1.4)
\u2013
(0.8)
(0.8)
Total reinsurance contracts held
1,193.3
(1.4)
1,191.9
1,016.2
(0.8)
1,015.4
Net
UK Motor
\u2013
2,795.8
2,795.8
\u2013
2,495.8
2,495.8
UK Non-Motor
\u2013
162.1
162.1
\u2013
141.2
141.2
International Motor
\u2013
380.7
380.7
\u2013
344.5
344.5
Other
\u2013
51.2
51.2
\u2013
28.5
28.5
Total insurance contracts issued
\u2013
3,389.8
3,389.8
\u2013
3,010.0
3,010.0
(ii) Roll-forward of net asset or liability for insurance contracts issued UK Motor The following tables reconcile the opening and closing balances of the LRC and LIC for UK Motor.
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Net opening balance
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Insurance revenue
2,250.2
\u2013
2,250.2
\u2013
\u2013
\u2013
2,250.2
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(2,105.1)
(144.8)
(2,249.9)
(2,249.9)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
140.1
266.8
406.9
406.9
Losses and reversals of losses
on onerous contracts
\u2013
18.6
18.6
\u2013
\u2013
\u2013
18.6
Insurance service result
2,250.2
18.6
2,268.8
(1,965.0)
122.0
(1,843.0)
425.8
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(4.1)
(4.1)
(59.0)
(12.3)
(71.3)
(75.4)
Insurance finance income/
(expense) recognised in OCI
\u2013
(9.4)
(9.4)
(60.5)
(27.0)
(87.5)
(96.9)
Total changes in
comprehensive income
2,250.2
5.1
2,255.3
(2,084.5)
82.7
(2,001.8)
253.5
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(2,482.1)
\u2013
(2,482.1)
\u2013
\u2013
\u2013
(2,482.1)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
1,866.2
\u2013
1,866.2
1,866.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(2,482.1)
\u2013
(2,482.1)
1,866.2
\u2013
1,866.2
(615.9)
Net closing balance
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(473.1)
(28.8)
(501.9)
(1,993.7)
(507.8)
(2,501.5)
(3,003.4)
Net opening balance
(473.1)
(28.8)
(501.9)
(1,993.7)
(507.8)
(2,501.5)
(3,003.4)
Insurance revenue
1,909.7
\u2013
1,909.7
\u2013
\u2013
\u2013
1,909.7
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(1,836.9)
(212.5)
(2,049.4)
(2,049.4)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
175.6
261.6
437.2
437.2
Losses and reversals of losses
on onerous contracts
\u2013
19.1
19.1
\u2013
\u2013
\u2013
19.1
Insurance service result
1,909.7
19.1
1,928.8
(1,661.3)
49.1
(1,612.2)
316.6
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(1.8)
(1.8)
(36.5)
(8.4)
(44.9)
(46.7)
Insurance finance income/
(expense) recognised in OCI
\u2013
3.4
3.4
191.9
40.5
232.4
235.8
Total changes in
comprehensive income
1,909.7
20.7
1,930.4
(1,505.9)
81.2
(1,424.7)
505.7
Other changes
\u2013
\u2013
\u2013
(1.7)
\u2013
(1.7)
(1.7)
Cashflows
Premiums received
(2,000.8)
\u2013
(2,000.8)
\u2013
\u2013
\u2013
(2,000.8)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
1,516.8
\u2013
1,516.8
1,516.8
Other movements
30.1
\u2013
30.1
\u2013
\u2013
\u2013
30.1
Total cashflows
(1,970.7)
\u2013
(1,970.7)
1,516.8
\u2013
1,516.8
(453.9)
Net closing balance
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411.1)
(2,953.3)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(534.1)
(8.1)
(542.2)
(1,984.5)
(426.6)
(2,411,1)
(2,953.3)
UK Non-Motor The following tables reconcile the opening and closing balances of the LRC and LIC for other UK insurance (UK Household, Pet and Travel).
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Net opening balance
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Insurance revenue
346.6
\u2013
346.6
\u2013
\u2013
\u2013
346.6
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(363.6)
(2.1)
(365.7)
(365.7)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
4.3
4.8
9.1
9.1
Losses and reversals of losses
on onerous contracts
\u2013
2.4
2.4
\u2013
\u2013
\u2013
2.4
Insurance service result
346.6
2.4
349.0
(359.3)
2.7
(356.6)
(7.6)
Insurance finance income/
(expense) recognised in profit
or loss
\u2013
\u2013
\u2013
(5.4)
(0.9)
(6.3)
(6.3)
Insurance finance income/
(expense) recognised in OCI
\u2013
(2.3)
(2.3)
(1.4)
(0.2)
(1.6)
(3.9)
Total changes in
comprehensive income
346.6
0.1
346.7
(366.1)
1.6
(364.5)
(17.8)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(381.9)
\u2013
(381.9)
\u2013
\u2013
\u2013
(381.9)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
313.7
\u2013
313.7
313.7
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(381.9)
\u2013
(381.9)
313.7
\u2013
313.7
(68.2)
Net closing balance
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(125.6)
\u2013
(125.6)
(74.2)
(16.0)
(90.2)
(215.8)
Net opening balance
(125.6)
\u2013
(125.6)
(74.2)
(16.0)
(90.2)
(215.8)
Insurance revenue
264.5
\u2013
264.5
\u2013
\u2013
\u2013
264.5
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(281.4)
(23.7)
(305.1)
(305.1)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
2.5
14.4
16.9
16.9
Losses and reversals of losses
on onerous contracts
\u2013
(0.4)
(0.4)
\u2013
\u2013
\u2013
(0.4)
Insurance service result
264.5
(0.4)
264.1
(278.9)
(9.3)
(288.2)
(24.1)
Insurance finance income/
(expense) recognised in profit
or loss
\u2013
(0.4)
(0.4)
(2.0)
(0.4)
(2.4)
(2.8)
Insurance finance income/
(expense) recognised in OCI
\u2013
0.7
0.7
1.4
0.2
1.6
2.3
Total changes in
comprehensive income
264.5
(0.1)
264.4
(279.5)
(9.5)
(289.0)
(24.6)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(239.8)
\u2013
(239.8)
\u2013
\u2013
\u2013
(239.8)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
212.5
\u2013
212.5
212.5
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(239.8)
\u2013
(239.8)
212.5
\u2013
212.5
(27.3)
Net closing balance
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(100.9)
(0.1)
(101.0)
(141.2)
(25.5)
(166.7)
(267.7)
International Insurance The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Net opening balance
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Insurance revenue
842.6
\u2013
842.6
\u2013
\u2013
\u2013
842.6
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(835.7)
(40.8)
(876.5)
(876.5)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(22.6)
43.9
21.3
21.3
Losses and reversals of losses
on onerous contracts
\u2013
2.4
2.4
\u2013
\u2013
\u2013
2.4
Insurance service result
842.6
2.4
845.0
(858.3)
3.1
(855.2)
(10.2)
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
(8.2)
(1.7)
(9.9)
(9.9)
Insurance finance income/
(expense) recognised in OCI
\u2013
(0.7)
(0.7)
(12.7)
(3.4)
(16.1)
(16.8)
Foreign exchange impact
2.3
0.1
2.4
15.7
2.0
17.7
20.1
Total changes in
comprehensive income
844.9
1.8
846.7
(863.5)
\u2013
(863.5)
(16.8)
Other changes
\u2013
\u2013
\u2013
\u2013
0.1
0.1
0.1
Cashflows
Premiums received
(862.3)
\u2013
(862.3)
\u2013
\u2013
\u2013
(862.3)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
793.2
\u2013
793.2
793.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(862.3)
\u2013
(862.3)
793.2
\u2013
793.2
(69.1)
Net closing balance
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(164.6)
(8.4)
(173.0)
(421.8)
(58.4)
(480.2)
(653.2)
Net opening balance
(164.6)
(8.4)
(173.0)
(421.8)
(58.4)
(480.2)
(653.2)
Insurance revenue
750.0
\u2013
750.0
\u2013
\u2013
\u2013
750.0
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(794.8)
(12.4)
(807.2)
(807.2)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(3.8)
(4.7)
(8.5)
(8.5)
Losses and reversals of losses
on onerous contracts
\u2013
3.9
3.9
\u2013
\u2013
\u2013
3.9
Insurance service result
750.0
3.9
753.9
(798.6)
(17.1)
(815.7)
(61.8)
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(0.1)
(0.1)
(2.2)
(0.3)
(2.5)
(2.6)
Insurance finance income/
(expense) recognised in OCI
\u2013
0.2
0.2
27.4
3.8
31.2
31.4
(iii) Roll-forward of net asset or liability for reinsurance contracts held UK Motor The following tables reconcile the opening and closing balances of the ARC and AIC for UK Motor.
2023
Asset for remaining coverage
Asset for incurred claims
Excluding loss Loss-recovery Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
20.2
6.3
26.5
255.4
175.6
431.0
457.5
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
20.2
6.3
26.5
255.4
175.6
431.0
457.5
Allocation of reinsurance
premiums
(93.6)
\u2013
(93.6)
\u2013
\u2013
\u2013
(93.6)
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
\u2013
\u2013
\u2013
96.7
77.1
173.8
173.8
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(43.1)
(92.0)
(135.1)
(135.1)
Changes in the loss recovery
component
\u2013
(14.5)
(14.5)
\u2013
\u2013
\u2013
(14.5)
Net income/(expense) from
reinsurance contracts held
(93.6)
(14.5)
(108.1)
53.6
(14.9)
38.7
(69.4)
Reinsurance finance income/
(expense) recognised in profit
or loss
\u2013
3.2
3.2
9.4
7.5
16.9
20.1
Reinsurance finance income/
(expense) recognised in OCI
\u2013
7.3
7.3
12.5
15.4
27.9
35.2
Total changes in
comprehensive income
(93.6)
(4.0)
(97.6)
75.5
8.0
83.5
(14.1)
Cashflows
Premiums paid
94.2
\u2013
94.2
\u2013
\u2013
\u2013
94.2
Claims recoveries
\u2013
\u2013
\u2013
(2.2)
\u2013
(2.2)
(2.2)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
(15.5)
\u2013
(15.5)
(15.5)
Total cashflows
94.2
\u2013
94.2
(17.7)
\u2013
(17.7)
76.5
Net closing balance
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Closing assets
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Closing liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2022
Liability for remaining coverage
Liability for incurred claims
Excluding loss Loss Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Foreign exchange impact
(6.9)
(0.3)
(7.2)
(32.2)
(4.1)
(36.3)
(43.5)
Total changes in
comprehensive income
743.1
3.7
746.8
(805.6)
(17.7)
(823.3)
(76.5)
Other changes
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cashflows
Premiums received
(779.2)
\u2013
(779.2)
\u2013
\u2013
\u2013
(779.2)
Claims and other insurance
service expenses paid
\u2013
\u2013
\u2013
732.2
\u2013
732.2
732.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(779.2)
\u2013
(779.2)
732.2
\u2013
732.2
(47.0)
Net closing balance
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(200.7)
(4.7)
(205.4)
(495.2)
(76.1)
(571.3)
(776.7)
2022 Asset for remaining coverage Asset for incurred claims Excluding loss Loss-recovery Present value of Risk adj. for non- \u00a3 million component component Total future cashflows financial risk Total Total Opening assets 24.7 21.7 46.4 250.7 203.1 453.8 500.2 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 24.7 21.7 46.4 250.7 203.1 453.8 500.2 Allocation of reinsurance premiums (69.8) \u2013 (69.8) \u2013 \u2013 \u2013 (69.8) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 91.9 90.9 182.8 182.8 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 (36.7) (100.0) (136.7) (136.7) Changes in the loss recovery component \u2013 (13.9) (13.9) \u2013 \u2013 \u2013 (13.9) Net income/(expense) from reinsurance contracts held (69.8) (13.9) (83.7) 55.2 (9.1) 46.1 (37.6) Reinsurance finance income/ (expense) recognised in profit or loss \u2013 1.3 1.3 5.1 3.9 9.0 10.3 Reinsurance finance income/ (expense) recognised in OCI \u2013 (2.8) (2.8) (44.8) (22.3) (67.1) (69.9) Total changes in comprehensive income (69.8) (15.4) (85.2) 15.5 (27.5) (12.0) (97.2) Other changes \u2013 \u2013 \u2013 1.8 \u2013 1.8 1.8 Cashflows Premiums paid 65.3 \u2013 65.3 \u2013 \u2013 \u2013 65.3 Amounts received \u2013 \u2013 \u2013 (12.6) \u2013 (12.6) (12.6) Total cashflows 65.3 \u2013 65.3 (12.6) \u2013 (12.6) 52.7 Net closing balance 20.2 6.3 26.5 255.4 175.6 431.0 457.5 Closing assets 20.2 6.3 26.5 255.4 175.6 431.0 457.5 Closing liabilities UK Non-Motor The following tables reconcile the opening and closing balances of the ARC and AIC for UK Non-motor insurance (Household, Travel and Pet). 2023 Asset for remaining coverage Asset for incurred claims Excluding loss Loss-recovery Present value of Risk adj. for non- \u00a3 million component component Total future cashflows financial risk Total Total Opening assets 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Allocation of reinsurance premiums (49.5) \u2013 (49.5) \u2013 \u2013 \u2013 (49.5) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 53.3 (1.3) 52.0 52.0 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 1.7 (0.3) 1.4 1.4 Changes in the loss recovery component \u2013 (2.2) (2.2) \u2013 \u2013 \u2013 (2.2) Net income/(expense) from reinsurance contracts held (49.5) (2.2) (51.7) 55.0 (1.6) 53.4 1.7 Reinsurance finance income/ (expense) recognised in profit or loss \u2013 \u2013 \u2013 3.6 0.6 4.2 4.2 Reinsurance finance income/ (expense) recognised in OCI \u2013 2.1 2.1 0.9 0.2 1.1 3.2 Total changes in comprehensive income (49.5) (0.1) (49.6) 59.5 (0.8) 58.7 9.1 Reinsurance investment components (111.7) \u2013 (111.7) 111.7 \u2013 111.7 \u2013 Cashflows Premiums paid 170.9 \u2013 170.9 \u2013 \u2013 \u2013 170.9 Claims recovered \u2013 \u2013 \u2013 (91.2) \u2013 (91.2) (91.2) Recoveries as a result of commutations \u2013 \u2013 \u2013 (23.7) \u2013 (23.7) (23.7) Total cash flows 170.9 \u2013 170.9 (114.9) \u2013 (114.9) 56.0 Net closing balance 21.4 \u2013 21.4 154.9 15.3 170.2 191.6 Closing assets 21.4 \u2013 21.4 154.9 15.3 170.2 191.6 Closing liabilities 2022 Asset for remaining coverage Asset for incurred claims Excluding loss Present value of Risk adj. for non- \u00a3 million component Loss component Total future cashflows financial risk Total Total Opening assets 8.4 \u2013 8.4 66.6 3.1 69.7 78.1 Opening liabilities \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Net opening balance 8.4 \u2013 8.4 66.6 3.1 69.7 78.1 Allocation of reinsurance premiums (44.4) \u2013 (44.4) \u2013 \u2013 \u2013 (44.4) Amounts recoverable from reinsurers for incurred claims Incurred claims \u2013 \u2013 \u2013 31.6 11.9 43.5 43.5 Changes to liabilities for incurred claims \u2013 \u2013 \u2013 (1.8) 1.0 (0.8) (0.8) Changes in the loss recovery component \u2013 0.3 0.3 \u2013 \u2013 \u2013 0.3 Net income/(expense) from reinsurance contracts held (44.4) 0.3 (44.1) 29.8 12.9 42.7 (1.4) Reinsurance finance income/ (expense) recognised in profit or loss \u2013 0.3 0.3 1.4 0.2 1.6 1.9 Reinsurance finance income/ (expense) recognised in OCI \u2013 (0.5) (0.5) (0.7) (0.1) (0.8) (1.3) Total changes in comprehensive income (44.4) 0.1 (44.3) 30.5 13.0 43.5 (0.8) Reinsurance investment components (78.4) \u2013 (78.4) 78.4 \u2013 78.4 \u2013 Cashflows Premiums paid 126.1 \u2013 126.1 \u2013 \u2013 \u2013 126.1 Amounts received \u2013 \u2013 \u2013 (76.9) \u2013 (76.9) (76.9) Total cashflows 126.1 \u2013 126.1 (76.9) \u2013 (76.9) 49.2 Net closing balance 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Closing assets 11.7 0.1 11.8 98.6 16.1 114.7 126.5 Closing liabilities International Insurance The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
2023
Asset for remaining coverage
Asset for incurred claims
Excluding loss Loss-recovery Present value of Risk adj. for non-
\u00a3 million component
component
Total
future cashflows
financial risk
Total
Total
Opening assets
\u2013
3.4
3.4
412.7
35.1
447.8
451.2
Opening liabilities
(19.0)
\u2013
(19.0)
\u2013
\u2013
\u2013
(19.0)
Net opening balance
(19.0)
3.4
(15.6)
412.7
35.1
447.8
432.2
Allocation of reinsurance
premiums
(190.0)
\u2013
(190.0)
\u2013
\u2013
\u2013
(190.0)
Amounts recoverable from
reinsurers for incurred
claims
Incurred claims
\u2013
\u2013
\u2013
243.7
26.6
270.3
270.3
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(69.8)
(26.1)
(95.9)
(95.9)
Changes in the loss recovery
component
\u2013
(1.7)
(1.7)
\u2013
\u2013
\u2013
(1.7)
Net income/(expense) from
reinsurance contracts held
(190.0)
(1.7)
(191.7)
173.9
0.5
174.4
(17.3)
Reinsurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
4.0
0.6
4.6
4.6
Reinsurance finance income/
(expense) recognised in OCI
\u2013
0.5
0.5
7.4
1.9
9.3
9.8
Foreign exchange impact
6.3
\u2013
6.3
(11.7)
(0.7)
(12.4)
(6.1)
Total changes in
comprehensive income
(183.7)
(1.2)
(184.9)
173.6
2.3
175.9
(9.0)
Reinsurance investment
components
(148.9)
\u2013
(148.9)
148.9
\u2013
148.9
\u2013
Cashflows
Premiums paid
328.4
\u2013
328.4
\u2013
\u2013
\u2013
328.4
Amounts received
\u2013
\u2013
\u2013
(269.8)
\u2013
(269.8)
(269.8)
Total cashflows
328.4
\u2013
328.4
(269.8)
\u2013
(269.8)
58.6
Net closing balance
(23.2)
2.2
(21.0)
465.4
37.4
502.8
481.8
Closing assets
\u2013
2.2
2.2
465.4
37.4
502.8
505.0
Closing liabilities
(23.2)
\u2013
(23.2)
\u2013
\u2013
\u2013
(23.2)
2022
Asset for remaining coverage
Asset for incurred claims
Risk adj. for
Excluding loss Loss recovery Present value of non-financial
\u00a3 million component
component
Total
future cashflows
risk
Total
Total
Opening assets
13.8
8.0
21.8
322.8
25.4
348.2
370.0
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
13.8
8.0
21.8
322.8
25.4
348.2
370.0
Allocation of reinsurance
premiums
(161.3)
\u2013
(161.3)
\u2013
\u2013
\u2013
(161.3)
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
\u2013
\u2013
\u2013
227.0
5.6
232.6
232.6
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(69.2)
5.0
(64.2)
(64.2)
Changes in the loss recovery
component
\u2013
(4.9)
(4.9)
\u2013
\u2013
\u2013
(4.9)
Net income/(expense) from
reinsurance contracts held
(161.3)
(4.9)
(166.2)
157.8
10.6
168.4
2.2
Reinsurance finance income/
(expense) recognised in profit
or loss
\u2013
0.1
0.1
1.3
0.1
1.4
1.5
Reinsurance finance income/
(expense) recognised in OCI
\u2013
\u2013
\u2013
(18.6)
(2.0)
(20.6)
(20.6)
Foreign exchange impact
(11.4)
0.2
(11.2)
28.1
1.0
29.1
17.9
Total changes in
comprehensive income
(172.7)
(4.6)
(177.3)
168.6
9.7
178.3
1.0
Reinsurance investment
component
(129.6)
\u2013
(129.6)
129.6
\u2013
129.6
\u2013
Cashflows
Premiums paid
269.5
\u2013
269.5
\u2013
\u2013
\u2013
269.5
Amounts received
\u2013
\u2013
\u2013
(208.3)
\u2013
(208.3)
(208.3)
Total cashflows
269.5
\u2013
269.5
(208.3)
\u2013
(208.3)
61.2
Net closing balance
(19.0)
3.4
(15.6)
412.7
35.1
447.8
432.2
Closing assets
\u2013
3.4
3.4
412.7
35.1
447.8
451.2
Closing liabilities
(19.0)
\u2013
(19.0)
\u2013
\u2013
\u2013
(19.0)
(iv) Claims development The tables below illustrate how estimates of cumulative claims for UK Motor, UK Non-Motor and International Insurance have developed over time on a gross and net of reinsurance basis. Each table shows how the Group\u2019s estimates of total claims for each underwriting year have developed over time and reconciles the cumulative claims to the amount included in the Statement of Financial Position. Balances have been translated at the exchange rates prevailing at the reporting date. The Group has not disclosed information for underwriting years 2017 and prior for the international insurance and UK Non-Motor insurance businesses, given that the claims that remain outstanding on those years are immaterial. IFRS 17 does not require an entity to disclose claims development information for which uncertainty about the amount and timing of the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims in its other lines of business or related directly attributable expenses. Gross claims development
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
382
394
436
552
686
701
552
688
845
973
At end of year two
675
701
829
1,144
1,175
1,067
985
1,326
1,584
At end of year three
659
707
788
994
1,109
1,010
954
1,294
At end of year four
689
680
727
947
1,064
996
921
At end of year five
643
636
713
912
1,008
981
At end of year six
635
619
690
890
1,000
At end of year seven
619
606
656
865
At end of year eight
604
594
652
At end of year nine
593
585
Ten years later
590
Gross best
estimates of
undiscounted
claims
3,225
590
585
652
865
1,000
981
921
1,294
1,584
973
12,670
Cumulative gross
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Gross undiscounted
best estimate
liabilities
150
14
25
36
118
107
211
259
468
613
578
2,579
Risk adjustment
(undiscounted)
411
Effect of
discounting
(537)
Gross claims
liabilities
2,453
Ancillary claims
liabilities and
expense liabilities
94
UK Motor Gross
liabilities for
incurred claims
2,547
UK Non-motor
(core)
At end of year one
26
29
56
55
53
58
116
146
At end of year two
34
50
78
102
105
96
128
224
At end of year three
18
35
47
76
102
103
95
124
At end of year four
19
34
47
75
102
102
90
At end of year five
19
33
47
76
102
93
At end of year six
19
33
47
76
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
5
19
33
48
75
100
93
90
124
224
146
957
Cumulative gross
claims paid
(5)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(147)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gross undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
77
96
199
Risk adjustment
(undiscounted)
22
Effect of
discounting
(7)
Gross claims
liabilities
214
Ancillary claims
liabilities and
expense liabilities
4
UK Non-motor
Gross liabilities for
incurred claims
218
International
Insurance
At end of year one
177
236
204
270
313
338
At end of year two
259
356
382
368
496
601
At end of year three
237
304
349
388
364
498
At end of year four
181
253
300
350
384
365
At end of year five
138
211
251
300
350
364
At end of year six
143
211
251
300
339
At end of year seven
143
211
251
296
At end of year eight
143
212
248
At end of year nine
143
233
Ten years later
151
Gross best
estimates of
undiscounted
claims
399
151
233
248
296
339
364
365
498
601
338
3,832
Cumulative gross
claims paid
(398)
(149)
(193)
(244)
(281)
(320)
(336)
(316)
(412)
(414)
(155)
(3,218)
Gross undiscounted
best estimate
liabilities
1
2
40
4
15
19
28
49
86
187
183
614
Risk adjustment
(undiscounted)
88
Effect of
discounting
(98)
Gross claims
liabilities
604
Ancillary claims
liabilities and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
642
Claims development net of XoL reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
510
646
675
520
661
825
951
At end of year two
659
682
783
1,053
1,123
1,033
949
1,292
1,550
At end of year three
644
667
743
917
1,053
986
927
1,257
At end of year four
659
637
692
883
1,024
969
892
At end of year five
623
607
677
860
974
950
At end of year six
619
599
663
840
978
At end of year seven
606
586
640
820
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net of XoL best
estimates of
undiscounted
claims
3,190
589
577
635
820
978
950
892
1,257
1,550
951
12,389
Cumulative
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Net of XoL
undiscounted best
estimate liabilities
115
13
17
19
73
85
180
230
431
579
556
2,298
Risk adjustment
(undiscounted)
331
Effect of
discounting
(420)
Net of XoL claims
liabilities
2,209
Ancillary claims
liabilities and
expenses
94
UK Motor Net of
XoL liabilities for
incurred claims
2,303
UK Non-motor
(core)
At end of year one
26
29
56
54
50
57
116
127
At end of year two
34
50
78
102
96
91
126
220
At end of year three
18
35
47
75
101
94
90
124
At end of year four
19
34
47
75
101
93
90
At end of year five
19
33
47
76
101
93
At end of year six
19
33
47
75
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
4
19
33
48
75
100
93
90
124
220
127
933
Cumulative
claims paid
(4)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(148)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
72
77
175
Risk adjustment
(undiscounted)
19
Effect of
discounting
(7)
Net of XoL claims
liabilities
187
Ancillary claims
liabilities and
expense liabilities
3
UK Non-motor Net
of XoL liabilities for
incurred claims
190
International
Insurance
At end of year one
177
236
204
270
313
335
At end of year two
259
356
382
368
496
559
At end of year three
237
304
349
388
364
477
At end of year four
181
253
300
350
384
355
At end of year five
138
211
251
300
350
360
At end of year six
143
211
251
300
337
At end of year seven
143
211
251
290
At end of year eight
143
212
248
At end of year nine
143
210
Ten years later
397
151
Gross best
estimates of
undiscounted
claims
397
151
210
248
290
337
360
355
477
559
335
3,719
Cumulative gross
claims paid
(397)
(149)
(193)
(244)
(280)
(320)
(336)
(316)
(412)
(414)
(155)
(3,216)
Gross undiscounted
best estimate
liabilities
\u2013
2
17
4
10
17
24
39
65
145
180
503
Risk adjustment
(undiscounted)
73
Effect of
discounting
(46)
Gross claims
liabilities
530
Ancillary claims and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
568
Claims development net of reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
493
625
626
520
657
762
939
At end of year two
659
682
783
1,016
1,086
1,033
949
1,259
1,442
At end of year three
644
667
743
886
1,018
986
927
1,239
At end of year four
659
637
692
853
990
969
892
At end of year five
623
607
677
830
957
950
At end of year six
619
599
663
811
944
At end of year seven
606
586
640
793
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net best estimates
of undiscounted
claims
3,190
589
577
635
793
944
950
892
1,239
1,442
939
12,190
Cumulative net
claims paid
(3,076)
(576)
(560)
(616)
(719)
(864)
(770)
(662)
(826)
(971)
(395)
(10,035)
Net undiscounted
best estimate
liabilities
114
13
17
19
74
80
180
230
413
471
544
2,155
Risk adjustment
(undiscounted)
172
Effect of
discounting
(365)
Net claims
liabilities
1,962
Ancillary claims
liabilities and
expenses
88
UK Motor Net
liabilities for
incurred claims
2,050
UK Non-motor
(core)
At end of year one
7
6
20
18
16
16
43
68
At end of year two
10
14
22
34
25
12
41
94
At end of year three
5
10
12
24
33
31
19
36
At end of year four
6
9
12
22
37
30
18
At end of year five
6
9
12
24
37
29
At end of year six
6
8
12
24
36
At end of year seven
6
9
12
24
At end of year eight
6
9
13
At end of year nine
6
9
Ten years later
6
Net best estimates
of undiscounted
claims
2
6
9
13
24
36
29
18
36
94
68
335
Cumulative net
claims paid
(2)
(6)
(9)
(13)
(23)
(34)
(28)
(16)
(28)
(87)
(55)
(301)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
1
2
1
2
8
7
13
34
Risk adjustment
(undiscounted)
6
Effect of
discounting
(2)
Net claims
liabilities
38
Ancillary claims
liabilities
and expenses
8
UK Non-motor
Net liabilities for
incurred claims
46
International
Insurance
At end of year one
61
79
83
100
114
140
At end of year two
85
120
129
145
185
218
At end of year three
115
97
117
129
144
187
At end of year four
92
132
96
119
130
144
At end of year five
71
82
131
101
119
123
At end of year six
76
83
86
101
115
At end of year seven
77
70
86
99
At end of year eight
47
70
85
At end of year nine
46
83
Ten years later
52
Net best estimates
of undiscounted
claims
295
52
83
85
99
115
123
144
187
218
140
1,541
Cumulative net
claims paid
(298)
(51)
(68)
(83)
(95)
(109)
(114)
(129)
(163)
(223)
(100)
(1,433)
Net undiscounted
best estimate
liabilities
(3)
1
15
2
4
6
9
15
24
(5)
40
108
Risk adjustment
(undiscounted)
24
Effect of
discounting
(20)
Net claims
liabilities
112
Ancillary claims
liabilities and
expenses
27
International
Insurance net
liabilities for
incurred claims
139
(v) UK Motor loss ratios and changes to liabilities for incurred claims The table below shows the development of UK Motor Insurance loss ratios for the past three financial periods, presented on an underwriting year basis, both using undiscounted amounts (i.e. cashflows) and discounted amounts.
UK Motor Insurance loss ratio development \u2013 31 December
undiscounted, gross net of excess of loss reinsurance
2021
2022
2023
Underwriting year
2018
73%
68%
65%
2019
73%
71%
67%
2020
68%
65%
58%
2021
95%
91%
86%
2022
\u2013
104%
96%
2023
\u2013
\u2013
94%
* Booked undiscounted loss ratios presented from the transition date of IFRS 17 (1 January 2022) onwards.
31 December
UK Motor Insurance loss ratio development \u2013
discounted*, gross net of excess of loss reinsurance
2021
2022
2023
Underwriting year
2018
71%
67%
64%
2019
71%
69%
65%
2020
67%
63%
57%
2021
92%
86%
81%
2022
\u2013
97%
88%
2023
\u2013
\u2013
86%
* Loss ratios using discounted locked-in curves, excluding finance expenses are presented from the transition date of IFRS 17 (1 January 2022) onwards. The following table analyses the impact of movements in changes to liabilities from incurred claims by underwriting year on a gross and net of excess of loss reinsurance basis for UK Motor.
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Gross
Underwriting year
2018 & prior
91.5
262.4
2019
61.4
34.3
2020
98.2
84.4
2021
76.4
56.1
2022
79.4
\u2013
2023
\u2013
\u2013
Total UK Motor gross changes to liabilities for incurred claims
406.9
437.2
Net
Underwriting year
2018 & prior
80.6
187.2
2019
65.0
29.0
2020
97.7
62.8
2021
80.1
48.2
2022
69.4
\u2013
2023
\u2013
\u2013
Total UK Motor net of excess of loss changes to liabilities for incurred claims
392.8
327.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-524": { "value": "5c. Insurance service expenses Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,755.5
255.0
618.2
36.4
2,665.1
Changes to liabilities for incurred claims
(406.9)
(9.1)
(21.3)
(3.3)
(440.6)
Total incurred claims
1,348.6
245.9
596.9
33.1
2,224.5
Movement in onerous contracts
(18.6)
(2.4)
(2.4)
\u2013
(23.4)
Directly attributable expenses
Administration expenses
377.8
73.5
184.0
19.0
654.3
Acquisition expenses
73.4
34.8
65.4
8.9
182.5
Insurance expenses
451.2
108.3
249.4
27.9
836.8
Share scheme expenses
43.2
2.4
8.9
0.8
55.3
Total insurance expenses and share scheme expenses
494.4
110.7
258.3
28.7
892.1
Total insurance service expenses
1,824.4
354.2
852.8
61.8
3,093.2
Insurance service expenses for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Incurred claims
Claims incurred in the period
1,620.4
214.8
516.0
21.1
2,372.3
Changes to liabilities for incurred claims
(437.2)
(16.9)
37.2
(3.6)
(420.5)
Total incurred claims
1,183.2
197.9
553.2
17.5
1,951.8
Movement in onerous contracts
(19.1)
0.4
(3.9)
\u2013
(22.6)
Directly attributable expenses
Administration expenses
327.7
54.6
182.5
16.0
580.8
Acquisition expenses
61.9
31.5
72.1
8.7
174.2
Insurance expenses
389.6
86.1
254.6
24.7
755.0
Share scheme expenses
39.4
4.2
9.4
\u2013
53.0
Total insurance expenses and share scheme expenses
429.0
90.3
264.0
24.7
808.0
Total insurance service expenses
1,593.1
288.6
813.3
42.2
2,737.2
5d. Net expenses from reinsurance contracts held Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2023 are shown below.
31 December 2023
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
93.6
49.5
190.0
2.2
335.3
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(173.8)
(52.0)
(270.3)
\u2013
(496.1)
Changes to liabilities for incurred claims
135.1
(1.4)
95.9
(0.1)
229.5
Net expense from reinsurance contracts excluding
movement in onerous loss component
54.9
(3.9)
15.6
2.1
68.7
Other reinsurance recoveries including movement in loss
recovery component
14.5
2.2
1.7
\u2013
18.4
Net expenses/(income) from reinsurance contracts held
69.4
(1.7)
17.3
2.1
87.1
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31 December 2022 are shown below.
31 December 2022 (restated)
UK Motor UK Non-motor Int. Insurance Other Total Group
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Allocation of reinsurance premiums
69.8
44.4
161.3
1.4
276.9
Amounts recoverable from reinsurers for incurred
insurance service expenses
Incurred claims
(182.8)
(43.5)
(232.6)
0.2
(458.7)
Changes to liabilities for incurred claims
136.7
0.8
64.2
\u2013
201.7
Net expense from reinsurance contracts excluding
movement in onerous loss component
23.7
1.7
(7.1)
1.6
19.9
Other reinsurance recoveries including movement in loss
recovery component
13.9
(0.3)
4.9
\u2013
18.5
Net expenses/(income) from reinsurance contracts held
37.6
1.4
(2.2)
1.6
38.4
(iv) Claims development The tables below illustrate how estimates of cumulative claims for UK Motor, UK Non-Motor and International Insurance have developed over time on a gross and net of reinsurance basis. Each table shows how the Group\u2019s estimates of total claims for each underwriting year have developed over time and reconciles the cumulative claims to the amount included in the Statement of Financial Position. Balances have been translated at the exchange rates prevailing at the reporting date. The Group has not disclosed information for underwriting years 2017 and prior for the international insurance and UK Non-Motor insurance businesses, given that the claims that remain outstanding on those years are immaterial. IFRS 17 does not require an entity to disclose claims development information for which uncertainty about the amount and timing of the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims in its other lines of business or related directly attributable expenses. Gross claims development
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
382
394
436
552
686
701
552
688
845
973
At end of year two
675
701
829
1,144
1,175
1,067
985
1,326
1,584
At end of year three
659
707
788
994
1,109
1,010
954
1,294
At end of year four
689
680
727
947
1,064
996
921
At end of year five
643
636
713
912
1,008
981
At end of year six
635
619
690
890
1,000
At end of year seven
619
606
656
865
At end of year eight
604
594
652
At end of year nine
593
585
Ten years later
590
Gross best
estimates of
undiscounted
claims
3,225
590
585
652
865
1,000
981
921
1,294
1,584
973
12,670
Cumulative gross
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Gross undiscounted
best estimate
liabilities
150
14
25
36
118
107
211
259
468
613
578
2,579
Risk adjustment
(undiscounted)
411
Effect of
discounting
(537)
Gross claims
liabilities
2,453
Ancillary claims
liabilities and
expense liabilities
94
UK Motor Gross
liabilities for
incurred claims
2,547
UK Non-motor
(core)
At end of year one
26
29
56
55
53
58
116
146
At end of year two
34
50
78
102
105
96
128
224
At end of year three
18
35
47
76
102
103
95
124
At end of year four
19
34
47
75
102
102
90
At end of year five
19
33
47
76
102
93
At end of year six
19
33
47
76
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
5
19
33
48
75
100
93
90
124
224
146
957
Cumulative gross
claims paid
(5)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(147)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gross undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
77
96
199
Risk adjustment
(undiscounted)
22
Effect of
discounting
(7)
Gross claims
liabilities
214
Ancillary claims
liabilities and
expense liabilities
4
UK Non-motor
Gross liabilities for
incurred claims
218
International
Insurance
At end of year one
177
236
204
270
313
338
At end of year two
259
356
382
368
496
601
At end of year three
237
304
349
388
364
498
At end of year four
181
253
300
350
384
365
At end of year five
138
211
251
300
350
364
At end of year six
143
211
251
300
339
At end of year seven
143
211
251
296
At end of year eight
143
212
248
At end of year nine
143
233
Ten years later
151
Gross best
estimates of
undiscounted
claims
399
151
233
248
296
339
364
365
498
601
338
3,832
Cumulative gross
claims paid
(398)
(149)
(193)
(244)
(281)
(320)
(336)
(316)
(412)
(414)
(155)
(3,218)
Gross undiscounted
best estimate
liabilities
1
2
40
4
15
19
28
49
86
187
183
614
Risk adjustment
(undiscounted)
88
Effect of
discounting
(98)
Gross claims
liabilities
604
Ancillary claims
liabilities and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
642
Claims development net of XoL reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
510
646
675
520
661
825
951
At end of year two
659
682
783
1,053
1,123
1,033
949
1,292
1,550
At end of year three
644
667
743
917
1,053
986
927
1,257
At end of year four
659
637
692
883
1,024
969
892
At end of year five
623
607
677
860
974
950
At end of year six
619
599
663
840
978
At end of year seven
606
586
640
820
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net of XoL best
estimates of
undiscounted
claims
3,190
589
577
635
820
978
950
892
1,257
1,550
951
12,389
Cumulative
claims paid
(3,075)
(576)
(560)
(616)
(747)
(893)
(770)
(662)
(826)
(971)
(395)
(10,091)
Net of XoL
undiscounted best
estimate liabilities
115
13
17
19
73
85
180
230
431
579
556
2,298
Risk adjustment
(undiscounted)
331
Effect of
discounting
(420)
Net of XoL claims
liabilities
2,209
Ancillary claims
liabilities and
expenses
94
UK Motor Net of
XoL liabilities for
incurred claims
2,303
UK Non-motor
(core)
At end of year one
26
29
56
54
50
57
116
127
At end of year two
34
50
78
102
96
91
126
220
At end of year three
18
35
47
75
101
94
90
124
At end of year four
19
34
47
75
101
93
90
At end of year five
19
33
47
76
101
93
At end of year six
19
33
47
75
100
At end of year seven
19
33
47
75
At end of year eight
19
33
48
At end of year nine
19
33
Ten years later
19
Gross best
estimates of
undiscounted
claims
4
19
33
48
75
100
93
90
124
220
127
933
Cumulative
claims paid
(4)
(19)
(33)
(48)
(75)
(97)
(90)
(85)
(109)
(148)
(50)
(758)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
3
3
5
15
72
77
175
Risk adjustment
(undiscounted)
19
Effect of
discounting
(7)
Net of XoL claims
liabilities
187
Ancillary claims
liabilities and
expense liabilities
3
UK Non-motor Net
of XoL liabilities for
incurred claims
190
International
Insurance
At end of year one
177
236
204
270
313
335
At end of year two
259
356
382
368
496
559
At end of year three
237
304
349
388
364
477
At end of year four
181
253
300
350
384
355
At end of year five
138
211
251
300
350
360
At end of year six
143
211
251
300
337
At end of year seven
143
211
251
290
At end of year eight
143
212
248
At end of year nine
143
210
Ten years later
397
151
Gross best
estimates of
undiscounted
claims
397
151
210
248
290
337
360
355
477
559
335
3,719
Cumulative gross
claims paid
(397)
(149)
(193)
(244)
(280)
(320)
(336)
(316)
(412)
(414)
(155)
(3,216)
Gross undiscounted
best estimate
liabilities
\u2013
2
17
4
10
17
24
39
65
145
180
503
Risk adjustment
(undiscounted)
73
Effect of
discounting
(46)
Gross claims
liabilities
530
Ancillary claims and
expense liabilities
38
International
Insurance Gross
liabilities for
incurred claims
568
Claims development net of reinsurance
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
UK Motor (core)
At end of year one
373
378
427
493
625
626
520
657
762
939
At end of year two
659
682
783
1,016
1,086
1,033
949
1,259
1,442
At end of year three
644
667
743
886
1,018
986
927
1,239
At end of year four
659
637
692
853
990
969
892
At end of year five
623
607
677
830
957
950
At end of year six
619
599
663
811
944
At end of year seven
606
586
640
793
At end of year eight
597
579
635
At end of year nine
589
577
Ten years later
589
Net best estimates
of undiscounted
claims
3,190
589
577
635
793
944
950
892
1,239
1,442
939
12,190
Cumulative net
claims paid
(3,076)
(576)
(560)
(616)
(719)
(864)
(770)
(662)
(826)
(971)
(395)
(10,035)
Net undiscounted
best estimate
liabilities
114
13
17
19
74
80
180
230
413
471
544
2,155
Risk adjustment
(undiscounted)
172
Effect of
discounting
(365)
Net claims
liabilities
1,962
Ancillary claims
liabilities and
expenses
88
UK Motor Net
liabilities for
incurred claims
2,050
UK Non-motor
(core)
At end of year one
7
6
20
18
16
16
43
68
At end of year two
10
14
22
34
25
12
41
94
At end of year three
5
10
12
24
33
31
19
36
At end of year four
6
9
12
22
37
30
18
At end of year five
6
9
12
24
37
29
At end of year six
6
8
12
24
36
At end of year seven
6
9
12
24
At end of year eight
6
9
13
At end of year nine
6
9
Ten years later
6
Net best estimates
of undiscounted
claims
2
6
9
13
24
36
29
18
36
94
68
335
Cumulative net
claims paid
(2)
(6)
(9)
(13)
(23)
(34)
(28)
(16)
(28)
(87)
(55)
(301)
Financial year ended 31 December 2023
2013 & 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 To t a l
Underwriting year prior \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net undiscounted
best estimate
liabilities
\u2013
\u2013
\u2013
\u2013
1
2
1
2
8
7
13
34
Risk adjustment
(undiscounted)
6
Effect of
discounting
(2)
Net claims
liabilities
38
Ancillary claims
liabilities
and expenses
8
UK Non-motor
Net liabilities for
incurred claims
46
International
Insurance
At end of year one
61
79
83
100
114
140
At end of year two
85
120
129
145
185
218
At end of year three
115
97
117
129
144
187
At end of year four
92
132
96
119
130
144
At end of year five
71
82
131
101
119
123
At end of year six
76
83
86
101
115
At end of year seven
77
70
86
99
At end of year eight
47
70
85
At end of year nine
46
83
Ten years later
52
Net best estimates
of undiscounted
claims
295
52
83
85
99
115
123
144
187
218
140
1,541
Cumulative net
claims paid
(298)
(51)
(68)
(83)
(95)
(109)
(114)
(129)
(163)
(223)
(100)
(1,433)
Net undiscounted
best estimate
liabilities
(3)
1
15
2
4
6
9
15
24
(5)
40
108
Risk adjustment
(undiscounted)
24
Effect of
discounting
(20)
Net claims
liabilities
112
Ancillary claims
liabilities and
expenses
27
International
Insurance net
liabilities for
incurred claims
139
", "dimensions": { "concept": "ifrs-full:DisclosureOfClaimsAndBenefitsPaidExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-460": { "value": "6. Investment income and finance costs 6a. Accounting policies i) Financial assets Classification and measurement The classification and subsequent measurement of the financial asset under IFRS 9 depends on: a. The Group\u2019s business model for managing the financial assets, and b. The contractual cashflow characteristics of the financial asset. Based on these factors, the financial asset is classified into one of the following categories: Amortised cost These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as fair value through profit or loss (FVTPL). For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other receivables and loans and advances to customers. The interest income generated from these assets is included in investment returns, with the exception of loans and advances to customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income. Fair value through Other Comprehensive Income (FVOCI) These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL. For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement. In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for trading and are strategic investments to be designated as being reported through FVOCI. Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss. A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises. Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. Derecognition A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset and all the attached substantial risks and rewards relating to the asset to a third party . ii) Financial liabilities Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability . 6b. Investment return
31 December 2023 31 December 2022
\u00a3m \u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
43.3
43.3
\u2013
8.4
8.4
On assets classified as FVOCI
77.0
(3.6)
73.4
50.3
2.3
52.6
On assets classified as amortised costs
4.1
\u2013
4.1
2.0
\u2013
2.0
Net unrealised losses
Unrealised (loss) / gain on forward
contracts
\u2013
(0.2)
(0.2)
\u2013
0.5
0.5
Share of associate profit/ loss
\u2013
(1.3)
(1.3)
\u2013
(0.1)
(0.1)
Interest receivable on cash and cash
equivalents
\u2013
3.6
3.6
\u2013
1.2
1.2
Total investment and
interest income
81.1
41.8
122.9
52.3
12.3
64.6
*1*3 *1 *1 *2 *1. Interest received during the year was \u00a376.8 million (2022: \u00a358.7 million). *2. Total investment return excludes \u00a33.2 million of intra-group interest (2022: \u00a32.2 million). *3. Realised losses on sales of debt securities classified as FVOCI are \u00a30.9 million (2022: \u00a32.2 million gain)
6c. Finance costs
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on subordinated loan notes and other credit facilities
18.5
11.5
Interest payable on lease liabilities
2.0
2.0
Interest recoverable from co and re-insurers
(0.4)
(1.5)
Total finance costs
20.1
12.0
*1*2
*1. Interest paid during the year was \u00a320.5 million (2022: \u00a313.4 million).
*2. See note 7e for details of credit facilities.
Finance costs represent interest payable on the \u00a3305.1 million (2022: \u00a3200.0 million) subordinated notes and other financial liabilities.
Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16 and does not result in a
cash payment.
6d. Expected credit losses
31 December 2023 31 December 2022
Note \u00a3m \u00a3m
Expected credit (gains)/losses on financial investments
6f
(2.5)
(1.8)
Expected credit losses on loans and advances to customers
7b
33.5
20.7
Total expense for expected credit losses
31.0
18.9
*1
*1. Includes \u00a315.0 million (2022: \u00a37.2 million) of write offs, with total movement in the expected credit loss provision being \u00a333.5 million (2022: \u00a320.7 million).
See note 6a and note 7b for details of the impairment methodology.
6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss
6f. Fair value measurement
IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of
significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end
of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none).
The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
31 December 2023
31 December 2022
FVTPL FVOCI FVTPL FVOCI
\u00a3m \u00a3m \u00a3m \u00a3m
Level one (quoted prices in active markets)
888.8
2,560.1
900.2
2,180.9
Level two (use of observable inputs)
17.6
\u2013
28.1
\u2013
Level three (use of significant unobservable inputs)
12.4
265.8
6.4
191.8
Total
918.8
2,825.9
934.7
2,372.7
*1
*1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information.
Fair value measurement using significant unobservable inputs (level three)
Level three investments consist of debt securities and equity securities.
Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the
Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and
commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on
active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these
instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is
the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future
performance will result in higher discount rates and lower values.
Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the
proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs
including market multiples and cashflow forecasts.
There were no significant inter-relationships between unobservable inputs that materially affect fair values.
The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
6g. Cash and cash equivalents
31 December 2023 31 December 2022
\u00a3m \u00a3m
Cash at bank and in hand
353.1
297.0
Total cash and cash equivalents
353.1
297.0
*1
*1 Cash at bank and in hand includes \u00a338.9 million (2022: \u00a336.6 million) related to special purpose entities which is not available for use by the Group.
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term deposits with original maturities
of three months or less.
An assessment has been completed for impairment purposes in line with that set out in note 6a above. Given the short-term duration of
these assets and low risk of these assets, no impairment provision has been recognised.
For cash at bank and cash deposits and other receivables, the fair value approximates to the book value due to their short maturity.
6h. Other assets
Insurance and other receivables
31 December 2023 31 December 2022
\u00a3m \u00a3m
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Prepayments and accrued income
62.2
41.2
Total insurance and other receivables
409.9
316.4
Insurance receivables
Insurance receivables are measured at historic cost. Given that non-repayment would result in a withdrawn policy and the short-term
duration of these assets, no bad debt provision has been recognised.
Insurance receivables reported within other receivables are comprised of the external coinsurer\u2019s share of premium receivable, with the
related liability in respect of written premium presented within amounts owed to the coinsurer.
Trade and other receivables
Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances.
Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables
per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a
combination of
(i) Aged debtor analysis
(ii) Historic experience of write offs for each receivable
(iii) Any specific indicators of credit deterioration observed, and
(iv) Management judgement.
The level of provision is immaterial.
The amortised cost carrying amount of receivables is a reasonable approximation of fair value.
Contract balances
The following table provides information about receivables and contract assets from contracts with customers. Both balances are
included in Trade and other receivables.
31 December 2023 31 December 2022
\u00a3m \u00a3m
Receivables
14.9
20.0
Contract assets
17.0
19.3
The contract asset relates to the Group\u2019s right to consideration for work undertaken in the law companies on behalf of clients which is
ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee has been billed.
Significant changes in the contract asset balance during the period are as follows:
31 December 2023
Contract asset balance \u00a3m
At 1 January 2022
23.8
Revenue recognised
16.3
Transferred to trade receivables
(20.2)
Write offs
(0.6)
At 31 December 2022
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write offs
(0.6)
At 31 December 2023
17.0
The amount of revenue recognised in 2023 from performance obligations satisfied (or partially satisfied) in previous periods in relation to
the above contract balances is \u00a3nil (2022: \u00a3nil).
6i. Financial and lease liabilities
31 December 2023
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest payable per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows
94.2
4.3
29.6
(10.7)
117.4
Other foreign exchange and non-cash
movements
(0.9)
\u2013
\u2013
1.4
0.5
Financial liability at the end of the period
315.2
759.6
55.0
81.2
1,211.0
*1
*1. Cash amounts relating to the interest proportion of the lease liability were \u00a31.9 million.
31 December 2022
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
446.5
20.0
105.3
776.2
Interest payable per Income Statement
11.0
11.7
1.3
2.0
26.0
Cashflows
(11.0)
256.5
(0.9)
(11.3)
233.3
Other foreign exchange and non-cash
movements
\u2013
\u2013
(0.4)
(7.5)
(7.9)
Financial liability at the end of the period
204.4
714.7
20.0
88.5
1,027.6
*1
*1. Cash amounts relating to the interest proportion of the lease liability were \u00a32.1 million.
Subordinated notes
Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes
were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered
with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024.
The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a
redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes).
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the
event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met.
There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes
in certain circumstances but to date none of these circumstances has arisen.
The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million
(2022: \u00a3196.4 million).
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026, a \u00a320.0 million facility
which expires in August 2024 and a \u20ac100.0 million facility which expires in August 2024. As at 31 December 2023 \u00a355.0 million was
drawn under these facilities (2022: \u00a320.0 million), which is shown within other borrowings in the table above. This is made up of
\u00a335.0 million from the facility expiring April 2026 (2022: \u00a3nil) and \u00a320.0 million from the pound sterling facility expiring August 2024
(2022: \u00a320.0 million).
The carrying value is a reasonable approximation of fair value.
Loan backed securities
Asset backed senior loan note facilities of \u00a31,000.0 million have been established in relation to the Admiral Money business (see note
2 for details of the accounting treatment of SPEs). As at the year end, \u00a3759.6 million (2022: \u00a3714.7 million) of these facilities had
been utilised.
The carrying value is a reasonable approximation of fair value.
Lease liabilities
The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension
options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available
for use by the Group.
The lease liability is initially measured at the present value of remaining lease payments, which include the following:
\u2022 Fixed payments (including in-substance fixed payments), less any lease incentives receivable
\u2022 Variable lease payments that are based on an index or a rate
\u2022 Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group\u2019s
incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of
a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is
charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability.
Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining
lease payments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-587": { "value": "6a. Accounting policies i) Financial assets Classification and measurement The classification and subsequent measurement of the financial asset under IFRS 9 depends on: a. The Group\u2019s business model for managing the financial assets, and b. The contractual cashflow characteristics of the financial asset. Based on these factors, the financial asset is classified into one of the following categories: Amortised cost These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as fair value through profit or loss (FVTPL). For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other receivables and loans and advances to customers. The interest income generated from these assets is included in investment returns, with the exception of loans and advances to customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income. Fair value through Other Comprehensive Income (FVOCI) These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL. For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement. In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for trading and are strategic investments to be designated as being reported through FVOCI. Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss. A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises. Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available . The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. Derecognition A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset and all the attached substantial risks and rewards relating to the asset to a third party . ii) Financial liabilities Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHeldtomaturityInvestmentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-547": { "value": "
i) Financial assets
Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:
a. The Group\u2019s business model for managing the financial assets, and
b. The contractual cashflow characteristics of the financial asset.
Based on these factors, the financial asset is classified into one of the following categories:
Amortised cost
These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give
rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not
designated as fair value through profit or loss (FVTPL).
For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other
receivables and loans and advances to customers.
The interest income generated from these assets is included in investment returns, with the exception of loans and advances to
customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income.
Fair value through Other Comprehensive Income (FVOCI)
These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the
financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI),
where the asset is not designated as FVTPL.
For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder
liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement.
In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be
held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for
trading and are strategic investments to be designated as being reported through FVOCI.
Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest
revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss.
A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises.
Fair value through profit or loss (FVTPL)
These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL.
For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments.
The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held.
Buying and selling activity occurs depending on timing of different cashflows.
Impairment
The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost,
as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and
advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach.
This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s
external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data
as follows:
\u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is
recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with
consideration of any overlay based on qualitative criteria
\u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting
a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for
a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on
watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate
by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based
on an average of a number of external and internal sources.
\u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to
return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available .
The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. Derecognition A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset and all the attached substantial risks and rewards relating to the asset to a third party . ii) Financial liabilities Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-564": { "value": "i) Financial assets Classification and measurement The classification and subsequent measurement of the financial asset under IFRS 9 depends on: a. The Group\u2019s business model for managing the financial assets, and b. The contractual cashflow characteristics of the financial asset. Based on these factors, the financial asset is classified into one of the following categories: Amortised cost These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as fair value through profit or loss (FVTPL). For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other receivables and loans and advances to customers. The interest income generated from these assets is included in investment returns, with the exception of loans and advances to customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income. Fair value through Other Comprehensive Income (FVOCI) These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL. For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement. In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for trading and are strategic investments to be designated as being reported through FVOCI. Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss. A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises. Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available . The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. Derecognition A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset and all the attached substantial risks and rewards relating to the asset to a third party ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-575": { "value": "Classification and measurement The classification and subsequent measurement of the financial asset under IFRS 9 depends on: a. The Group\u2019s business model for managing the financial assets, and b. The contractual cashflow characteristics of the financial asset. Based on these factors, the financial asset is classified into one of the following categories: Amortised cost These comprise assets which are held in order to collect contractual cashflows and the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as fair value through profit or loss (FVTPL). For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and other receivables and loans and advances to customers. The interest income generated from these assets is included in investment returns, with the exception of loans and advances to customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised in interest income. Fair value through Other Comprehensive Income (FVOCI) These comprise assets which are held both to collect contractual cashflows and to sell the asset, where the contractual terms of the financial asset give rise to cashflows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL. For the Group, these assets include corporate, government and private debt securities. These assets are held to match policyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the consolidated Income Statement. In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain investments which are not held for trading and are strategic investments to be designated as being reported through FVOCI. Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses, interest revenue, dividend income and foreign exchange gains or losses which are recognised in profit or loss. A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises. Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-583": { "value": "Fair value through profit or loss (FVTPL) These are assets which do not meet the criteria for amortised cost or FVOCI, or which are designated as FVTPL. For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments. The regulatory capital within the Group is used to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on timing of different cashflows. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-584": { "value": "Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available . The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the impairment provision required. The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022). The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are recognised in Other Comprehensive Income. Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further disclosure has been made. (ii) Impairment of property and equipment In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are recognised through the Income Statement. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-576": { "value": "Impairment The expected credit loss model (ECL) is used to calculate any impairment to be recognised for all assets measured at amortised cost, as well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for loans and advances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach. This simplified approach is based on an assessment made based on an external credit rating agency or an assessment from the Group\u2019s external asset managers, to assess whether there has been a significant increase in credit risk, combined with other external data as follows: \u2022 Financial assets in stage 1 are those where the credit risk has not increased significantly since initial recognition. A 12-month ECL is recognised. To determine the default rate, the average of external rates using Standard & Poor and Moody\u2019s is used, together with consideration of any overlay based on qualitative criteria \u2022 Financial assets in stage 2 are those where credit risk has increased significantly since initial recognition, with the provision reflecting a lifetime loss. A significant increase in credit risk is defined as public assets that are downgraded outside of investment grade, or for a bond purchased at sub-investment grade, a fall in of a full credit banding i.e. BB to B; and private assets which have been flagged on watchlists for significant credit deterioration. For assets in stage 2, the lifetime credit loss is calculated by multiplying the default rate by the number of years from maturity. For assets in stage 1 and stage 2, a recovery rate is also applied to the loss given default, based on an average of a number of external and internal sources. \u2022 Financial assets in stage 3 are credit impaired, which typically occurs when the asset has defaulted, restructured or is not expected to return full proceeds. Each asset in this category is reviewed to assess the recoverable amount based on the information available .
The credit rating of all assets is regularly monitored. As at the year-end reporting date, the majority of financial assets are of investment
grade and considered low risk under IFRS 9. These therefore remain within stage 1 and a 12-month expected loss is used to calculate the
impairment provision required.
The impairment provision at 31 December 2023 is \u00a36.9 million (\u00a39.4 million at 31 December 2022).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements are
recognised in Other Comprehensive Income.
Given there is no material change in the credit quality or type of financial assets in the year and the movement in provision is immaterial,
no further disclosure has been made.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-577": { "value": "
Derecognition
A financial asset is derecognised when the rights to receive cashflows from that asset have expired, or when the Group transfers the asset
and all the attached substantial risks and rewards relating to the asset to a third party .
Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-565": { "value": "
ii) Financial liabilities
Classification and subsequent measurement
All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for
derivatives that are classified at fair value through profit or loss and subsequently measured at fair value.
Movements in the amortised cost are recognised through the Income Statement.
Derecognition
A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-586": { "value": "ii) Financial liabilities Classification and subsequent measurement All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except for derivatives that are classified at fair value through profit or loss and subsequently measured at fair value. Movements in the amortised cost are recognised through the Income Statement. Derecognition A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-566": { "value": "
iii) Investment return and finance costs
Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as
FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified
as amortised cost.
Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and
lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost
of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the
expected life of the asset or liability .
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-585": { "value": "iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability . Interest income and expense Interest income received in relation to loans and advances to customers is calculated using the effective interest method which allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been no change in recognition of interest income from the comparative period. Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-578": { "value": "iii) Investment return and finance costs Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets classified as amortised cost. Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates the amortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income or expense over the expected life of the asset or liability . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-477": { "value": "
6b. Investment return
31 December 2023 31 December 2022
\u00a3m \u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
43.3
43.3
\u2013
8.4
8.4
On assets classified as FVOCI
77.0
(3.6)
73.4
50.3
2.3
52.6
On assets classified as amortised costs
4.1
\u2013
4.1
2.0
\u2013
2.0
Net unrealised losses
Unrealised (loss) / gain on forward
contracts
\u2013
(0.2)
(0.2)
\u2013
0.5
0.5
Share of associate profit/ loss
\u2013
(1.3)
(1.3)
\u2013
(0.1)
(0.1)
Interest receivable on cash and cash
equivalents
\u2013
3.6
3.6
\u2013
1.2
1.2
Total investment and
interest income
81.1
41.8
122.9
52.3
12.3
64.6
*1*3
*1
*1
*2
*1. Interest received during the year was \u00a376.8 million (2022: \u00a358.7 million).
*2. Total investment return excludes \u00a33.2 million of intra-group interest (2022: \u00a32.2 million).
*3. Realised losses on sales of debt securities classified as FVOCI are \u00a30.9 million (2022: \u00a32.2 million gain) .
", "dimensions": { "concept": "admiralgroupplc:DisclosureOfInvestmentReturn", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-525": { "value": "6b. Investment return
31 December 2023 31 December 2022
\u00a3m \u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
43.3
43.3
\u2013
8.4
8.4
On assets classified as FVOCI
77.0
(3.6)
73.4
50.3
2.3
52.6
On assets classified as amortised costs
4.1
\u2013
4.1
2.0
\u2013
2.0
Net unrealised losses
Unrealised (loss) / gain on forward
contracts
\u2013
(0.2)
(0.2)
\u2013
0.5
0.5
Share of associate profit/ loss
\u2013
(1.3)
(1.3)
\u2013
(0.1)
(0.1)
Interest receivable on cash and cash
equivalents
\u2013
3.6
3.6
\u2013
1.2
1.2
Total investment and
interest income
81.1
41.8
122.9
52.3
12.3
64.6
*1*3 *1 *1 *2 *1. Interest received during the year was \u00a376.8 million (2022: \u00a358.7 million). *2. Total investment return excludes \u00a33.2 million of intra-group interest (2022: \u00a32.2 million). *3. Realised losses on sales of debt securities classified as FVOCI are \u00a30.9 million (2022: \u00a32.2 million gain) . 7d. Interest income
31 December 2023 31 December 2022
\u00a3m \u00a3m
From loans and advances to customers
90.2
56.1
From finance leases
2.0
2.6
From bank interest
2.7
\u2013
94.9
58.7
Interest income receivable is recognised in the Income Statement using the effective interest method, which calculates the amortised cost of the financial asset and allocates the interest income over the expected product life. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-526": { "value": "6c. Finance costs
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on subordinated loan notes and other credit facilities
18.5
11.5
Interest payable on lease liabilities
2.0
2.0
Interest recoverable from co and re-insurers
(0.4)
(1.5)
Total finance costs
20.1
12.0
*1*2 *1. Interest paid during the year was \u00a320.5 million (2022: \u00a313.4 million). *2. See note 7e for details of credit facilities. Finance costs represent interest payable on the \u00a3305.1 million (2022: \u00a3200.0 million) subordinated notes and other financial liabilities. Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16 and does not result in a cash payment. 7e. Interest expense
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on loan backed securities
23.4
11.7
Interest payable on other credit facilities
3.4
0.9
Total interest expense
26.8
12.6
*1 *1. Interest paid in total net of swaps during the year was \u00a325.6 million (2022: \u00a311.9 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-478": { "value": "6c. Finance costs
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on subordinated loan notes and other credit facilities
18.5
11.5
Interest payable on lease liabilities
2.0
2.0
Interest recoverable from co and re-insurers
(0.4)
(1.5)
Total finance costs
20.1
12.0
*1*2 *1. Interest paid during the year was \u00a320.5 million (2022: \u00a313.4 million). *2. See note 7e for details of credit facilities. Finance costs represent interest payable on the \u00a3305.1 million (2022: \u00a3200.0 million) subordinated notes and other financial liabilities. Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16 and does not result in a cash payment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-479": { "value": "6d. Expected credit losses
31 December 2023 31 December 2022
Note \u00a3m \u00a3m
Expected credit (gains)/losses on financial investments
6f
(2.5)
(1.8)
Expected credit losses on loans and advances to customers
7b
33.5
20.7
Total expense for expected credit losses
31.0
18.9
*1 *1. Includes \u00a315.0 million (2022: \u00a37.2 million) of write offs, with total movement in the expected credit loss provision being \u00a333.5 million (2022: \u00a320.7 million). See note 6a and note 7b for details of the impairment methodology. Expected credit losses The expected credit loss model is a three-stage model based on forward looking information regarding changes in the credit quality since origination. Credit risk is measured using a Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) defined as follows: \u2022 Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic customer behaviour. Where customers have already met the definition of default this is 100%. For customers that are not in default the PD is determined through analysis of historic default data using external and internal data sources available at the reporting date. \u2022 Exposure at Default (EAD): The amount of balance at the time of default. For loans that are in arrears the EAD is taken as the current balance plus any expected interest arrears. For up-to-date loans the EAD is calculated as the expected balance 3 months prior to each period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears. \u2022 Loss Given Default (LGD): The amount of the asset not recovered following a borrower\u2019s default, determined through analysis of historic recovery performance. The PD is applied to the EAD to calculate the expected loss excluding recoveries. The LGD is then applied to this loss to calculate the total expected loss including recoveries. A forward-looking provision is also calculated, as set out later in this note. Loan assets are segmented into three stages of credit impairment: \u2022 Stage 1 \u2013 no significant increase in credit risk of the financial asset since inception; \u2022 Stage 2 \u2013 significant increase in credit risk of the financial asset since inception; \u2022 Stage 3 \u2013 financial asset is credit impaired. For assets in stage 1, the allowance is calculated as the expected credit losses from events within 12 months after the reporting date. For assets in stages 2 and 3 the allowance is calculated as the expected credit loss from events in the remaining lifetime of each asset. The allowance is calculated for each loan at an individual level. The following tables reconcile the opening and closing gross carrying amount and expected credit loss allowance. Loans originated in the year are initially classified as Stage 1. In the following tables, the loans are presented in line with their staging as at each year end.
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2023 \u00a3m \u00a3m \u00a3m \u00a3m
Gross carrying amount as at 1 January 2023
728.3
125.3
34.0
887.6
Transfers
Transfers from stage 1 to stage 2
(60.2)
60.2
\u2013
\u2013
Transfers from stage 1 to stage 3
(19.4)
\u2013
19.4
\u2013
Transfers from stage 2 to stage 1
51.7
(51.7)
\u2013
\u2013
Transfers from stage 2 to stage 3
\u2013
(10.8)
10.8
\u2013
Transfers from stage 3 to stage 1
0.3
\u2013
(0.3)
\u2013
Transfers from stage 3 to stage 2
\u2013
0.8
(0.8)
\u2013
Principal redemption payments
(315.0)
(48.8)
(5.5)
(369.3)
Write offs
\u2013
\u2013
(15.6)
(15.6)
EIR adjustment
0.3
0.2
0.2
0.7
New financial assets originated or purchased
393.6
50.8
13.4
457.8
Gross carrying amount as at 31 December 2023
779.6
126.0
55.6
961.2
Of the amounts written off during the year, \u00a38.3m related to loans which were still subject to enforcement activity (2022: \u00a3NIL). The loss allowance in place in relation to these loans at the time of writing off totalled \u00a37.9m (2022: \u00a3NIL). The EIR adjustment represents incremental acquisition costs incurred when advancing loans. These costs are spread over the expected economic lives of the loans under the effective interest rate method.
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2022 \u00a3m \u00a3m \u00a3m \u00a3m
Gross carrying amount as at 1 January 2022
510.6
68.4
28.0
607.0
Transfers
Transfers from stage 1 to stage 2
(62.6)
62.6
\u2013
\u2013
Transfers from stage 1 to stage 3
(9.4)
\u2013
9.4
\u2013
Transfers from stage 2 to stage 1
25.3
(25.3)
\u2013
\u2013
Transfers from stage 2 to stage 3
\u2013
(4.2)
4.2
\u2013
Transfers from stage 3 to stage 1
0.2
\u2013
(0.2)
\u2013
Transfers from stage 3 to stage 2
\u2013
0.4
(0.4)
\u2013
Principal redemption payments
(235.3)
(39.9)
(5.9)
(281.1)
Write offs
\u2013
\u2013
(7.2)
(7.2)
EIR adjustment
3.4
0.4
\u2013
3.8
New financial assets originated or purchased
496.1
62.9
6.1
565.1
Gross carrying amount as at
31 December 2022
728.3
125.3
34.0
887.6
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2023 \u00a3m \u00a3m \u00a3m \u00a3m
Expected credit loss allowance
as at 1 January 2023
13.4
23.5
26.2
63.1
Movements with a profit and loss impact
Transfers
Transfers from stage 1 to stage 2
(1.9)
5.0
\u2013
3.1
Transfers from stage 1 to stage 3
(0.7)
\u2013
1.9
1.2
Transfers from stage 2 to stage 1
3.4
(7.4)
\u2013
(4.0)
Transfers from stage 3 to stage 1
\u2013
\u2013
(0.1)
(0.1)
Changes in PDs/LGDs/EADs
(9.5)
(1.4)
13.6
2.7
New financial assets originated or purchased
8.0
12.5
9.8
30.3
Total net profit and loss charge in the period
(0.7)
8.7
25.2
33.2
Write offs
\u2013
\u2013
(15.0)
(15.0)
Transfers
Transfers from stage 2 to stage 3
\u2013
(3.2)
3.2
\u2013
Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
Expected credit loss allowance as at
31 December 2023
12.7
29.3
39.3
81.2
Stage 1 Stage 2 Stage 3 12- month ECL Lifetime ECL Lifetime ECL To t a l 2022 \u00a3m \u00a3m \u00a3m \u00a3m Expected credit loss allowance as at 1 January 2022 13.7 12.7 23.5 49.9 Movements with a profit and loss impact Transfers Transfers from stage 1 to stage 2 (1.5) 4.4 \u2013 2.9 Transfers from stage 1 to stage 3 (0.4) \u2013 1.0 0.6 Transfers from stage 2 to stage 1 1.8 (3.9) \u2013 (2.1) Transfers from stage 3 to stage 1 \u2013 \u2013 (0.1) (0.1) Changes in PDs/LGDs/EADs (10.1) (2.4) 4.4 (8.1) New financial assets originated or purchased 9.9 12.7 4.6 27.2 Total net profit and loss charge in the period (0.3) 10.8 9.9 20.4 Write offs \u2013 \u2013 (7.2) (7.2) Expected credit loss allowance as at 31 December 2022 13.4 23.5 26.2 63.1 Other movements with no profit and loss impact Transfers Transfers from stage 2 to stage 3 \u2013 (1.3) 1.3 \u2013 Transfers from stage 3 to stage 2 ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-534": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1
*1. Other funds include fixed income securities recognised as fair value through profit and loss .
6i. Financial and lease liabilities
31 December 2023
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest payable per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows
94.2
4.3
29.6
(10.7)
117.4
Other foreign exchange and non-cash
movements
(0.9)
\u2013
\u2013
1.4
0.5
Financial liability at the end of the period
315.2
759.6
55.0
81.2
1,211.0
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a31.9 million.
31 December 2022
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
446.5
20.0
105.3
776.2
Interest payable per Income Statement
11.0
11.7
1.3
2.0
26.0
Cashflows
(11.0)
256.5
(0.9)
(11.3)
233.3
Other foreign exchange and non-cash
movements
\u2013
\u2013
(0.4)
(7.5)
(7.9)
Financial liability at the end of the period
204.4
714.7
20.0
88.5
1,027.6
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a32.1 million. Subordinated notes Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024. The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes). The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met. There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes in certain circumstances but to date none of these circumstances has arisen. The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million (2022: \u00a3196.4 million). Other borrowings The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026, a \u00a320.0 million facility which expires in August 2024 and a \u20ac100.0 million facility which expires in August 2024. As at 31 December 2023 \u00a355.0 million was drawn under these facilities (2022: \u00a320.0 million), which is shown within other borrowings in the table above. This is made up of \u00a335.0 million from the facility expiring April 2026 (2022: \u00a3nil) and \u00a320.0 million from the pound sterling facility expiring August 2024 (2022: \u00a320.0 million). The carrying value is a reasonable approximation of fair value. Loan backed securities Asset backed senior loan note facilities of \u00a31,000.0 million have been established in relation to the Admiral Money business (see note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3759.6 million (2022: \u00a3714.7 million) of these facilities had been utilised. The carrying value is a reasonable approximation of fair value. Lease liabilities The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available for use by the Group. The lease liability is initially measured at the present value of remaining lease payments, which include the following: \u2022 Fixed payments (including in-substance fixed payments), less any lease incentives receivable \u2022 Variable lease payments that are based on an index or a rate \u2022 Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group\u2019s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing rate as the discount rate. Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability. Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining lease payments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-579": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss . ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-567": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss . 6f. Fair value measurement IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none). The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
31 December 2023
31 December 2022
FVTPL FVOCI FVTPL FVOCI
\u00a3m \u00a3m \u00a3m \u00a3m
Level one (quoted prices in active markets)
888.8
2,560.1
900.2
2,180.9
Level two (use of observable inputs)
17.6
\u2013
28.1
\u2013
Level three (use of significant unobservable inputs)
12.4
265.8
6.4
191.8
Total
918.8
2,825.9
934.7
2,372.7
*1 *1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information. Fair value measurement using significant unobservable inputs (level three) Level three investments consist of debt securities and equity securities. Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future performance will result in higher discount rates and lower values. Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs including market multiples and cashflow forecasts. There were no significant inter-relationships between unobservable inputs that materially affect fair values. The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-548": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-539": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss . ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-527": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss 6f. Fair value measurement IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none). The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
31 December 2023
31 December 2022
FVTPL FVOCI FVTPL FVOCI
\u00a3m \u00a3m \u00a3m \u00a3m
Level one (quoted prices in active markets)
888.8
2,560.1
900.2
2,180.9
Level two (use of observable inputs)
17.6
\u2013
28.1
\u2013
Level three (use of significant unobservable inputs)
12.4
265.8
6.4
191.8
Total
918.8
2,825.9
934.7
2,372.7
*1 *1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information. Fair value measurement using significant unobservable inputs (level three) Level three investments consist of debt securities and equity securities. Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future performance will result in higher discount rates and lower values. Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs including market multiples and cashflow forecasts. There were no significant inter-relationships between unobservable inputs that materially affect fair values. The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-505": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-480": { "value": "6e. Financial assets and liabilities The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Financial investments measured at FVTPL
Money market funds
587.5
706.5
Other funds
301.3
188.8
Derivative financial instruments
17.6
33.0
Equity Investments (designated FVTPL)
12.4
6.4
918.8
934.7
Financial investments classified as FVOCI
Corporate debt securities
2,040.6
1,701.2
Government debt securities
519.6
479.8
Private debt securities
242.7
166.6
2,802.9
2,347.6
Equity investments (designated FVOCI)
23.0
25.1
2,825.9
2,372.7
Financial assets measured at amortised cost
Deposits with credit institutions
116.7
101.4
Investment in Associates
1.0
2.4
Total financial investments
3,862.4
3,411.2
Other financial assets (measured at amortised cost)
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Insurance and other receivables
347.7
275.2
Loans and advances to customers (note 7)
879.4
823.9
Cash and cash equivalents
353.1
297.0
Total financial assets
5,442.6
4,807.3
Financial liabilities
Subordinated notes
315.2
204.4
Loan backed securities
759.6
714.7
Other borrowings
55.0
20.0
Derivative financial instruments
\u2013
\u2013
Subordinated and other financial liabilities
1,129.8
939.1
Trade and other payables
305.8
254.9
Lease liabilities
81.2
88.5
Total financial liabilities
1,516.8
1,282.5
*1 *1. Other funds include fixed income securities recognised as fair value through profit and loss . 6f. Fair value measurement IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none). The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
31 December 2023
31 December 2022
FVTPL FVOCI FVTPL FVOCI
\u00a3m \u00a3m \u00a3m \u00a3m
Level one (quoted prices in active markets)
888.8
2,560.1
900.2
2,180.9
Level two (use of observable inputs)
17.6
\u2013
28.1
\u2013
Level three (use of significant unobservable inputs)
12.4
265.8
6.4
191.8
Total
918.8
2,825.9
934.7
2,372.7
*1 *1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information. Fair value measurement using significant unobservable inputs (level three) Level three investments consist of debt securities and equity securities. Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future performance will result in higher discount rates and lower values. Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs including market multiples and cashflow forecasts. There were no significant inter-relationships between unobservable inputs that materially affect fair values. The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
6i. Financial and lease liabilities
31 December 2023
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest payable per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows
94.2
4.3
29.6
(10.7)
117.4
Other foreign exchange and non-cash
movements
(0.9)
\u2013
\u2013
1.4
0.5
Financial liability at the end of the period
315.2
759.6
55.0
81.2
1,211.0
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a31.9 million.
31 December 2022
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
446.5
20.0
105.3
776.2
Interest payable per Income Statement
11.0
11.7
1.3
2.0
26.0
Cashflows
(11.0)
256.5
(0.9)
(11.3)
233.3
Other foreign exchange and non-cash
movements
\u2013
\u2013
(0.4)
(7.5)
(7.9)
Financial liability at the end of the period
204.4
714.7
20.0
88.5
1,027.6
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a32.1 million. Subordinated notes Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024. The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes). The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met. There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes in certain circumstances but to date none of these circumstances has arisen. The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million (2022: \u00a3196.4 million). Other borrowings The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026, a \u00a320.0 million facility which expires in August 2024 and a \u20ac100.0 million facility which expires in August 2024. As at 31 December 2023 \u00a355.0 million was drawn under these facilities (2022: \u00a320.0 million), which is shown within other borrowings in the table above. This is made up of \u00a335.0 million from the facility expiring April 2026 (2022: \u00a3nil) and \u00a320.0 million from the pound sterling facility expiring August 2024 (2022: \u00a320.0 million). The carrying value is a reasonable approximation of fair value. Loan backed securities Asset backed senior loan note facilities of \u00a31,000.0 million have been established in relation to the Admiral Money business (see note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3759.6 million (2022: \u00a3714.7 million) of these facilities had been utilised. The carrying value is a reasonable approximation of fair value. Lease liabilities The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available for use by the Group. The lease liability is initially measured at the present value of remaining lease payments, which include the following: \u2022 Fixed payments (including in-substance fixed payments), less any lease incentives receivable \u2022 Variable lease payments that are based on an index or a rate \u2022 Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group\u2019s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing rate as the discount rate. Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability. Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining lease payments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-506": { "value": "6f. Fair value measurement IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects the observability of significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value hierarchy levels as at the end of the reporting period. There were no transfers between fair value hierarchy levels in the reporting period (2022: none). The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
31 December 2023
31 December 2022
FVTPL FVOCI FVTPL FVOCI
\u00a3m \u00a3m \u00a3m \u00a3m
Level one (quoted prices in active markets)
888.8
2,560.1
900.2
2,180.9
Level two (use of observable inputs)
17.6
\u2013
28.1
\u2013
Level three (use of significant unobservable inputs)
12.4
265.8
6.4
191.8
Total
918.8
2,825.9
934.7
2,372.7
*1 *1. Gains through the Income Statement are recognised within Investment return. See note 6b for further information. Fair value measurement using significant unobservable inputs (level three) Level three investments consist of debt securities and equity securities. Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future performance will result in higher discount rates and lower values. Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs including market multiples and cashflow forecasts. There were no significant inter-relationships between unobservable inputs that materially affect fair values. The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-535": { "value": "Fair value measurement using significant unobservable inputs (level three) Level three investments consist of debt securities and equity securities. Debt securities are comprised primarily of investments in debt funds which are valued at the proportion of the Group\u2019s holding of the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate direct lending, residential and commercial mortgages, and other private debt. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments; these valuations are performed by the external fund managers. The key unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets. A deterioration of the credit performance or expected future performance will result in higher discount rates and lower values. Equity securities are primarily comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the proportion of the Group\u2019s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs including market multiples and cashflow forecasts. There were no significant inter-relationships between unobservable inputs that materially affect fair values. The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
31 December 2023
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2023
31.6
166.6
198.2
Gains / (losses) recognised in IS
(0.1)
10.0
9.9
Gains / (losses) recognised in OCI
(1.0)
0.8
(0.2)
Purchases
6.1
89.6
95.7
Disposals
(1.1)
(24.3)
(25.4)
Balance as at 31 December 2023
35.5
242.7
278.2
31 December 2022
Equity Securities Debt Securities To t a l
Level Three Investments \u00a3m \u00a3m \u00a3m
Balance as at 1 January 2022
21.5
125.5
147.0
Gains / (losses) recognised in IS
1.8
3.9
5.7
Gains / (losses) recognised in OCI
1.1
(9.6)
(8.5)
Purchases
9.4
74.4
83.8
Disposals
(2.5)
(27.6)
(30.1)
Translation differences
0.3
\u2013
0.3
Balance as at 31 December 2022
31.6
166.6
198.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantUnobservableInputsUsedInFairValueMeasurementOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-528": { "value": "6g. Cash and cash equivalents
31 December 2023 31 December 2022
\u00a3m \u00a3m
Cash at bank and in hand
353.1
297.0
Total cash and cash equivalents
353.1
297.0
*1 *1 Cash at bank and in hand includes \u00a338.9 million (2022: \u00a336.6 million) related to special purpose entities which is not available for use by the Group. Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term deposits with original maturities of three months or less. An assessment has been completed for impairment purposes in line with that set out in note 6a above. Given the short-term duration of these assets and low risk of these assets, no impairment provision has been recognised. For cash at bank and cash deposits and other receivables, the fair value approximates to the book value due to their short maturity.", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-481": { "value": "6g. Cash and cash equivalents
31 December 2023 31 December 2022
\u00a3m \u00a3m
Cash at bank and in hand
353.1
297.0
Total cash and cash equivalents
353.1
297.0
*1 *1 Cash at bank and in hand includes \u00a338.9 million (2022: \u00a336.6 million) related to special purpose entities which is not available for use by the Group. Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term deposits with original maturities of three months or less. An assessment has been completed for impairment purposes in line with that set out in note 6a above. Given the short-term duration of these assets and low risk of these assets, no impairment provision has been recognised. For cash at bank and cash deposits and other receivables, the fair value approximates to the book value due to their short maturity.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-536": { "value": "6h. Other assets Insurance and other receivables
31 December 2023 31 December 2022
\u00a3m \u00a3m
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Prepayments and accrued income
62.2
41.2
Total insurance and other receivables
409.9
316.4
Insurance receivables Insurance receivables are measured at historic cost. Given that non-repayment would result in a withdrawn policy and the short-term duration of these assets, no bad debt provision has been recognised. Insurance receivables reported within other receivables are comprised of the external coinsurer\u2019s share of premium receivable, with the related liability in respect of written premium presented within amounts owed to the coinsurer. Trade and other receivables Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances. Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a combination of (i) Aged debtor analysis (ii) Historic experience of write offs for each receivable (iii) Any specific indicators of credit deterioration observed, and (iv) Management judgement. The level of provision is immaterial. The amortised cost carrying amount of receivables is a reasonable approximation of fair value. Contract balances The following table provides information about receivables and contract assets from contracts with customers. Both balances are included in Trade and other receivables.
31 December 2023 31 December 2022
\u00a3m \u00a3m
Receivables
14.9
20.0
Contract assets
17.0
19.3
The contract asset relates to the Group\u2019s right to consideration for work undertaken in the law companies on behalf of clients which is ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee has been billed. Significant changes in the contract asset balance during the period are as follows:
31 December 2023
Contract asset balance \u00a3m
At 1 January 2022
23.8
Revenue recognised
16.3
Transferred to trade receivables
(20.2)
Write offs
(0.6)
At 31 December 2022
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write offs
(0.6)
At 31 December 2023
17.0
The amount of revenue recognised in 2023 from performance obligations satisfied (or partially satisfied) in previous periods in relation to the above contract balances is \u00a3nil (2022: \u00a3nil). 10. Taxation 10a. Accounting policy Income tax on the profit or loss for the periods presented comprise of current and deferred tax. (i) Current tax Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods. Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in the Income Statement. (ii) Deferred tax Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are expected to apply in the period when the liability is settled, or the asset is realised. The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of property, plant and equipment, reserve movements and share scheme charges. The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or directly in equity respectively. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable temporary differences and reviewing future profit projections for the businesses. 10b. Taxation
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Current tax
Corporation tax on profits for the year
91.6
107.6
Under/(over) provision relating to prior periods
21.3
(0.8)
Current tax charge
112.9
106.8
Deferred tax
Current period deferred taxation movement
0.7
(31.6)
(Over)/Under provision relating to prior periods
(8.0)
0.7
Total tax charge per Consolidated Income Statement
105.6
75.9
Factors affecting the total tax charge are:
31 December 31 December
2023 2022 (restated)
\u00a3m \u00a3m
Profit before tax
442.8
361.2
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
104.1
68.6
Expenses and provisions not deductible for tax purposes
3.0
2.2
Non-taxable income
(13.4)
(6.0)
Impact of change in UK tax rate on deferred tax balances
(0.4)
(5.6)
Adjustments relating to prior periods
13.5
(0.2)
Impact of different overseas tax rates
(8.9)
3.6
Unrecognised deferred tax
7.7
13.3
Total tax charge for the period as above
105.6
75.9
Corporation tax assets as at 31 December 2023 totalled \u00a320.4 million, with corporation tax liabilities of \u00a34.9 million (2022: \u00a313.9 million liability and \u00a39.1 million asset). The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25% was announced in the 2021 Budget and has come into effect from 1 April 2023. Adjustments relating to prior periods are higher than previous periods, with \u00a311.7 million of the above total impact of \u00a313.5 million due to the Group deciding to settle a historic Italian tax matter, relating mainly to cross border matters. Further costs of \u00a36.8 million relating to this inspection, such as interest and penalties, are included in Other Group costs within the Income Statement. These costs are expected to be non-recurring. In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of the agreement was to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate and this included the introduction of a new global minimum corporate income tax rate of 15% - referred to as the Pillar Two rules. Legislation has now been enacted in various countries (including the United Kingdom) and draft legislation or announcements have been made in others, with the rules first coming into effect for the Group from 1 January 2024. Under the new rules, the Group may be required to pay top-up taxes either in the UK ultimate parent location or in the overseas jurisdiction if a jurisdiction has an effective tax rate of less than 15%, as calculated under the rules. The Group expects top-up tax to arise in relation to our operations in Gibraltar, where the statutory corporate tax rate is 12.5%. However, since the enacted Pillar Two legislation is only effective from 1 January 2024, the Group has no related current tax impact for the year ended 31 December 2023. If the Pillar Two rules had applied in the year ended 31 December 2023, top-up tax arising in relation to the profits in Gibraltar would have been immaterial to the Group. The Pillar Two rules are complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact for future periods. Current modelling indicates that the top-up tax will primarily be dependent on the profits arising in Gibraltar. Based on current forecasts and the expected profit mix across the Group for the next two financial years (2024 and 2025), it is not expected that the Pillar Two rules will result in a material increase in the Group effective tax rate compared to the average of the last three years (2021-2023: 21% average). The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. In addition to the Pillar Two legislation, the Government of Gibraltar announced on 24 January 2024 that the taxation of interest income as trading income is to be extended to include that of insurers for accounting periods beginning on or after 1 February 2024. This change would result in additional investment and interest income of the Group\u2019s subsidiary, Admiral Insurance (Gibraltar) Limited becoming taxable from 1 January 2025 at the Gibraltar corporation tax rate of 12.5%. If the change in treatment had taken effect for the current financial year ended 31 December 2023, the impact to the Group on current tax and deferred tax is estimated to be immaterial. The Group are continuing to review the draft legislation against the particular nature of the investments held in Gibraltar to determine how widely it applies. It should be noted that there will be interactions between these two legislative changes. Additional corporation tax in Gibraltar payable as a result of the proposed changes to the taxation of interest income will correspondingly reduce the Pillar Two top-up tax required to be paid by the Group for periods ending 31 December 2025 onwards . Analysis of deferred tax asset/(liability)
Tax
treatment Carried Insurance
of share Capital forward Fair value Hedging finance Other
schemes allowances losses reserve reserve reserve differences To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Balance brought forward at
1 January 2022 (restated)
8.5
7.8
8.4
(5.8)
\u2013
3.0
(1.2)
20.7
Tax treatment of share scheme
charges through income or expense
1.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
Tax treatment of share scheme
charges through reserves
(6.3)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(6.3)
Capital allowances
\u2013
(0.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.7)
Carried forward losses
\u2013
\u2013
29.2
\u2013
\u2013
\u2013
\u2013
29.2
Movement in fair value reserve
\u2013
\u2013
\u2013
13.0
\u2013
\u2013
\u2013
13.0
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
(7.0)
\u2013
\u2013
(7.0)
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(22.8)
\u2013
(22.8)
Other difference
\u2013
\u2013
\u2013
(0.3)
\u2013
\u2013
1.4
1.1
Balance carried forward at
31 December 2022 (restated)
3.4
7.1
37.6
6.9
(7.0)
(19.8)
0.2
28.4
Tax treatment of share scheme
charges through income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share scheme
charges through reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
(5.7)
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
9.7
Other difference
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2023
7.2
(3.9)
53.5
1.2
(2.5)
(10.1)
0.7
46.1
Positive amounts presented above relate to a deferred tax asset position. The deferred tax asset has increased during the year, mainly relating to unused tax losses in the UK and Gibraltar which are recognised as it is considered probable that there are sufficient future taxable profits available to utilise the losses. At 31 December 2023, the Group had unused tax losses amounting to \u00a3233.0 million (2022: \u00a3322.0 million, including losses of compare. com which was disposed of in 2023) and other deductible timing differences of \u00a343.4 million, relating primarily to the Group\u2019s businesses in the US and Spain for which no deferred tax assets have been recognised. This is due to uncertainty over the availability and timing of future taxable profits against which to utilise these deferred tax assets. The earliest expiry date for the US tax losses is 2029, with no expiry for the losses in Spain.
11. Other Assets and Other Liabilities
11a. Accounting policy
(i) Property and equipment, and depreciation
All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method
to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements.
The right-of-use asset is measured at cost, which comprises the following:
\u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements)
\u2022 Any lease payments made at or before the commencement date less any lease incentives received
\u2022 Any initial direct costs, and
\u2022 Restoration costs.
The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis.
The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption.
(ii) Impairment of property and equipment
In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are
any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying
value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are
recognised through the Income Statement.
(iii) Intangible assets
Goodwill
All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries
and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.
The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing
the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of
acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the
amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has
ceased as required by IAS 38.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to
business segment and is reviewed annually for impairment.
The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment.
Impairment of goodwill
The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill
to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income
Statement and are not subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU.
The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to
three years. Cashflows beyond this period are considered, but not included in the calculation.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing
and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past
practices and expected future changes in the market.
The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which
is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs
incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of
the systems and amortisation commences when the software is available for use.
The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any
impairment exists. Impairment may be reversed if conditions subsequently improve.
Customer contracts and relationships
Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the
term of the contract), amortisation commences when the contract begins.
The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value
being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve.
(iv) Provisions, contingent liabilities and contingent assets
Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet
date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably.
Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation
arising from a past event that is contingent on a future event, a contingent liability is disclosed.
Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-
occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed.
11b. Property and equipment
Improvements to ROU
short leasehold Computer Office Furniture and Asset \u2013 Leasehold
buildings equipment equipment fittings buildings To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2022
37.0
68.9
21.9
9.9
103.3
241.0
Additions
1.7
7.0
0.6
0.7
1.3
11.3
Impairment
\u2013
\u2013
\u2013
\u2013
(1.3)
(1.3)
Disposals
(1.6)
(2.7)
(1.5)
(0.1)
(9.7)
(15.6)
Foreign exchange and other
movements
0.4
0.7
0.4
0.2
1.4
3.1
At 31 December 2022
37.5
73.9
21.4
10.7
95.0
238.5
Depreciation
At 1 January 2022
26.3
57.3
19.9
8.5
25.8
137.8
Charge for the year
3.2
5.5
0.8
0.6
8.1
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.7)
(0.7)
Disposals
(1.6)
(2.4)
(1.5)
\u2013
(3.2)
(8.7)
Foreign exchange and other
movements
0.2
0.7
0.3
0.1
0.8
2.1
At 31 December 2022
28.1
61.1
19.5
9.2
30.8
148.7
Net book amount
At 1 January 2022
10.7
11.6
2.0
1.4
77.5
103.2
Net book amount
At 31 December 2022
9.4
12.8
1.9
1.5
64.2
89.8
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions
3.5
4.9
0.2
0.7
3.3
12.6
Impairment
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements
(0.4)
(0.7)
(0.5)
0.1
1.1
(0.4)
At 31 December 2023
29.7
57.3
18.3
9.6
99.9
214.8
Depreciation
At 1 January 2023
28.1
61.1
19.5
9.2
30.8
148.7
Charge for the year
3.1
6.4
0.9
0.8
7.0
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(9.5)
(20.8)
(2.8)
(1.7)
(5.4)
(40.2)
Foreign exchange and other
movements
(0.1)
(0.9)
(0.4)
0.1
(0.5)
(1.8)
At 31 December 2023
21.6
45.8
17.2
8.4
31.7
124.7
Net book amount
At 31 December 2023
8.1
11.5
1.1
1.2
68.2
90.1
11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999. As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the carrying amount and therefore no impairment losses have been recognised. Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying amount of \u00a324.1 million as at 31 December 2023 (2022: \u00a333.4 million) and a remaining amortisation period of 3 years. Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the recoverable amount, no terminal growth rate or discounting is applied. Refer to the accounting policy for goodwill for further information. 11d. Trade and other payables
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Trade payables
42.3
22.7
Other tax and social security
11.9
14.9
Amounts owed to co-insurers
156.9
115.8
Other payables
42.5
38.2
Accruals and deferred income
52.2
63.3
Total trade and other payables
305.8
254.9
Analysis of accruals and deferred income
Accruals
28.3
41.0
Deferred income
23.9
22.3
Total accruals and deferred income as above
52.2
63.3
11e. Leases The Group occupies various properties under leasing arrangements that are now recognised as right of use assets and lease liabilities. Amounts recognised in the Statement of Financial Position are as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Lease liabilities
Current
13.7
8.3
Non-Current
67.5
80.2
To t al
81.2
88.5
See note 11b for right of use assets depreciation and the carrying amount of right of use assets at the end of the reporting period. Only one class of underlying assets is identified as leasehold buildings. Total cash outflows in relation to leases is disclosed under 6i. The Group has no significant financial commitments other than those accounted for as right of use assets and lease liabilities under IFRS 16. 11f. Contingent liabilities The Group\u2019s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by the relevant tax authority. One of the Group\u2019s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which the Company is exposed to has been indemnified by the Admiral Group up to a cap of \u00a322 million. No material provisions have been made in these financial statements in relation to the matters noted above. The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations or similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisers if appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision is established to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts are unclear or because further time is needed to properly assess the merits of the case or form a reliable estimate of its financial effect. In these circumstances, specific disclosure of a contingent liability and an estimate of its financial effect will be made where material, unless it is not practicable to do so. The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group\u2019s financial position, operations or cashflows, and as such, no material provisions are currently held in relation to such matters. A number of the Group\u2019s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-507": { "value": "6h. Other assets Insurance and other receivables
31 December 2023 31 December 2022
\u00a3m \u00a3m
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Prepayments and accrued income
62.2
41.2
Total insurance and other receivables
409.9
316.4
Insurance receivables Insurance receivables are measured at historic cost. Given that non-repayment would result in a withdrawn policy and the short-term duration of these assets, no bad debt provision has been recognised. Insurance receivables reported within other receivables are comprised of the external coinsurer\u2019s share of premium receivable, with the related liability in respect of written premium presented within amounts owed to the coinsurer. Trade and other receivables Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances. Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a combination of (i) Aged debtor analysis (ii) Historic experience of write offs for each receivable (iii) Any specific indicators of credit deterioration observed, and (iv) Management judgement. The level of provision is immaterial. The amortised cost carrying amount of receivables is a reasonable approximation of fair value. Contract balances The following table provides information about receivables and contract assets from contracts with customers. Both balances are included in Trade and other receivables.
31 December 2023 31 December 2022
\u00a3m \u00a3m
Receivables
14.9
20.0
Contract assets
17.0
19.3
The contract asset relates to the Group\u2019s right to consideration for work undertaken in the law companies on behalf of clients which is ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee has been billed. Significant changes in the contract asset balance during the period are as follows:
31 December 2023
Contract asset balance \u00a3m
At 1 January 2022
23.8
Revenue recognised
16.3
Transferred to trade receivables
(20.2)
Write offs
(0.6)
At 31 December 2022
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write offs
(0.6)
At 31 December 2023
17.0
The amount of revenue recognised in 2023 from performance obligations satisfied (or partially satisfied) in previous periods in relation to the above contract balances is \u00a3nil (2022: \u00a3nil). 7c. Finance lease receivables Loans and advances to customers include the following finance leases. The Group is the lessor for leases of cars
31 December 2023 31 December 2022
\u00a3m \u00a3m
Gross investment in finance leases, receivable
Less than 1 year
7.0
9.8
Between 1 to 5 years
14.3
25.7
More than 5 years
\u2013
\u2013
21.3
35.5
Unearned finance income
(2.2)
(4.0)
Net investment in lease receivables
19.1
31.5
Less impairment allowance
(0.3)
(0.8)
18.8
30.7
Net investment in finance leases, receivable
Less than 1 year
5.7
7.9
Between 1 to 5 years
13.4
23.7
More than 5 years
\u2013
\u2013
19.1
31.6
The net investment in finance leases shown above includes an unguaranteed residual value of \u00a30.2 million (2022: The net investment in finance leases shown above is net of the unguaranteed residual value of \u00a30.3 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-482": { "value": "6h. Other assets Insurance and other receivables
31 December 2023 31 December 2022
\u00a3m \u00a3m
Insurance receivables
272.7
187.6
Trade and other receivables
75.0
87.6
Prepayments and accrued income
62.2
41.2
Total insurance and other receivables
409.9
316.4
Insurance receivables Insurance receivables are measured at historic cost. Given that non-repayment would result in a withdrawn policy and the short-term duration of these assets, no bad debt provision has been recognised. Insurance receivables reported within other receivables are comprised of the external coinsurer\u2019s share of premium receivable, with the related liability in respect of written premium presented within amounts owed to the coinsurer. Trade and other receivables Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances. Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a combination of (i) Aged debtor analysis (ii) Historic experience of write offs for each receivable (iii) Any specific indicators of credit deterioration observed, and (iv) Management judgement. The level of provision is immaterial. The amortised cost carrying amount of receivables is a reasonable approximation of fair value. Contract balances The following table provides information about receivables and contract assets from contracts with customers. Both balances are included in Trade and other receivables.
31 December 2023 31 December 2022
\u00a3m \u00a3m
Receivables
14.9
20.0
Contract assets
17.0
19.3
The contract asset relates to the Group\u2019s right to consideration for work undertaken in the law companies on behalf of clients which is ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee has been billed. Significant changes in the contract asset balance during the period are as follows:
31 December 2023
Contract asset balance \u00a3m
At 1 January 2022
23.8
Revenue recognised
16.3
Transferred to trade receivables
(20.2)
Write offs
(0.6)
At 31 December 2022
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write offs
(0.6)
At 31 December 2023
17.0
The amount of revenue recognised in 2023 from performance obligations satisfied (or partially satisfied) in previous periods in relation to the above contract balances is \u00a3nil (2022: \u00a3nil). ", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-580": { "value": "Trade and other receivables Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances. Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for trade receivables per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, the provision is based on a combination of (i) Aged debtor analysis (ii) Historic experience of write offs for each receivable (iii) Any specific indicators of credit deterioration observed, and (iv) Management judgement. The level of provision is immaterial. The amortised cost carrying amount of receivables is a reasonable approximation of fair value. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-529": { "value": "6i. Financial and lease liabilities
31 December 2023
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest payable per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows
94.2
4.3
29.6
(10.7)
117.4
Other foreign exchange and non-cash
movements
(0.9)
\u2013
\u2013
1.4
0.5
Financial liability at the end of the period
315.2
759.6
55.0
81.2
1,211.0
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a31.9 million.
31 December 2022
Subordinated Loan backed Other borrowings Lease
notes securities and derivatives liabilities To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial liability at the start of the period
204.4
446.5
20.0
105.3
776.2
Interest payable per Income Statement
11.0
11.7
1.3
2.0
26.0
Cashflows
(11.0)
256.5
(0.9)
(11.3)
233.3
Other foreign exchange and non-cash
movements
\u2013
\u2013
(0.4)
(7.5)
(7.9)
Financial liability at the end of the period
204.4
714.7
20.0
88.5
1,027.6
*1 *1. Cash amounts relating to the interest proportion of the lease liability were \u00a32.1 million. Subordinated notes Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024. The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes). The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met. There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes in certain circumstances but to date none of these circumstances has arisen. The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million (2022: \u00a3196.4 million). Other borrowings The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026, a \u00a320.0 million facility which expires in August 2024 and a \u20ac100.0 million facility which expires in August 2024. As at 31 December 2023 \u00a355.0 million was drawn under these facilities (2022: \u00a320.0 million), which is shown within other borrowings in the table above. This is made up of \u00a335.0 million from the facility expiring April 2026 (2022: \u00a3nil) and \u00a320.0 million from the pound sterling facility expiring August 2024 (2022: \u00a320.0 million). The carrying value is a reasonable approximation of fair value. Loan backed securities Asset backed senior loan note facilities of \u00a31,000.0 million have been established in relation to the Admiral Money business (see note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3759.6 million (2022: \u00a3714.7 million) of these facilities had been utilised. The carrying value is a reasonable approximation of fair value. Lease liabilities The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available for use by the Group. The lease liability is initially measured at the present value of remaining lease payments, which include the following: \u2022 Fixed payments (including in-substance fixed payments), less any lease incentives receivable \u2022 Variable lease payments that are based on an index or a rate \u2022 Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group\u2019s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing rate as the discount rate. Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability. Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining lease payments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-540": { "value": "Subordinated notes Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024. The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes). The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met. There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes in certain circumstances but to date none of these circumstances has arisen. The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million (2022: \u00a3196.4 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-508": { "value": "Subordinated notes Financial liabilities are inclusive of two separate issuances of subordinated notes totalling \u00a3305.1 million. The first subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5% per annum and a total value of \u00a3200 million. In July 2023 these notes were tendered with a take-up of 72.45%, with the remaining amount retaining the original redemption date of 25 July 2024. The second subordinated notes were issued on 6 July 2023 at a fixed rate of 8.5% per annum, with a total value of \u00a3250 million and a redemption date of 6 January 2034 (subject to various provisions of the terms and conditions governing the notes). The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves. In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other senior creditors have been met. There have been no defaults on any of the notes during the year. The Group has the requirement to defer interest payments on the notes in certain circumstances but to date none of these circumstances has arisen. The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2023 is \u00a3329.8 million (2022: \u00a3196.4 million). Other borrowings The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026, a \u00a320.0 million facility which expires in August 2024 and a \u20ac100.0 million facility which expires in August 2024. As at 31 December 2023 \u00a355.0 million was drawn under these facilities (2022: \u00a320.0 million), which is shown within other borrowings in the table above. This is made up of \u00a335.0 million from the facility expiring April 2026 (2022: \u00a3nil) and \u00a320.0 million from the pound sterling facility expiring August 2024 (2022: \u00a320.0 million). The carrying value is a reasonable approximation of fair value. Loan backed securities Asset backed senior loan note facilities of \u00a31,000.0 million have been established in relation to the Admiral Money business (see note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3759.6 million (2022: \u00a3714.7 million) of these facilities had been utilised. The carrying value is a reasonable approximation of fair value. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-509": { "value": "Lease liabilities The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes available for use by the Group. The lease liability is initially measured at the present value of remaining lease payments, which include the following: \u2022 Fixed payments (including in-substance fixed payments), less any lease incentives receivable \u2022 Variable lease payments that are based on an index or a rate \u2022 Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group\u2019s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing rate as the discount rate. Subsequently, lease payments are allocated to the lease liability, split between repayments of principal and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability. Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining lease payments. 11e. Leases The Group occupies various properties under leasing arrangements that are now recognised as right of use assets and lease liabilities. Amounts recognised in the Statement of Financial Position are as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Lease liabilities
Current
13.7
8.3
Non-Current
67.5
80.2
To t al
81.2
88.5
See note 11b for right of use assets depreciation and the carrying amount of right of use assets at the end of the reporting period. Only one class of underlying assets is identified as leasehold buildings. Total cash outflows in relation to leases is disclosed under 6i. The Group has no significant financial commitments other than those accounted for as right of use assets and lease liabilities under IFRS 16. ", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-461": { "value": "
7. Loans and Advances to Customers
7a. Accounting policies
Loans and advances to customers consist of unsecured personal loans and car finance products.
Classification
Loans and advances to customers are measured at amortised cost. This is because assets are held in order to collect contractual cashflows
and the contractual terms of the financial asset demand cash inflows which are solely payments of principal and interest on the principal
amount outstanding.
Interest income and expense
Interest income received in relation to loans and advances to customers is calculated using the effective interest method which
allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been no change in
recognition of interest income from the comparative period.
Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts.
Finance leases
Included within loans and advances to customers are personal contract purchase (PCP) and hire purchase (HP) arrangements which are
classified as finance leases under IFRS 16. A receivable equal to the net investment in the lease has been recognised. The net investment
is equal to the gross investment in the lease discounted at the rate implicit in the lease.
Lease interest income is recognised within interest income in the Income Statement over the term of the lease using the effective
interest rate method.
The title to the underlying vehicle remains with the Group until the lessee has made all contractual payments, at which point ownership
is transferred to the lessee. In the event of breach of contract, such as non-payment, the vehicle itself acts as collateral for the finance
lease, becoming available for repossession in most cases.
Some of the ways in which the Group maintains its rights to the vehicle, and thus manages the risk of loss associated with the finance
lease, include:
\u2022 The Group does not enter into any finance leases with a maximum loan-to-value limit, reducing the risk of shortfall on termination of
the contract
\u2022 The Group requires the lessee to insure the underlying vehicle at all times, reducing the risk of non-recovery if the asset is stolen
or destroyed
\u2022 The estimated future value of each vehicle, which is sourced externally, is considered in the pricing of the lease contracts to provide
protection against deterioration in that value.
7b. Loans and advances to customers
31 December 2023 31 December 2022
\u00a3m \u00a3m
Loans and advances to customers \u2013 gross carrying amount
956.8
887.4
Loans and advances to customers \u2013 provision
(81.7)
(63.7)
Total loans and advances to customers \u2013 Admiral Money
875.1
823.7
Total loans and advances to customers \u2013 Other
4.3
0.2
Total loans and advances to customers
879.4
823.9
Loans and advances to customers are comprised of the following:
31 December 2023 31 December 2022
\u00a3m \u00a3m
Unsecured personal loans
937.7
855.8
Finance leases
19.1
31.6
Other
4.4
0.2
Total loans and advances to customers, gross
961.2
887.6
Fair value measurement
The loans and advances are recognised at fair value at the point of origination and then subsequently on an amortised cost basis.
This carrying value is deemed a reasonable approximation of fair value, which is calculated based on estimates using the present value of
future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
Expected credit losses
The expected credit loss model is a three-stage model based on forward looking information regarding changes in the credit quality since
origination. Credit risk is measured using a Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) defined
as follows:
\u2022 Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic customer behaviour.
Where customers have already met the definition of default this is 100%. For customers that are not in default the PD is determined
through analysis of historic default data using external and internal data sources available at the reporting date.
\u2022 Exposure at Default (EAD): The amount of balance at the time of default. For loans that are in arrears the EAD is taken as the current
balance plus any expected interest arrears. For up-to-date loans the EAD is calculated as the expected balance 3 months prior to each
period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears.
\u2022 Loss Given Default (LGD): The amount of the asset not recovered following a borrower\u2019s default, determined through analysis of
historic recovery performance.
The PD is applied to the EAD to calculate the expected loss excluding recoveries. The LGD is then applied to this loss to calculate the total
expected loss including recoveries. A forward-looking provision is also calculated, as set out later in this note.
Loan assets are segmented into three stages of credit impairment:
\u2022 Stage 1 \u2013 no significant increase in credit risk of the financial asset since inception;
\u2022 Stage 2 \u2013 significant increase in credit risk of the financial asset since inception;
\u2022 Stage 3 \u2013 financial asset is credit impaired.
For assets in stage 1, the allowance is calculated as the expected credit losses from events within 12 months after the reporting date.
For assets in stages 2 and 3 the allowance is calculated as the expected credit loss from events in the remaining lifetime of each asset.
The allowance is calculated for each loan at an individual level.
Significant increase in credit risk (SICR) (stage 2)
As explained above, stage 1 assets have an ECL allowing for losses in the next twelve months, and stage 2 or 3 assets have an ECL allowing
for losses over the remaining lifetime of the contract. An asset moves to stage 2 when its credit risk has increased significantly since initial
recognition. IFRS 9 does not prescribe a definition of significant increase in credit risk but does include a rebuttable presumption that this
does occur for loan assets which are 30 days past due (which the Group does not rebut).
The Group has deemed a significant increase in credit risk to have occurred where:
\u2022 The loan is in arrears, or
\u2022 The behavioural PD has moved outside a specified threshold from the application PD
\u2022 The customer is identified as being two or more payments in arrears on a credit product with a third party and reported to the credit
reference agency.
The Group maintains two probation periods:
\u2022 Where a customer is up to date but previously has been 30+ days past due they will be held in stage 2 for 6 months;
\u2022 Where a customer is up to date but previously Credit impaired (stage 3) they will be held in stage 2 for 12 months.
A range of metrics including accuracy rates, false positive rates, oscillation rates and the Mathews corelation are monitored in relation to
loans which are held in the above probation periods.
Credit impaired (stage 3)
The Group does not rebut the presumption within IFRS 9 that default has occurred when an exposure is greater than 90 days past due,
which is consistent with a customer being three or more payments in arrears. In addition, a loan is deemed to be credit impaired where:
\u2022 There is an Individual Voluntary Arrangement (IVA) agreement confirmed or proposed, or
\u2022 Customer has started or progressed bankruptcy action, or
\u2022 A repayment plan is in place, or
\u2022 A customer is deceased.
As at 31 December 2023, there were 7,300 loans totalling \u00a340.1m that were subject to forbearance (2022: 4,400 loans totalling
\u00a321.5m). Significant categories of forbearance arrangements include Bankruptcy, Debt Management Plans and Individual
Voluntary Arrangements.
Judgements required - Post Model Adjustments (\u2018PMA\u2019s)
As at 31 December 2023, the expected credit loss allowance included PMAs totalling \u00a39.2 million (2022: \u00a311.3 million).
31 December 2023 31 December 2022
Post Model Adjustments \u00a3m \u00a3m
Model performance
2.0
3.9
Cost of Living
6.5
6.5
Economic scenarios
0.7
0.9
9.2
11.3
PMAs are calculated using management judgement and analysis. The key categories of PMAs are as follows:
Model performance
The model has been calibrated on historical data that may not fully reflect the risk of losses in the recent and ongoing, highly volatile
macro-economic period. In addition, interest rate rises in 2023 have created the potential for performance uncertainty. For this reason
a Model Performance PMA has been made. It effectively recalibrates the modelled probability of default of the loans to reflect recent
monitored performance. A refresh of the PD model during 2023 has reduced the PMA in comparison to the previous year end.
Cost of Living
This PMA captures the risk of customers falling into a negative affordability position, whereby customers are no longer able to meet their
credit commitments due to higher expenditure driven by higher prices and increased mortgage payments, when their standard variable
or fixed term rate comes to an end. A PMA is held to acknowledge this, using both external and internal data.
Economic scenarios
An uncertainty factor determined by management judgment has been added to reflect the recent volatility in unemployment forecasts.
This factor has been reduced as variability between successive forecasts has fallen.
Write off policy
Loans are written off where there is no reasonable expectation of recovery. The Group\u2019s policy is to write off balances to their
estimated net realisable value. Write offs are actioned on a case-by-case basis taking into account the operational position and the
collections strategy.
Forward-looking information
Under IFRS 9 the provision must reflect an unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes. The means by which the Group has determined this is to run scenario analysis.
Management judgment has been used to define the weighting and severity of the different scenarios based on available data.
The key economic driver of credit losses from the scenarios is the likelihood of a customer entering hardship through unemployment.
Unemployment forecasts include a risk grade split of PD based on the correlation between grade-level default rates observed relative
to the change in unemployment rates in the previous downturn, adjusted for the unemployment forecast expected in the current
economic environment.
The scenario weighting assumptions used are detailed below, along with the unemployment rate assumed in each scenario at
31 December 2023.
31 December 2023 31 December 2022
Scenario peak Scenario peak
Unemployment 31 December 2023 Unemployment 31 December 2022
rate Weighting rate Weighting
Base
4.7%
50%
4.8%
40%
Upturn
3.5%
10%
3.5%
10%
Downturn
6.0%
30%
6.0%
40%
Severe
8.0%
10%
7.9%
10%
The economic scenarios and forecasts have been updated in conjunction with a third party economics provider. The probability
weightings reflect the view that there is a probability of 90% attached to recessionary outcomes.
Sensitivities to key areas of estimation uncertainty
The key areas of estimation uncertainty identified, as per note 3 to the financial statements, are in the PD and the forward-
looking scenarios.
31 December 2023 31 December 2022
31 December 2023 Sensitivity 31 December 2022 Sensitivity
Weighting \u00a3m Weighting \u00a3m
Base
50%
(1.1)
40%
(1.3)
Upturn
10%
(5.2)
10%
(6.9)
Downturn
30%
2.5
40%
1.4
Severe
10%
8.2
10%
5.7
The sensitivities in the above tables show the variance to ECL that would be expected if the given scenario unfolded rather than the
weighted position the provision is based on. At 31 December 2023 the implied weighted peak unemployment rate is 5.2%: the table
shows that in a downturn scenario with a 6.0% peak unemployment rate the provision would increase by \u00a32.5 million, whilst the upturn
would reduce the provision by \u00a35.2 million, base case reduce by \u00a31.1 million and severe increase the provision by \u00a38.2 million.
Stage 1 assets represent 81% of the total loan assets; 0.1% increase in the stage 1 PD, i.e. from 2.2% to 2.3% would result in a \u00a30.6 million
increase in ECL.
Amounts arising from ECL: loans and advances to customers
The following table sets out information about the credit quality of the loans and advances to customers measured at amortised cost.
Credit grades are used to segment customers by apparent credit risk at the time of acquisition. Higher grades are the lowest credit risk
with each subsequent grade increasing in expected credit risk. The Group does not have any purchased or originated credit impaired
assets. These tables are inclusive of the finance lease assets which are held by the Group, further analysis of these balances can be found
in note 7c.
All probability of default figures included in this paragraph allow for forward-looking information, i.e. the PDs are a weighted average from
the economic scenarios considered and relate to the Admiral Money consumer lending business. The average probability of default in
for stage 1 assets is 2.2% (2022: 2.7%) reflecting the expectation of defaults within 12 months of the reporting date. The average PD for
assets in stage 2 is 36.8% (2022: 36.6%) reflecting expected losses over the remaining life of the assets. The PD for assets in stage 3 is
100% (2022: 100%) as these assets are deemed to have defaulted.
31 December 2023
31 December 2022
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Credit Grade
Higher
566.0
83.3
\u2013
649.3
600.2
Medium
155.8
30.8
\u2013
186.6
200.0
Lower
53.6
11.8
\u2013
65.4
53.2
Credit impaired
\u2013
\u2013
55.5
55.5
34.0
Gross carrying amount
775.4
125.9
55.5
956.8
887.4
Expected credit loss allowance
(12.8)
(29.1)
(39.2)
(81.1)
(63.1)
Other loss allowance
(0.5)
(0.1)
\u2013
(0.6)
(0.6)
Carrying amount \u2013 Admiral Money
762.1
96.7
16.3
875.1
823.7
Carrying amount \u2013 Other
4.3
\u2013
\u2013
4.3
0.2
Carrying amount
766.4
96.7
16.3
879.4
823.9
*1
*2
*1. Credit grade is the internal credit banding given to a customer at origination. This is based on external credit rating information.
*2 Other loss allowance covers losses due to a reduction in current or future vehicle value or costs associated with recovery and sale of vehicles and those as a result of changes in the performance of
.the EIR asset.
The following tables reconcile the opening and closing gross carrying amount and expected credit loss allowance. Loans originated in the
year are initially classified as Stage 1. In the following tables, the loans are presented in line with their staging as at each year end.
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2023 \u00a3m \u00a3m \u00a3m \u00a3m
Gross carrying amount as at 1 January 2023
728.3
125.3
34.0
887.6
Transfers
Transfers from stage 1 to stage 2
(60.2)
60.2
\u2013
\u2013
Transfers from stage 1 to stage 3
(19.4)
\u2013
19.4
\u2013
Transfers from stage 2 to stage 1
51.7
(51.7)
\u2013
\u2013
Transfers from stage 2 to stage 3
\u2013
(10.8)
10.8
\u2013
Transfers from stage 3 to stage 1
0.3
\u2013
(0.3)
\u2013
Transfers from stage 3 to stage 2
\u2013
0.8
(0.8)
\u2013
Principal redemption payments
(315.0)
(48.8)
(5.5)
(369.3)
Write offs
\u2013
\u2013
(15.6)
(15.6)
EIR adjustment
0.3
0.2
0.2
0.7
New financial assets originated or purchased
393.6
50.8
13.4
457.8
Gross carrying amount as at 31 December 2023
779.6
126.0
55.6
961.2
Of the amounts written off during the year, \u00a38.3m related to loans which were still subject to enforcement activity (2022: \u00a3NIL). The loss
allowance in place in relation to these loans at the time of writing off totalled \u00a37.9m (2022: \u00a3NIL).
The EIR adjustment represents incremental acquisition costs incurred when advancing loans. These costs are spread over the expected
economic lives of the loans under the effective interest rate method.
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2022 \u00a3m \u00a3m \u00a3m \u00a3m
Gross carrying amount as at 1 January 2022
510.6
68.4
28.0
607.0
Transfers
Transfers from stage 1 to stage 2
(62.6)
62.6
\u2013
\u2013
Transfers from stage 1 to stage 3
(9.4)
\u2013
9.4
\u2013
Transfers from stage 2 to stage 1
25.3
(25.3)
\u2013
\u2013
Transfers from stage 2 to stage 3
\u2013
(4.2)
4.2
\u2013
Transfers from stage 3 to stage 1
0.2
\u2013
(0.2)
\u2013
Transfers from stage 3 to stage 2
\u2013
0.4
(0.4)
\u2013
Principal redemption payments
(235.3)
(39.9)
(5.9)
(281.1)
Write offs
\u2013
\u2013
(7.2)
(7.2)
EIR adjustment
3.4
0.4
\u2013
3.8
New financial assets originated or purchased
496.1
62.9
6.1
565.1
Gross carrying amount as at
31 December 2022
728.3
125.3
34.0
887.6
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2023 \u00a3m \u00a3m \u00a3m \u00a3m
Expected credit loss allowance
as at 1 January 2023
13.4
23.5
26.2
63.1
Movements with a profit and loss impact
Transfers
Transfers from stage 1 to stage 2
(1.9)
5.0
\u2013
3.1
Transfers from stage 1 to stage 3
(0.7)
\u2013
1.9
1.2
Transfers from stage 2 to stage 1
3.4
(7.4)
\u2013
(4.0)
Transfers from stage 3 to stage 1
\u2013
\u2013
(0.1)
(0.1)
Changes in PDs/LGDs/EADs
(9.5)
(1.4)
13.6
2.7
New financial assets originated or purchased
8.0
12.5
9.8
30.3
Total net profit and loss charge in the period
(0.7)
8.7
25.2
33.2
Write offs
\u2013
\u2013
(15.0)
(15.0)
Transfers
Transfers from stage 2 to stage 3
\u2013
(3.2)
3.2
\u2013
Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
Expected credit loss allowance as at
31 December 2023
12.7
29.3
39.3
81.2
Stage 1 Stage 2 Stage 3
12- month ECL Lifetime ECL Lifetime ECL To t a l
2022 \u00a3m \u00a3m \u00a3m \u00a3m
Expected credit loss allowance as at 1 January 2022
13.7
12.7
23.5
49.9
Movements with a profit and loss impact
Transfers
Transfers from stage 1 to stage 2
(1.5)
4.4
\u2013
2.9
Transfers from stage 1 to stage 3
(0.4)
\u2013
1.0
0.6
Transfers from stage 2 to stage 1
1.8
(3.9)
\u2013
(2.1)
Transfers from stage 3 to stage 1
\u2013
\u2013
(0.1)
(0.1)
Changes in PDs/LGDs/EADs
(10.1)
(2.4)
4.4
(8.1)
New financial assets originated or purchased
9.9
12.7
4.6
27.2
Total net profit and loss charge in the period
(0.3)
10.8
9.9
20.4
Write offs
\u2013
\u2013
(7.2)
(7.2)
Expected credit loss allowance as at 31 December 2022
13.4
23.5
26.2
63.1
Other movements with no profit and loss impact
Transfers
Transfers from stage 2 to stage 3
\u2013
(1.3)
1.3
\u2013
Transfers from stage 3 to stage 2
\u2013
\u2013
\u2013
\u2013
7c. Finance lease receivables
Loans and advances to customers include the following finance leases. The Group is the lessor for leases of cars
31 December 2023 31 December 2022
\u00a3m \u00a3m
Gross investment in finance leases, receivable
Less than 1 year
7.0
9.8
Between 1 to 5 years
14.3
25.7
More than 5 years
\u2013
\u2013
21.3
35.5
Unearned finance income
(2.2)
(4.0)
Net investment in lease receivables
19.1
31.5
Less impairment allowance
(0.3)
(0.8)
18.8
30.7
Net investment in finance leases, receivable
Less than 1 year
5.7
7.9
Between 1 to 5 years
13.4
23.7
More than 5 years
\u2013
\u2013
19.1
31.6
The net investment in finance leases shown above includes an unguaranteed residual value of \u00a30.2 million (2022: The net investment in
finance leases shown above is net of the unguaranteed residual value of \u00a30.3 million).
7d. Interest income
31 December 2023 31 December 2022
\u00a3m \u00a3m
From loans and advances to customers
90.2
56.1
From finance leases
2.0
2.6
From bank interest
2.7
\u2013
94.9
58.7
Interest income receivable is recognised in the Income Statement using the effective interest method, which calculates the amortised
cost of the financial asset and allocates the interest income over the expected product life.
7e. Interest expense
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on loan backed securities
23.4
11.7
Interest payable on other credit facilities
3.4
0.9
Total interest expense
26.8
12.6
*1
*1. Interest paid in total net of swaps during the year was \u00a325.6 million (2022: \u00a311.9 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-588": { "value": "7a. Accounting policies Loans and advances to customers consist of unsecured personal loans and car finance products. Classification Loans and advances to customers are measured at amortised cost. This is because assets are held in order to collect contractual cashflows and the contractual terms of the financial asset demand cash inflows which are solely payments of principal and interest on the principal amount outstanding. Interest income and expense Interest income received in relation to loans and advances to customers is calculated using the effective interest method which allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been no change in recognition of interest income from the comparative period. Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts. Finance leases Included within loans and advances to customers are personal contract purchase (PCP) and hire purchase (HP) arrangements which are classified as finance leases under IFRS 16. A receivable equal to the net investment in the lease has been recognised. The net investment is equal to the gross investment in the lease discounted at the rate implicit in the lease. Lease interest income is recognised within interest income in the Income Statement over the term of the lease using the effective interest rate method. The title to the underlying vehicle remains with the Group until the lessee has made all contractual payments, at which point ownership is transferred to the lessee. In the event of breach of contract, such as non-payment, the vehicle itself acts as collateral for the finance lease, becoming available for repossession in most cases. Some of the ways in which the Group maintains its rights to the vehicle, and thus manages the risk of loss associated with the finance lease, include: \u2022 The Group does not enter into any finance leases with a maximum loan-to-value limit, reducing the risk of shortfall on termination of the contract \u2022 The Group requires the lessee to insure the underlying vehicle at all times, reducing the risk of non-recovery if the asset is stolen or destroyed \u2022 The estimated future value of each vehicle, which is sourced externally, is considered in the pricing of the lease contracts to provide protection against deterioration in that value. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-510": { "value": "7d. Interest income
31 December 2023 31 December 2022
\u00a3m \u00a3m
From loans and advances to customers
90.2
56.1
From finance leases
2.0
2.6
From bank interest
2.7
\u2013
94.9
58.7
Interest income receivable is recognised in the Income Statement using the effective interest method, which calculates the amortised cost of the financial asset and allocates the interest income over the expected product life. 7e. Interest expense
31 December 2023 31 December 2022
\u00a3m \u00a3m
Interest payable on loan backed securities
23.4
11.7
Interest payable on other credit facilities
3.4
0.9
Total interest expense
26.8
12.6
*1 *1. Interest paid in total net of swaps during the year was \u00a325.6 million (2022: \u00a311.9 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-462": { "value": "
8. Other revenue and co-insurer profit commission
8a. Accounting policy
(i) Composition of Other revenue and co-insurer profit commission
Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from:
\u2022 Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5)
\u2022 Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from
the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are
distinct, the revenue is recognised applying IFRS 15
\u2022 Revenue from the Group\u2019s law firm
\u2022 Comparison income
Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17
(see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the
effective interest rate method, and as such is not within the scope of IFRS 15.
Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a
contractual arrangement between the Group\u2019s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary
of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited.
(ii) Nature of goods and services
The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Nature, timing of satisfaction of performance obligations and significant payment terms
Fee and commission revenue, The performance obligation is the provision of insurance intermediary services, at which point
including administration fees: the performance obligation is met. Revenue is therefore recognised at a point in time, matching
where the income is separable the Group\u2019s provision of services. Where the Group has no remaining obligations, the revenue is
from the underlying recognised immediately. An allowance is made for expected cancellations where the customer may
insurance contract be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
Revenue from The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
law firm on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission Profit commission is generated if an individual year is profitable, based on the premiums written,
from co-insurers and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
\u2022
Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
\u2022
Insurance expenses incurred
\u2022
Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
\u2022
The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
\u2022
The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
Comparison
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with
Customers due to the nature of the income.
The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of \u201cOther revenue\u201d is now recognised
under IFRS 17. The prior year comparatives have been restated from those previously reported as a result.
During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within
the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss
ratios in line with the Group\u2019s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting
year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission
aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period
and in future is not expected to have a material impact on the Group\u2019s financial statements.
There has been no further change in revenue recognition from the restated comparative period.
8b. Disaggregation of revenue
In the following tables, other revenue is disaggregated by major products/service lines and timing of revenue recognition. The total
revenue disclosed in the table of \u00a3205.8 million (2022: \u00a3256.4 million) represents total other revenue and co-insurer profit commission
and is disaggregated into the segments included in note 4.
31 December 2023
International
UK Insurance Insurance Admiral Money Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Major products/service line
Fee and commission revenue
107.2
\u2013
0.1
\u2013
107.3
Revenue from law firm
18.3
\u2013
\u2013
\u2013
18.3
Comparison income
\u2013
\u2013
\u2013
1.6
1.6
Total other revenue
125.5
\u2013
0.1
1.6
127.2
Profit commission from co-insurers
76.5
2.0
\u2013
\u2013
78.5
Total other revenue and co-insurer profit
commission
202.0
2.0
0.1
1.6
205.7
Timing of revenue recognition
Point in time
160.4
2.0
0.1
1.6
164.1
Over time
20.1
\u2013
\u2013
\u2013
20.1
Revenue outside the scope of IFRS 15
21.5
\u2013
\u2013
\u2013
21.5
202.0
2.0
0.1
1.6
205.7
31 December 2022 (restated)
International
UK Insurance Insurance Admiral Money Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Major products/service line
Fee and commission revenue
104.3
\u2013
0.3
0.2
104.8
Law firm revenue
15.8
\u2013
\u2013
\u2013
15.8
Comparison income*1
\u2013
\u2013
\u2013
8.3
8.3
Total other revenue
120.1
\u2013
0.3
8.5
128.9
Profit commission from co-insurers
127.5
\u2013
\u2013
\u2013
127.5
Total other revenue and co-insurer profit
commission
247.6
\u2013
0.3
8.5
256.4
Timing of revenue recognition
Point in time
209.0
\u2013
0.3
8.5
217.8
Over time
17.8
\u2013
\u2013
\u2013
17.8
Revenue outside the scope of IFRS 15
20.8
\u2013
\u2013
\u2013
20.8
247.6
\u2013
0.3
8.5
256.4
*1. Comparison revenue excludes \u00a3nil million (31 December 2022: \u00a30.3 million) of income from other Group companies.
Profit commission analysis
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Underwriting year
2019 & prior
48.8
105.9
2020
27.7
24.5
2021
\u2013
\u2013
2022
\u2013
(2.9)
2023
\u2013
\u2013
Total UK motor profit commission
76.5
127.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-483": { "value": "8. Other revenue and co-insurer profit commission 8a. Accounting policy (i) Composition of Other revenue and co-insurer profit commission Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from: \u2022 Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5) \u2022 Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are distinct, the revenue is recognised applying IFRS 15 \u2022 Revenue from the Group\u2019s law firm \u2022 Comparison income Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17 (see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the effective interest rate method, and as such is not within the scope of IFRS 15. Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a contractual arrangement between the Group\u2019s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited. (ii) Nature of goods and services The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Nature, timing of satisfaction of performance obligations and significant payment terms
Fee and commission revenue, The performance obligation is the provision of insurance intermediary services, at which point
including administration fees: the performance obligation is met. Revenue is therefore recognised at a point in time, matching
where the income is separable the Group\u2019s provision of services. Where the Group has no remaining obligations, the revenue is
from the underlying recognised immediately. An allowance is made for expected cancellations where the customer may
insurance contract be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
Revenue from The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
law firm on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission Profit commission is generated if an individual year is profitable, based on the premiums written,
from co-insurers and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
\u2022
Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
\u2022
Insurance expenses incurred
\u2022
Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
\u2022
The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
\u2022
The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
Comparison
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with Customers due to the nature of the income. The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of \u201cOther revenue\u201d is now recognised under IFRS 17. The prior year comparatives have been restated from those previously reported as a result. During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss ratios in line with the Group\u2019s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period and in future is not expected to have a material impact on the Group\u2019s financial statements. There has been no further change in revenue recognition from the restated comparative period. 8b. Disaggregation of revenue In the following tables, other revenue is disaggregated by major products/service lines and timing of revenue recognition. The total revenue disclosed in the table of \u00a3205.8 million (2022: \u00a3256.4 million) represents total other revenue and co-insurer profit commission and is disaggregated into the segments included in note 4.
31 December 2023
International
UK Insurance Insurance Admiral Money Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Major products/service line
Fee and commission revenue
107.2
\u2013
0.1
\u2013
107.3
Revenue from law firm
18.3
\u2013
\u2013
\u2013
18.3
Comparison income
\u2013
\u2013
\u2013
1.6
1.6
Total other revenue
125.5
\u2013
0.1
1.6
127.2
Profit commission from co-insurers
76.5
2.0
\u2013
\u2013
78.5
Total other revenue and co-insurer profit
commission
202.0
2.0
0.1
1.6
205.7
Timing of revenue recognition
Point in time
160.4
2.0
0.1
1.6
164.1
Over time
20.1
\u2013
\u2013
\u2013
20.1
Revenue outside the scope of IFRS 15
21.5
\u2013
\u2013
\u2013
21.5
202.0
2.0
0.1
1.6
205.7
31 December 2022 (restated)
International
UK Insurance Insurance Admiral Money Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Major products/service line
Fee and commission revenue
104.3
\u2013
0.3
0.2
104.8
Law firm revenue
15.8
\u2013
\u2013
\u2013
15.8
Comparison income*1
\u2013
\u2013
\u2013
8.3
8.3
Total other revenue
120.1
\u2013
0.3
8.5
128.9
Profit commission from co-insurers
127.5
\u2013
\u2013
\u2013
127.5
Total other revenue and co-insurer profit
commission
247.6
\u2013
0.3
8.5
256.4
Timing of revenue recognition
Point in time
209.0
\u2013
0.3
8.5
217.8
Over time
17.8
\u2013
\u2013
\u2013
17.8
Revenue outside the scope of IFRS 15
20.8
\u2013
\u2013
\u2013
20.8
247.6
\u2013
0.3
8.5
256.4
*1. Comparison revenue excludes \u00a3nil million (31 December 2022: \u00a30.3 million) of income from other Group companies. Profit commission analysis
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Underwriting year
2019 & prior
48.8
105.9
2020
27.7
24.5
2021
\u2013
\u2013
2022
\u2013
(2.9)
2023
\u2013
\u2013
Total UK motor profit commission
76.5
127.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-568": { "value": "8a. Accounting policy (i) Composition of Other revenue and co-insurer profit commission Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from: \u2022 Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5) \u2022 Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are distinct, the revenue is recognised applying IFRS 15 \u2022 Revenue from the Group\u2019s law firm \u2022 Comparison income Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17 (see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the effective interest rate method, and as such is not within the scope of IFRS 15. Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a contractual arrangement between the Group\u2019s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited. (ii) Nature of goods and services The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Nature, timing of satisfaction of performance obligations and significant payment terms
Fee and commission revenue, The performance obligation is the provision of insurance intermediary services, at which point
including administration fees: the performance obligation is met. Revenue is therefore recognised at a point in time, matching
where the income is separable the Group\u2019s provision of services. Where the Group has no remaining obligations, the revenue is
from the underlying recognised immediately. An allowance is made for expected cancellations where the customer may
insurance contract be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
Revenue from The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
law firm on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission Profit commission is generated if an individual year is profitable, based on the premiums written,
from co-insurers and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
\u2022
Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
\u2022
Insurance expenses incurred
\u2022
Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
\u2022
The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
\u2022
The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
Comparison
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with Customers due to the nature of the income. The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of \u201cOther revenue\u201d is now recognised under IFRS 17. The prior year comparatives have been restated from those previously reported as a result. During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss ratios in line with the Group\u2019s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period and in future is not expected to have a material impact on the Group\u2019s financial statements. There has been no further change in revenue recognition from the restated comparative period. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-549": { "value": "8a. Accounting policy (i) Composition of Other revenue and co-insurer profit commission Other revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers is generated from: \u2022 Fee and commission revenue related to the sale of insurance contracts (see notes 2 and 5) \u2022 Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue separable from the host insurance contract in accordance with the principles of IFRS 17, and the goods or services provided to the policyholder are distinct, the revenue is recognised applying IFRS 15 \u2022 Revenue from the Group\u2019s law firm \u2022 Comparison income Other revenue also includes instalment income on insurance premium paid via instalments, where it is not recognised under IFRS 17 (see notes 2 and 5) due to the income being separable from the host insurance contract. This instalment income is recognised using the effective interest rate method, and as such is not within the scope of IFRS 15. Co-insurer profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers relates primarily to a contractual arrangement between the Group\u2019s insurance intermediary EUI Limited, and an external co-insurer (Great Lakes, a subsidiary of Munich Re) which underwrites a share of the UK Car Insurance business generated by EUI Limited. (ii) Nature of goods and services The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its other revenue.
Products and services
Nature, timing of satisfaction of performance obligations and significant payment terms
Fee and commission revenue, The performance obligation is the provision of insurance intermediary services, at which point
including administration fees: the performance obligation is met. Revenue is therefore recognised at a point in time, matching
where the income is separable the Group\u2019s provision of services. Where the Group has no remaining obligations, the revenue is
from the underlying recognised immediately. An allowance is made for expected cancellations where the customer may
insurance contract be entitled to a refund of amounts charged.
Payment from revenue generated from policyholders is due immediately, or in line with direct debit
instalments. Payments from external parties is due within 30 days of the period close.
Revenue from The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
law firm on behalf of the customer. Once the case is settled the performance obligation is fully satisfied.
Revenue is therefore recognised over time using the expected value method. This method values
revenue by multiplying hours incurred on open cases by a 12-month realisable rate. The realisable
rate is a probability weighted transaction price based on settled cases. The expected value method
therefore results in revenue recognised being constrained to that where there is a high probability of
no significant reversal.
Revenue is recognised over time because the Group has an enforceable right to payment for
performance completed to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet
billed. Refer to note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission Profit commission is generated if an individual year is profitable, based on the premiums written,
from co-insurers and expenses and claims costs incurred. It is therefore a variable consideration, recognised at a
point in time.
The cumulative profit commission recognised is calculated in aggregate across the contract, in line
with contract terms, based on a number of detailed inputs for each individual underwriting year, the
most material of which are as follows:
\u2022
Premiums, defined as gross premiums ceded including any instalment income, less reinsurance
premium (for excess of loss reinsurance)
\u2022
Insurance expenses incurred
\u2022
Claims costs incurred.
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed
at the conclusion of each underwriting year and are not subject to judgement, the claims cost is
subject to inherent uncertainty. This results in the co-insurer profit commission recognised under
IFRS 15 being a variable amount.
As such:
\u2022
The Group uses the expected value method for the initial calculation of profit commission
revenue, based on known premiums and expenses, and the best estimate of claims costs.
\u2022
The variable revenue estimated using the expected value method above is constrained through
the inclusion of the risk adjustment within the claims cost element of the calculation, with the
profit commission recognised aligned to the IFRS 17 booked loss ratios, discounted at locked-
in rates, and inclusive of finance expense. The inclusion of the risk adjustment constrains the
cumulative profit commission revenue recognised to a level where there is a high probability of no
significant reversal.
The key methods, inputs and assumptions used to estimate the variable consideration of profit
commission are therefore in line with those used for the calculation of claims liabilities, as set out in
note 3 to the financial statements, with further detail also included in note 5. There are no further
critical accounting estimates or judgements in relation to the recognition of profit commission.
Comparison
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at a point in time.
Profit commission from reinsurers is within the scope of IFRS 17, and not within the scope of IFRS 15 Revenue from Contracts with Customers due to the nature of the income. The adoption of IFRS 17 has resulted in a presentational change whereby a significant proportion of \u201cOther revenue\u201d is now recognised under IFRS 17. The prior year comparatives have been restated from those previously reported as a result. During the period, there has been a change in accounting estimate in relation to the calculation of co-insurer profit commission within the scope of IFRS 15. The underwriting year loss ratio inputs to the calculation were previously based on IFRS 4 financial statement loss ratios in line with the Group\u2019s insurance accounting. The transition from IFRS 4 to IFRS 17 has resulted in a change to the underwriting year loss ratio inputs to the calculation, such that the new basis of estimation results in the recognition of co-insurer profit commission aligned to the IFRS 17 loss ratios, including risk adjustment, as set out above. The impact of the change in estimation basis in the period and in future is not expected to have a material impact on the Group\u2019s financial statements. There has been no further change in revenue recognition from the restated comparative period. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-463": { "value": "
9. Directly attributable and other expenses
9a. Accounting policies
(i) Directly attributable insurance expenses
Directly attributable expenses are cashflows that are directly attributable to a portfolio of insurance contracts and recognised as incurred
insurance service expenses. See note 5a for details of the types of expenses recognised as directly attributable insurance expenses.
(ii) Other operating expenses
All other operating expenses are charged to the Income Statement in the period that they are incurred.
(iii) Employee benefits
As detailed in the Remuneration Committee Report, the key elements of employee remuneration are:
\u2022 Base salaries and pension contributions;
\u2022 Share based incentive plans;
\u2022 A discretionary bonus, (the \u2018DFSS Bonus\u2019), rather than an annual cash bonus, that is based on the number of DFSS awards held and
actual dividends paid out to shareholders.
Within note 9b, the charges for base salaries and pension contributions (and the related social security costs) are recognised within
Administration and acquisition expenses, Expenses relating to additional products and fees and Other expenses based on the role of
the employee.
Charges for the share-based incentive plans (and related social security costs) and discretionary bonus are included within share scheme
charges. These charges are not shown as part of the result for each reportable segment, or within the expense ratio, due to them being
materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result in a cash payment to
employees but instead results in an issue of new shares (resulting in a dilution of existing shares).
The rules of the share schemes ensure that the actual dilution level does not exceed 10% in any rolling ten-year period.
Base salaries and pension contributions
Base salaries and the related employer social security costs are charged to the Income Statement in the period that they are incurred.
The Group contributes to defined contribution personal pension plans for its employees. The contributions payable to these schemes are
charged in the accounting period to which they relate.
Share based incentive plans and related social security costs
The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being:
\u2022 A Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and
\u2022 The Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees 50%
of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity and Total
Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% are guaranteed with
continued employment.
For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise the
shares are forfeited.
The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash) as
consideration for the services provided.
For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grant of the
free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement of changes in equity
(2023: \u00a363.3 million; 2022: \u00a357.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in liabilities.
The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are:
\u2022 The number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for each scheme
where shares remain unvested is set out in note 9f (iii)
\u2022 The fair value of the shares;
\u2013 For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled to receive
dividends, and hence no adjustment is made to this fair value
\u2013 For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid equivalent
to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised downwards to take
account of these expected dividends
\u2013 For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at the end of
each reporting period is used as an approximation for the closing price at the end of the vesting period.
\u2022 Employee attrition rates, which impact the ultimate number of shares that vest.
\u2022 In the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number of shares
that vest.
The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv).
At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on the latest
forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met.
The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes
in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected
cumulative charge required.
Social security costs on share-based incentive plans
Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised over the
vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting (typically 3\u20135
years after the grant date). For the DFSS, the costs are paid immediately upon vesting.
The total social security costs are calculated based on the following:
\u2022 The taxable value of the shares, being:
\u2013 For the SIP, the lower of the share price at award date and the share price at the balance sheet date
\u2013 For the DFSS, the share price at the balance sheet date
\u2022 The number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the DFSS, the
vesting rate based on performance conditions
\u2022 The appropriate social security rate.
These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in the assumptions
is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased
charge in an accounting period as a result of this true-up of the expected cumulative charge required.
Discretionary bonus on shares allocated but unvested
The cost of the DFSS bonus is recognised and paid in each period equivalent to the dividends on shares allocated to employees that are
still entitled to vest but have not yet vested. The cost shown also includes the social security costs on the discretionary bonus. No accrual
is made for future discretionary bonus payments due to there being no contractual obligation for such a bonus at the balance sheet date.
9b. Operating expenses and share scheme charges
31 December 2023
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
836.8
100.8
937.6
Expenses relating to additional products and fees
\u2013
41.4
41.4
Share scheme expenses
55.3
28.5
83.8
Loan expenses (excluding movement on ECL provision)
\u2013
23.0
23.0
Movement in expected credit loss provision
\u2013
31.0
31.0
Other
\u2013
57.1
57.1
To t al
892.1
281.8
1,173.9
*1
31 December 2022 (restated)
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
755.1
83.8
838.9
Expenses relating to additional products and fees
\u2013
38.5
38.5
Share scheme expenses
53.0
26.3
79.3
Loan expenses (excluding movement on ECL provision)
\u2013
22.2
22.2
Movement in expected credit loss provision
\u2013
18.9
18.9
Other
\u2013
33.8
33.8
To t al
808.1
223.5
1,031.6
*1
*1. Other includes centralised costs (2023: \u00a334.5 million, 2022: \u00a315.0 million) , business development costs (2023: \u00a315.3 million, 2022: \u00a38.8 million) and other costs (2023: \u00a37.3 million,
2022: \u00a310.0 million).
9c. Employee costs and other expenses
31 December 2023 31 December 2022
To t a l To t a l
\u00a3m \u00a3m
Salaries
439.4
397.0
Social security charges
45.5
41.4
Pension costs
16.5
14.6
Share scheme charges (see note 9f)
83.8
79.3
Total employee expenses
585.2
532.3
Depreciation charge:
\u2013 Owned assets
11.2
10.1
\u2013 ROU assets
7.0
8.1
Amortisation charge:
\u2013 Software
40.3
23.7
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.3
0.1
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
3.0
1.7
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.1
1.0
\u00a3146,600 (inclusive of VAT) (2022: \u00a310,800) was payable to the auditor for other services in the year.
Refer to the Corporate Governance Report for details of the Audit Committee\u2019s policy on fees paid to the Company\u2019s auditor for non-
audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed
as audit related assurance services under the FRC rules on non-audit services.
The majority of amortisation of software is charged to directly attributable expenses in the Income Statement
9d. Employee numbers (including Directors)
Average for the year
2023 2022
Number Number
Direct customer contact employees
8,365
7,490
Support employees
4,276
3,845
To t al
12,641
11,335
9e. Directors\u2019 remuneration
(i) Directors\u2019 remuneration
31 December 31 December
2023 2022
\u00a3m \u00a3m
Directors\u2019 emoluments
1.2
1.1
Amounts receivable under SIP and DFSS share schemes
2.1
2.2
Company contributions to money purchase pension plans
\u2013
\u2013
Total*
1
3.3
3.3
*1. Directors\u2019 remuneration is stated as that of the Executive Directors. For information on Non-Executive Directors\u2019 remuneration see the remuneration report
(ii) Number of Directors
2023 2022
Number Number
Retirement benefits are accruing to the following number of Directors under:
\u2013 Money purchase schemes
2
2
9f. Employee share schemes
Total share scheme costs for the Group are analysed below:
31 December 2023
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
17.0
46.3
63.3
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
17.0
49.5
66.5
Social security costs on IFRS 2 charge
1.3
7.3
8.6
Discretionary bonus on shares allocated but unvested
\u2013
8.7
8.7
Total share scheme charges
18.3
65.5
83.8
Amounts recovered from co-and reinsurance arrangements
(29.4)
Net share scheme charges
54.4
31 December 2022
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
18.0
39.3
57.3
IFRS 2 charge for cash settled share schemes
\u2013
0.2
0.2
Total IFRS 2 charge
18.0
39.5
57.5
Social security costs
0.7
0.4
1.1
Discretionary bonus on shares allocated but unvested
\u2013
20.7
20.7
Total share scheme charges
18.7
60.6
79.3
Amounts recovered from co-and reinsurance arrangements
(27.6)
Net share scheme charges
51.7
Share scheme charges are presented on a net basis within the strategic report, after allocations to co-insurers (in the UK and Italy) and
reinsurers (in the International Insurance businesses), in line with internal management reporting. The proportion of net to gross share
scheme charges would be expected to be consistent in each period, at approximately 65%.
Financial year ended 31 December
Total cumulative
2020 and prior 2021 2022 2023 charge to date
Analysis of gross cost \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Year of share scheme \u2013 SIP
2019
9.4
6.4
4.1
\u2013
19.9
2020
3.1
6.7
5.4
3.1
18.3
2021
\u2013
4.4
5.4
5.3
15.1
2022
\u2013
\u2013
3.1
5.3
8.4
2023
\u2013
\u2013
\u2013
3.3
3.3
Gross IFRS 2 costs \u2013 SIP
18.0
17.0
Year of share scheme \u2013 DFSS
2019
14.3
15.8
8.0
\u2013
38.1
2020
4.7
13.0
14.6
10.0
42.3
2021
\u2013
4.9
13.4
19.2
37.5
2022
\u2013
\u2013
3.5
14.9
18.4
2023
\u2013
\u2013
\u2013
5.4
5.4
Gross IFRS 2 costs \u2013 DFSS
39.5
49.5
Total IFRS 2 costs
57.5
66.5
*1
*1
*1
*2
*2
*2
*1. Awards are made in March and September of each year, and vest over 36 months from award date. On the 2021 scheme, an average of 5 months\u2019 charge remains outstanding, on the 2022 scheme
an average of 17 months\u2019 charge remains outstanding, and on the 2023 schemes an average of 29 months\u2019 charge remains outstanding.
*2. The main award is made in September of each year, with smaller awards made at other points through the year. The shares vest over 36 months from award date. On the 2021 main DFSS,
9 months\u2019 charge remains outstanding; on the 2022 main DFSS 21 months\u2019 charge remains outstanding, and on the 2023 main DFSS, 33 months\u2019 charge remains outstanding.
(i) The Approved Share Incentive Plan (the SIP)
Eligible UK based employees qualify for awards under the SIP based upon the performance of the Group in each half-year period.
The maximum award for each year is \u00a33,600 per employee and the maximum number of shares that can vest relating to the 2023
schemes is 1,045,697 (2022 schemes: 872,728; 2021 schemes: 688,384).
The awards are made at the discretion of the Remuneration Committee, taking into account the Group\u2019s performance.
(ii) The Discretionary Free Share Scheme (the DFSS)
Under the DFSS, details of which are contained in the remuneration policy section of the Directors\u2019 Remuneration Report, individuals
receive an award of free shares at no charge.
The maximum number of shares that can vest relating to the 2023 schemes is 3,360,665 (2022 scheme: 3,070,323; 2021
scheme: 2,850,114).
The vesting percentage for most employees for the 2020 DFSS scheme which vested during 2023 was 78.25% (2019 DFSS
scheme: 98.9%).
(iii) Number of free share awards committed at 31 December 2023
Awards
outstanding
SIP 2021 688,384
SIP 2022 872,728
SIP 2023 1,045,697
DFSS 2021 2,850,114
DFSS 2022 3,070,323
DFSS 2023 3,360,665
Total awards committed
11,887,911
*1
*2
*2
*2
*3
*3
*3
*1. Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions.
*2. Shares are awarded in March and September of each year, and vest three years later.
*3. The main award is made in September of each year, with smaller awards made at other points through the year.
(iv) Number of free share awards vesting during the year ended 31 December 2023
Original awards
Awards vested
SIP 2020 schemes
982,643
819,861
DFSS 2020 schemes
2,795,261
1,898,249
The difference between the original and vested awards reflects employee attrition (SIP schemes) and both employee attrition and the
vesting outcomes based on performance conditions noted above (DFSS schemes).
The weighted average fair value of the shares granted in the year was \u00a320.48 (2022: \u00a319.45).
The weighted average market share price at the date of exercise for shares exercised during the year was \u00a323.28 (2022: \u00a321.51).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-550": { "value": "(i) Directly attributable insurance expenses Directly attributable expenses are cashflows that are directly attributable to a portfolio of insurance contracts and recognised as incurred insurance service expenses. See note 5a for details of the types of expenses recognised as directly attributable insurance expenses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerAcquisitionCostsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-551": { "value": "(ii) Other operating expenses All other operating expenses are charged to the Income Statement in the period that they are incurred. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-552": { "value": "(iii) Employee benefits As detailed in the Remuneration Committee Report, the key elements of employee remuneration are: \u2022 Base salaries and pension contributions; \u2022 Share based incentive plans; \u2022 A discretionary bonus, (the \u2018DFSS Bonus\u2019), rather than an annual cash bonus, that is based on the number of DFSS awards held and actual dividends paid out to shareholders. Within note 9b, the charges for base salaries and pension contributions (and the related social security costs) are recognised within Administration and acquisition expenses, Expenses relating to additional products and fees and Other expenses based on the role of the employee. Charges for the share-based incentive plans (and related social security costs) and discretionary bonus are included within share scheme charges. These charges are not shown as part of the result for each reportable segment, or within the expense ratio, due to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result in a cash payment to employees but instead results in an issue of new shares (resulting in a dilution of existing shares). The rules of the share schemes ensure that the actual dilution level does not exceed 10% in any rolling ten-year period. Base salaries and pension contributions Base salaries and the related employer social security costs are charged to the Income Statement in the period that they are incurred. The Group contributes to defined contribution personal pension plans for its employees. The contributions payable to these schemes are charged in the accounting period to which they relate. Share based incentive plans and related social security costs The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being: \u2022 A Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and \u2022 The Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees 50% of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% are guaranteed with continued employment. For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise the shares are forfeited. The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash) as consideration for the services provided. For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grant of the free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement of changes in equity (2023: \u00a363.3 million; 2022: \u00a357.3 million). For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase in liabilities. The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are: \u2022 The number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for each scheme where shares remain unvested is set out in note 9f (iii) \u2022 The fair value of the shares; \u2013 For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled to receive dividends, and hence no adjustment is made to this fair value \u2013 For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid equivalent to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised downwards to take account of these expected dividends \u2013 For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at the end of each reporting period is used as an approximation for the closing price at the end of the vesting period. \u2022 Employee attrition rates, which impact the ultimate number of shares that vest. \u2022 In the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number of shares that vest. The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv). At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on the latest forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. Social security costs on share-based incentive plans Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised over the vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting (typically 3\u20135 years after the grant date). For the DFSS, the costs are paid immediately upon vesting. The total social security costs are calculated based on the following: \u2022 The taxable value of the shares, being: \u2013 For the SIP, the lower of the share price at award date and the share price at the balance sheet date \u2013 For the DFSS, the share price at the balance sheet date \u2022 The number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the DFSS, the vesting rate based on performance conditions \u2022 The appropriate social security rate. These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. Discretionary bonus on shares allocated but unvested The cost of the DFSS bonus is recognised and paid in each period equivalent to the dividends on shares allocated to employees that are still entitled to vest but have not yet vested. The cost shown also includes the social security costs on the discretionary bonus. No accrual is made for future discretionary bonus payments due to there being no contractual obligation for such a bonus at the balance sheet date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-569": { "value": "Share based incentive plans and related social security costs The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being: \u2022 A Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and \u2022 The Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees 50% of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% are guaranteed with continued employment. For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise the shares are forfeited. The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash) as consideration for the services provided. For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grant of the free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement of changes in equity (2023: \u00a363.3 million; 2022: \u00a357.3 million). For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase in liabilities. The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are: \u2022 The number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for each scheme where shares remain unvested is set out in note 9f (iii) \u2022 The fair value of the shares; \u2013 For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled to receive dividends, and hence no adjustment is made to this fair value \u2013 For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid equivalent to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised downwards to take account of these expected dividends \u2013 For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at the end of each reporting period is used as an approximation for the closing price at the end of the vesting period. \u2022 Employee attrition rates, which impact the ultimate number of shares that vest. \u2022 In the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number of shares that vest. The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv). At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on the latest forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. Social security costs on share-based incentive plans Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised over the vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting (typically 3\u20135 years after the grant date). For the DFSS, the costs are paid immediately upon vesting. The total social security costs are calculated based on the following: \u2022 The taxable value of the shares, being: \u2013 For the SIP, the lower of the share price at award date and the share price at the balance sheet date \u2013 For the DFSS, the share price at the balance sheet date \u2022 The number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the DFSS, the vesting rate based on performance conditions \u2022 The appropriate social security rate. These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in the assumptions is recognised through the Income Statement. Any significant changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-511": { "value": "9b. Operating expenses and share scheme charges
31 December 2023
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
836.8
100.8
937.6
Expenses relating to additional products and fees
\u2013
41.4
41.4
Share scheme expenses
55.3
28.5
83.8
Loan expenses (excluding movement on ECL provision)
\u2013
23.0
23.0
Movement in expected credit loss provision
\u2013
31.0
31.0
Other
\u2013
57.1
57.1
To t al
892.1
281.8
1,173.9
*1
31 December 2022 (restated)
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
755.1
83.8
838.9
Expenses relating to additional products and fees
\u2013
38.5
38.5
Share scheme expenses
53.0
26.3
79.3
Loan expenses (excluding movement on ECL provision)
\u2013
22.2
22.2
Movement in expected credit loss provision
\u2013
18.9
18.9
Other
\u2013
33.8
33.8
To t al
808.1
223.5
1,031.6
*1 *1. Other includes centralised costs (2023: \u00a334.5 million, 2022: \u00a315.0 million) , business development costs (2023: \u00a315.3 million, 2022: \u00a38.8 million) and other costs (2023: \u00a37.3 million, 2022: \u00a310.0 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-484": { "value": "9b. Operating expenses and share scheme charges
31 December 2023
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
836.8
100.8
937.6
Expenses relating to additional products and fees
\u2013
41.4
41.4
Share scheme expenses
55.3
28.5
83.8
Loan expenses (excluding movement on ECL provision)
\u2013
23.0
23.0
Movement in expected credit loss provision
\u2013
31.0
31.0
Other
\u2013
57.1
57.1
To t al
892.1
281.8
1,173.9
*1
31 December 2022 (restated)
Directly
attributable Other operating
expenses expenses Total expenses
\u00a3m \u00a3m \u00a3m
Administration and acquisition expenses
755.1
83.8
838.9
Expenses relating to additional products and fees
\u2013
38.5
38.5
Share scheme expenses
53.0
26.3
79.3
Loan expenses (excluding movement on ECL provision)
\u2013
22.2
22.2
Movement in expected credit loss provision
\u2013
18.9
18.9
Other
\u2013
33.8
33.8
To t al
808.1
223.5
1,031.6
*1 *1. Other includes centralised costs (2023: \u00a334.5 million, 2022: \u00a315.0 million) , business development costs (2023: \u00a315.3 million, 2022: \u00a38.8 million) and other costs (2023: \u00a37.3 million, 2022: \u00a310.0 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-537": { "value": "9c. Employee costs and other expenses
31 December 2023 31 December 2022
To t a l To t a l
\u00a3m \u00a3m
Salaries
439.4
397.0
Social security charges
45.5
41.4
Pension costs
16.5
14.6
Share scheme charges (see note 9f)
83.8
79.3
Total employee expenses
585.2
532.3
Depreciation charge:
\u2013 Owned assets
11.2
10.1
\u2013 ROU assets
7.0
8.1
Amortisation charge:
\u2013 Software
40.3
23.7
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.3
0.1
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
3.0
1.7
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.1
1.0
\u00a3146,600 (inclusive of VAT) (2022: \u00a310,800) was payable to the auditor for other services in the year. Refer to the Corporate Governance Report for details of the Audit Committee\u2019s policy on fees paid to the Company\u2019s auditor for non- audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed as audit related assurance services under the FRC rules on non-audit services. The majority of amortisation of software is charged to directly attributable expenses in the Income Statement 9f. Employee share schemes Total share scheme costs for the Group are analysed below:
31 December 2023
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
17.0
46.3
63.3
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
17.0
49.5
66.5
Social security costs on IFRS 2 charge
1.3
7.3
8.6
Discretionary bonus on shares allocated but unvested
\u2013
8.7
8.7
Total share scheme charges
18.3
65.5
83.8
Amounts recovered from co-and reinsurance arrangements
(29.4)
Net share scheme charges
54.4
31 December 2022
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
18.0
39.3
57.3
IFRS 2 charge for cash settled share schemes
\u2013
0.2
0.2
Total IFRS 2 charge
18.0
39.5
57.5
Social security costs
0.7
0.4
1.1
Discretionary bonus on shares allocated but unvested
\u2013
20.7
20.7
Total share scheme charges
18.7
60.6
79.3
Amounts recovered from co-and reinsurance arrangements
(27.6)
Net share scheme charges
51.7
Share scheme charges are presented on a net basis within the strategic report, after allocations to co-insurers (in the UK and Italy) and reinsurers (in the International Insurance businesses), in line with internal management reporting. The proportion of net to gross share scheme charges would be expected to be consistent in each period, at approximately 65%.
Financial year ended 31 December
Total cumulative
2020 and prior 2021 2022 2023 charge to date
Analysis of gross cost \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Year of share scheme \u2013 SIP
2019
9.4
6.4
4.1
\u2013
19.9
2020
3.1
6.7
5.4
3.1
18.3
2021
\u2013
4.4
5.4
5.3
15.1
2022
\u2013
\u2013
3.1
5.3
8.4
2023
\u2013
\u2013
\u2013
3.3
3.3
Gross IFRS 2 costs \u2013 SIP
18.0
17.0
Year of share scheme \u2013 DFSS
2019
14.3
15.8
8.0
\u2013
38.1
2020
4.7
13.0
14.6
10.0
42.3
2021
\u2013
4.9
13.4
19.2
37.5
2022
\u2013
\u2013
3.5
14.9
18.4
2023
\u2013
\u2013
\u2013
5.4
5.4
Gross IFRS 2 costs \u2013 DFSS
39.5
49.5
Total IFRS 2 costs
57.5
66.5
*1 *1 *1 *2 *2 *2 *1. Awards are made in March and September of each year, and vest over 36 months from award date. On the 2021 scheme, an average of 5 months\u2019 charge remains outstanding, on the 2022 scheme an average of 17 months\u2019 charge remains outstanding, and on the 2023 schemes an average of 29 months\u2019 charge remains outstanding. *2. The main award is made in September of each year, with smaller awards made at other points through the year. The shares vest over 36 months from award date. On the 2021 main DFSS, 9 months\u2019 charge remains outstanding; on the 2022 main DFSS 21 months\u2019 charge remains outstanding, and on the 2023 main DFSS, 33 months\u2019 charge remains outstanding. (i) The Approved Share Incentive Plan (the SIP) Eligible UK based employees qualify for awards under the SIP based upon the performance of the Group in each half-year period. The maximum award for each year is \u00a33,600 per employee and the maximum number of shares that can vest relating to the 2023 schemes is 1,045,697 (2022 schemes: 872,728; 2021 schemes: 688,384). The awards are made at the discretion of the Remuneration Committee, taking into account the Group\u2019s performance. (ii) The Discretionary Free Share Scheme (the DFSS) Under the DFSS, details of which are contained in the remuneration policy section of the Directors\u2019 Remuneration Report, individuals receive an award of free shares at no charge. The maximum number of shares that can vest relating to the 2023 schemes is 3,360,665 (2022 scheme: 3,070,323; 2021 scheme: 2,850,114). The vesting percentage for most employees for the 2020 DFSS scheme which vested during 2023 was 78.25% (2019 DFSS scheme: 98.9%). (iii) Number of free share awards committed at 31 December 2023
Awards
outstanding
SIP 2021 688,384
SIP 2022 872,728
SIP 2023 1,045,697
DFSS 2021 2,850,114
DFSS 2022 3,070,323
DFSS 2023 3,360,665
Total awards committed
11,887,911
*1 *2 *2 *2 *3 *3 *3 *1. Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions. *2. Shares are awarded in March and September of each year, and vest three years later. *3. The main award is made in September of each year, with smaller awards made at other points through the year. (iv) Number of free share awards vesting during the year ended 31 December 2023
Original awards
Awards vested
SIP 2020 schemes
982,643
819,861
DFSS 2020 schemes
2,795,261
1,898,249
The difference between the original and vested awards reflects employee attrition (SIP schemes) and both employee attrition and the vesting outcomes based on performance conditions noted above (DFSS schemes). The weighted average fair value of the shares granted in the year was \u00a320.48 (2022: \u00a319.45). The weighted average market share price at the date of exercise for shares exercised during the year was \u00a323.28 (2022: \u00a321.51).", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-530": { "value": "9c. Employee costs and other expenses
31 December 2023 31 December 2022
To t a l To t a l
\u00a3m \u00a3m
Salaries
439.4
397.0
Social security charges
45.5
41.4
Pension costs
16.5
14.6
Share scheme charges (see note 9f)
83.8
79.3
Total employee expenses
585.2
532.3
Depreciation charge:
\u2013 Owned assets
11.2
10.1
\u2013 ROU assets
7.0
8.1
Amortisation charge:
\u2013 Software
40.3
23.7
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.3
0.1
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
3.0
1.7
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.1
1.0
\u00a3146,600 (inclusive of VAT) (2022: \u00a310,800) was payable to the auditor for other services in the year. Refer to the Corporate Governance Report for details of the Audit Committee\u2019s policy on fees paid to the Company\u2019s auditor for non- audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed as audit related assurance services under the FRC rules on non-audit services. The majority of amortisation of software is charged to directly attributable expenses in the Income Statement ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-512": { "value": "9c. Employee costs and other expenses
31 December 2023 31 December 2022
To t a l To t a l
\u00a3m \u00a3m
Salaries
439.4
397.0
Social security charges
45.5
41.4
Pension costs
16.5
14.6
Share scheme charges (see note 9f)
83.8
79.3
Total employee expenses
585.2
532.3
Depreciation charge:
\u2013 Owned assets
11.2
10.1
\u2013 ROU assets
7.0
8.1
Amortisation charge:
\u2013 Software
40.3
23.7
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.3
0.1
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
3.0
1.7
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.1
1.0
\u00a3146,600 (inclusive of VAT) (2022: \u00a310,800) was payable to the auditor for other services in the year. Refer to the Corporate Governance Report for details of the Audit Committee\u2019s policy on fees paid to the Company\u2019s auditor for non- audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed as audit related assurance services under the FRC rules on non-audit services. The majority of amortisation of software is charged to directly attributable expenses in the Income Statement 9d. Employee numbers (including Directors)
Average for the year
2023 2022
Number Number
Direct customer contact employees
8,365
7,490
Support employees
4,276
3,845
To t al
12,641
11,335
9e. Directors\u2019 remuneration (i) Directors\u2019 remuneration
31 December 31 December
2023 2022
\u00a3m \u00a3m
Directors\u2019 emoluments
1.2
1.1
Amounts receivable under SIP and DFSS share schemes
2.1
2.2
Company contributions to money purchase pension plans
\u2013
\u2013
Total*
1
3.3
3.3
*1. Directors\u2019 remuneration is stated as that of the Executive Directors. For information on Non-Executive Directors\u2019 remuneration see the remuneration report (ii) Number of Directors
2023 2022
Number Number
Retirement benefits are accruing to the following number of Directors under:
\u2013 Money purchase schemes
2
2
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-485": { "value": "9c. Employee costs and other expenses
31 December 2023 31 December 2022
To t a l To t a l
\u00a3m \u00a3m
Salaries
439.4
397.0
Social security charges
45.5
41.4
Pension costs
16.5
14.6
Share scheme charges (see note 9f)
83.8
79.3
Total employee expenses
585.2
532.3
Depreciation charge:
\u2013 Owned assets
11.2
10.1
\u2013 ROU assets
7.0
8.1
Amortisation charge:
\u2013 Software
40.3
23.7
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.3
0.1
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
3.0
1.7
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.1
1.0
\u00a3146,600 (inclusive of VAT) (2022: \u00a310,800) was payable to the auditor for other services in the year. Refer to the Corporate Governance Report for details of the Audit Committee\u2019s policy on fees paid to the Company\u2019s auditor for non- audit services. Audit fees are 74% (2022: 65%) of total fees and 26% (2022: 35%) of total fees are for non-audit services, which are classed as audit related assurance services under the FRC rules on non-audit services. The majority of amortisation of software is charged to directly attributable expenses in the Income Statement ", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-486": { "value": "9f. Employee share schemes Total share scheme costs for the Group are analysed below:
31 December 2023
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
17.0
46.3
63.3
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
17.0
49.5
66.5
Social security costs on IFRS 2 charge
1.3
7.3
8.6
Discretionary bonus on shares allocated but unvested
\u2013
8.7
8.7
Total share scheme charges
18.3
65.5
83.8
Amounts recovered from co-and reinsurance arrangements
(29.4)
Net share scheme charges
54.4
31 December 2022
SIP charge (i) \u00a3m
DFSS charge (ii) \u00a3m
Total charge \u00a3m
IFRS 2 charge for equity settled share schemes
18.0
39.3
57.3
IFRS 2 charge for cash settled share schemes
\u2013
0.2
0.2
Total IFRS 2 charge
18.0
39.5
57.5
Social security costs
0.7
0.4
1.1
Discretionary bonus on shares allocated but unvested
\u2013
20.7
20.7
Total share scheme charges
18.7
60.6
79.3
Amounts recovered from co-and reinsurance arrangements
(27.6)
Net share scheme charges
51.7
Share scheme charges are presented on a net basis within the strategic report, after allocations to co-insurers (in the UK and Italy) and reinsurers (in the International Insurance businesses), in line with internal management reporting. The proportion of net to gross share scheme charges would be expected to be consistent in each period, at approximately 65%.
Financial year ended 31 December
Total cumulative
2020 and prior 2021 2022 2023 charge to date
Analysis of gross cost \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Year of share scheme \u2013 SIP
2019
9.4
6.4
4.1
\u2013
19.9
2020
3.1
6.7
5.4
3.1
18.3
2021
\u2013
4.4
5.4
5.3
15.1
2022
\u2013
\u2013
3.1
5.3
8.4
2023
\u2013
\u2013
\u2013
3.3
3.3
Gross IFRS 2 costs \u2013 SIP
18.0
17.0
Year of share scheme \u2013 DFSS
2019
14.3
15.8
8.0
\u2013
38.1
2020
4.7
13.0
14.6
10.0
42.3
2021
\u2013
4.9
13.4
19.2
37.5
2022
\u2013
\u2013
3.5
14.9
18.4
2023
\u2013
\u2013
\u2013
5.4
5.4
Gross IFRS 2 costs \u2013 DFSS
39.5
49.5
Total IFRS 2 costs
57.5
66.5
*1 *1 *1 *2 *2 *2 *1. Awards are made in March and September of each year, and vest over 36 months from award date. On the 2021 scheme, an average of 5 months\u2019 charge remains outstanding, on the 2022 scheme an average of 17 months\u2019 charge remains outstanding, and on the 2023 schemes an average of 29 months\u2019 charge remains outstanding. *2. The main award is made in September of each year, with smaller awards made at other points through the year. The shares vest over 36 months from award date. On the 2021 main DFSS, 9 months\u2019 charge remains outstanding; on the 2022 main DFSS 21 months\u2019 charge remains outstanding, and on the 2023 main DFSS, 33 months\u2019 charge remains outstanding. (i) The Approved Share Incentive Plan (the SIP) Eligible UK based employees qualify for awards under the SIP based upon the performance of the Group in each half-year period. The maximum award for each year is \u00a33,600 per employee and the maximum number of shares that can vest relating to the 2023 schemes is 1,045,697 (2022 schemes: 872,728; 2021 schemes: 688,384). The awards are made at the discretion of the Remuneration Committee, taking into account the Group\u2019s performance. (ii) The Discretionary Free Share Scheme (the DFSS) Under the DFSS, details of which are contained in the remuneration policy section of the Directors\u2019 Remuneration Report, individuals receive an award of free shares at no charge. The maximum number of shares that can vest relating to the 2023 schemes is 3,360,665 (2022 scheme: 3,070,323; 2021 scheme: 2,850,114). The vesting percentage for most employees for the 2020 DFSS scheme which vested during 2023 was 78.25% (2019 DFSS scheme: 98.9%). (iii) Number of free share awards committed at 31 December 2023
Awards
outstanding
SIP 2021 688,384
SIP 2022 872,728
SIP 2023 1,045,697
DFSS 2021 2,850,114
DFSS 2022 3,070,323
DFSS 2023 3,360,665
Total awards committed
11,887,911
*1 *2 *2 *2 *3 *3 *3 *1. Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions. *2. Shares are awarded in March and September of each year, and vest three years later. *3. The main award is made in September of each year, with smaller awards made at other points through the year. (iv) Number of free share awards vesting during the year ended 31 December 2023
Original awards
Awards vested
SIP 2020 schemes
982,643
819,861
DFSS 2020 schemes
2,795,261
1,898,249
The difference between the original and vested awards reflects employee attrition (SIP schemes) and both employee attrition and the vesting outcomes based on performance conditions noted above (DFSS schemes). The weighted average fair value of the shares granted in the year was \u00a320.48 (2022: \u00a319.45). The weighted average market share price at the date of exercise for shares exercised during the year was \u00a323.28 (2022: \u00a321.51).", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-464": { "value": "
10. Taxation
10a. Accounting policy
Income tax on the profit or loss for the periods presented comprise of current and deferred tax.
(i) Current tax
Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively
enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods.
Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in
the Income Statement.
(ii) Deferred tax
Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying
amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are
expected to apply in the period when the liability is settled, or the asset is realised.
The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of
property, plant and equipment, reserve movements and share scheme charges.
The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in
Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or
directly in equity respectively.
Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried
forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets
can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable
temporary differences and reviewing future profit projections for the businesses.
10b. Taxation
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Current tax
Corporation tax on profits for the year
91.6
107.6
Under/(over) provision relating to prior periods
21.3
(0.8)
Current tax charge
112.9
106.8
Deferred tax
Current period deferred taxation movement
0.7
(31.6)
(Over)/Under provision relating to prior periods
(8.0)
0.7
Total tax charge per Consolidated Income Statement
105.6
75.9
Factors affecting the total tax charge are:
31 December 31 December
2023 2022 (restated)
\u00a3m \u00a3m
Profit before tax
442.8
361.2
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
104.1
68.6
Expenses and provisions not deductible for tax purposes
3.0
2.2
Non-taxable income
(13.4)
(6.0)
Impact of change in UK tax rate on deferred tax balances
(0.4)
(5.6)
Adjustments relating to prior periods
13.5
(0.2)
Impact of different overseas tax rates
(8.9)
3.6
Unrecognised deferred tax
7.7
13.3
Total tax charge for the period as above
105.6
75.9
Corporation tax assets as at 31 December 2023 totalled \u00a320.4 million, with corporation tax liabilities of \u00a34.9 million (2022: \u00a313.9 million liability and \u00a39.1 million asset). The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25% was announced in the 2021 Budget and has come into effect from 1 April 2023. Adjustments relating to prior periods are higher than previous periods, with \u00a311.7 million of the above total impact of \u00a313.5 million due to the Group deciding to settle a historic Italian tax matter, relating mainly to cross border matters. Further costs of \u00a36.8 million relating to this inspection, such as interest and penalties, are included in Other Group costs within the Income Statement. These costs are expected to be non-recurring. In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of the agreement was to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate and this included the introduction of a new global minimum corporate income tax rate of 15% - referred to as the Pillar Two rules. Legislation has now been enacted in various countries (including the United Kingdom) and draft legislation or announcements have been made in others, with the rules first coming into effect for the Group from 1 January 2024. Under the new rules, the Group may be required to pay top-up taxes either in the UK ultimate parent location or in the overseas jurisdiction if a jurisdiction has an effective tax rate of less than 15%, as calculated under the rules. The Group expects top-up tax to arise in relation to our operations in Gibraltar, where the statutory corporate tax rate is 12.5%. However, since the enacted Pillar Two legislation is only effective from 1 January 2024, the Group has no related current tax impact for the year ended 31 December 2023. If the Pillar Two rules had applied in the year ended 31 December 2023, top-up tax arising in relation to the profits in Gibraltar would have been immaterial to the Group. The Pillar Two rules are complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact for future periods. Current modelling indicates that the top-up tax will primarily be dependent on the profits arising in Gibraltar. Based on current forecasts and the expected profit mix across the Group for the next two financial years (2024 and 2025), it is not expected that the Pillar Two rules will result in a material increase in the Group effective tax rate compared to the average of the last three years (2021-2023: 21% average). The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. In addition to the Pillar Two legislation, the Government of Gibraltar announced on 24 January 2024 that the taxation of interest income as trading income is to be extended to include that of insurers for accounting periods beginning on or after 1 February 2024. This change would result in additional investment and interest income of the Group\u2019s subsidiary, Admiral Insurance (Gibraltar) Limited becoming taxable from 1 January 2025 at the Gibraltar corporation tax rate of 12.5%. If the change in treatment had taken effect for the current financial year ended 31 December 2023, the impact to the Group on current tax and deferred tax is estimated to be immaterial. The Group are continuing to review the draft legislation against the particular nature of the investments held in Gibraltar to determine how widely it applies. It should be noted that there will be interactions between these two legislative changes. Additional corporation tax in Gibraltar payable as a result of the proposed changes to the taxation of interest income will correspondingly reduce the Pillar Two top-up tax required to be paid by the Group for periods ending 31 December 2025 onwards
10c. Deferred income tax asset/(liability)
Analysis of deferred tax asset/(liability)
Tax
treatment Carried Insurance
of share Capital forward Fair value Hedging finance Other
schemes allowances losses reserve reserve reserve differences To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Balance brought forward at
1 January 2022 (restated)
8.5
7.8
8.4
(5.8)
\u2013
3.0
(1.2)
20.7
Tax treatment of share scheme
charges through income or expense
1.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
Tax treatment of share scheme
charges through reserves
(6.3)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(6.3)
Capital allowances
\u2013
(0.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.7)
Carried forward losses
\u2013
\u2013
29.2
\u2013
\u2013
\u2013
\u2013
29.2
Movement in fair value reserve
\u2013
\u2013
\u2013
13.0
\u2013
\u2013
\u2013
13.0
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
(7.0)
\u2013
\u2013
(7.0)
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(22.8)
\u2013
(22.8)
Other difference
\u2013
\u2013
\u2013
(0.3)
\u2013
\u2013
1.4
1.1
Balance carried forward at
31 December 2022 (restated)
3.4
7.1
37.6
6.9
(7.0)
(19.8)
0.2
28.4
Tax treatment of share scheme
charges through income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share scheme
charges through reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
(5.7)
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
9.7
Other difference
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2023
7.2
(3.9)
53.5
1.2
(2.5)
(10.1)
0.7
46.1
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has increased during the year, mainly relating to unused tax losses in the UK and Gibraltar which are recognised as
it is considered probable that there are sufficient future taxable profits available to utilise the losses.
At 31 December 2023, the Group had unused tax losses amounting to \u00a3233.0 million (2022: \u00a3322.0 million, including losses of compare.
com which was disposed of in 2023) and other deductible timing differences of \u00a343.4 million, relating primarily to the Group\u2019s businesses
in the US and Spain for which no deferred tax assets have been recognised. This is due to uncertainty over the availability and timing of
future taxable profits against which to utilise these deferred tax assets. The earliest expiry date for the US tax losses is 2029, with no
expiry for the losses in Spain.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-487": { "value": "10. Taxation 10a. Accounting policy Income tax on the profit or loss for the periods presented comprise of current and deferred tax. (i) Current tax Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods. Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in the Income Statement. (ii) Deferred tax Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are expected to apply in the period when the liability is settled, or the asset is realised. The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of property, plant and equipment, reserve movements and share scheme charges. The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or directly in equity respectively. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable temporary differences and reviewing future profit projections for the businesses. 10b. Taxation
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Current tax
Corporation tax on profits for the year
91.6
107.6
Under/(over) provision relating to prior periods
21.3
(0.8)
Current tax charge
112.9
106.8
Deferred tax
Current period deferred taxation movement
0.7
(31.6)
(Over)/Under provision relating to prior periods
(8.0)
0.7
Total tax charge per Consolidated Income Statement
105.6
75.9
Factors affecting the total tax charge are:
31 December 31 December
2023 2022 (restated)
\u00a3m \u00a3m
Profit before tax
442.8
361.2
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
104.1
68.6
Expenses and provisions not deductible for tax purposes
3.0
2.2
Non-taxable income
(13.4)
(6.0)
Impact of change in UK tax rate on deferred tax balances
(0.4)
(5.6)
Adjustments relating to prior periods
13.5
(0.2)
Impact of different overseas tax rates
(8.9)
3.6
Unrecognised deferred tax
7.7
13.3
Total tax charge for the period as above
105.6
75.9
Corporation tax assets as at 31 December 2023 totalled \u00a320.4 million, with corporation tax liabilities of \u00a34.9 million (2022: \u00a313.9 million
liability and \u00a39.1 million asset).
The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25%
was announced in the 2021 Budget and has come into effect from 1 April 2023.
Adjustments relating to prior periods are higher than previous periods, with \u00a311.7 million of the above total impact of \u00a313.5 million
due to the Group deciding to settle a historic Italian tax matter, relating mainly to cross border matters. Further costs of \u00a36.8 million
relating to this inspection, such as interest and penalties, are included in Other Group costs within the Income Statement. These costs are
expected to be non-recurring.
In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of the agreement was
to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate and this included the
introduction of a new global minimum corporate income tax rate of 15% - referred to as the Pillar Two rules.
Legislation has now been enacted in various countries (including the United Kingdom) and draft legislation or announcements have
been made in others, with the rules first coming into effect for the Group from 1 January 2024. Under the new rules, the Group may be
required to pay top-up taxes either in the UK ultimate parent location or in the overseas jurisdiction if a jurisdiction has an effective tax
rate of less than 15%, as calculated under the rules.
The Group expects top-up tax to arise in relation to our operations in Gibraltar, where the statutory corporate tax rate is 12.5%. However,
since the enacted Pillar Two legislation is only effective from 1 January 2024, the Group has no related current tax impact for the year
ended 31 December 2023. If the Pillar Two rules had applied in the year ended 31 December 2023, top-up tax arising in relation to the
profits in Gibraltar would have been immaterial to the Group.
The Pillar Two rules are complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the
impact for future periods. Current modelling indicates that the top-up tax will primarily be dependent on the profits arising in Gibraltar.
Based on current forecasts and the expected profit mix across the Group for the next two financial years (2024 and 2025), it is not
expected that the Pillar Two rules will result in a material increase in the Group effective tax rate compared to the average of the last
three years (2021-2023: 21% average).
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
In addition to the Pillar Two legislation, the Government of Gibraltar announced on 24 January 2024 that the taxation of interest income
as trading income is to be extended to include that of insurers for accounting periods beginning on or after 1 February 2024. This change
would result in additional investment and interest income of the Group\u2019s subsidiary, Admiral Insurance (Gibraltar) Limited becoming
taxable from 1 January 2025 at the Gibraltar corporation tax rate of 12.5%.
If the change in treatment had taken effect for the current financial year ended 31 December 2023, the impact to the Group on current
tax and deferred tax is estimated to be immaterial. The Group are continuing to review the draft legislation against the particular nature
of the investments held in Gibraltar to determine how widely it applies.
It should be noted that there will be interactions between these two legislative changes. Additional corporation tax in Gibraltar payable
as a result of the proposed changes to the taxation of interest income will correspondingly reduce the Pillar Two top-up tax required to
be paid by the Group for periods ending 31 December 2025 onwards .
10c. Deferred income tax asset/(liability) Analysis of deferred tax asset/(liability)
Tax
treatment Carried Insurance
of share Capital forward Fair value Hedging finance Other
schemes allowances losses reserve reserve reserve differences To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Balance brought forward at
1 January 2022 (restated)
8.5
7.8
8.4
(5.8)
\u2013
3.0
(1.2)
20.7
Tax treatment of share scheme
charges through income or expense
1.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
Tax treatment of share scheme
charges through reserves
(6.3)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(6.3)
Capital allowances
\u2013
(0.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.7)
Carried forward losses
\u2013
\u2013
29.2
\u2013
\u2013
\u2013
\u2013
29.2
Movement in fair value reserve
\u2013
\u2013
\u2013
13.0
\u2013
\u2013
\u2013
13.0
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
(7.0)
\u2013
\u2013
(7.0)
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(22.8)
\u2013
(22.8)
Other difference
\u2013
\u2013
\u2013
(0.3)
\u2013
\u2013
1.4
1.1
Balance carried forward at
31 December 2022 (restated)
3.4
7.1
37.6
6.9
(7.0)
(19.8)
0.2
28.4
Tax treatment of share scheme
charges through income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share scheme
charges through reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
(5.7)
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
9.7
Other difference
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2023
7.2
(3.9)
53.5
1.2
(2.5)
(10.1)
0.7
46.1
Positive amounts presented above relate to a deferred tax asset position. The deferred tax asset has increased during the year, mainly relating to unused tax losses in the UK and Gibraltar which are recognised as it is considered probable that there are sufficient future taxable profits available to utilise the losses. At 31 December 2023, the Group had unused tax losses amounting to \u00a3233.0 million (2022: \u00a3322.0 million, including losses of compare. com which was disposed of in 2023) and other deductible timing differences of \u00a343.4 million, relating primarily to the Group\u2019s businesses in the US and Spain for which no deferred tax assets have been recognised. This is due to uncertainty over the availability and timing of future taxable profits against which to utilise these deferred tax assets. The earliest expiry date for the US tax losses is 2029, with no expiry for the losses in Spain.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-553": { "value": "10a. Accounting policy Income tax on the profit or loss for the periods presented comprise of current and deferred tax. (i) Current tax Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods. Current tax related to items recognised in Other Comprehensive Income is also recognised in Other Comprehensive Income and not in the Income Statement. (ii) Deferred tax Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are expected to apply in the period when the liability is settled, or the asset is realised. The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of property, plant and equipment, reserve movements and share scheme charges. The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or directly in equity respectively. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable temporary differences and reviewing future profit projections for the businesses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-570": { "value": "(ii) Deferred tax Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and that are expected to apply in the period when the liability is settled, or the asset is realised. The principal temporary differences arise from carried forward losses, differences between tax capital allowances and depreciation of property, plant and equipment, reserve movements and share scheme charges. The resulting deferred tax is charged or credited in the Income Statement, except to the extent it relates to items that are recognised in Other Comprehensive Income or directly in equity, in which case the deferred tax is also recognised in Other Comprehensive Income or directly in equity respectively. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets (including those relating to carried forward losses) are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits is determined by a combination of the existence of taxable temporary differences and reviewing future profit projections for the businesses. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-513": { "value": "10b. Taxation
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Current tax
Corporation tax on profits for the year
91.6
107.6
Under/(over) provision relating to prior periods
21.3
(0.8)
Current tax charge
112.9
106.8
Deferred tax
Current period deferred taxation movement
0.7
(31.6)
(Over)/Under provision relating to prior periods
(8.0)
0.7
Total tax charge per Consolidated Income Statement
105.6
75.9
Factors affecting the total tax charge are:
31 December 31 December
2023 2022 (restated)
\u00a3m \u00a3m
Profit before tax
442.8
361.2
Corporation tax thereon at effective UK corporation tax rate of 23.5% (2022: 19.0%)
104.1
68.6
Expenses and provisions not deductible for tax purposes
3.0
2.2
Non-taxable income
(13.4)
(6.0)
Impact of change in UK tax rate on deferred tax balances
(0.4)
(5.6)
Adjustments relating to prior periods
13.5
(0.2)
Impact of different overseas tax rates
(8.9)
3.6
Unrecognised deferred tax
7.7
13.3
Total tax charge for the period as above
105.6
75.9
Corporation tax assets as at 31 December 2023 totalled \u00a320.4 million, with corporation tax liabilities of \u00a34.9 million (2022: \u00a313.9 million liability and \u00a39.1 million asset). The UK corporation tax rate for 2023 is 23.5% (2022: 19.0%). An increase to the main rate of corporation tax in the UK from 19% to 25% was announced in the 2021 Budget and has come into effect from 1 April 2023. Adjustments relating to prior periods are higher than previous periods, with \u00a311.7 million of the above total impact of \u00a313.5 million due to the Group deciding to settle a historic Italian tax matter, relating mainly to cross border matters. Further costs of \u00a36.8 million relating to this inspection, such as interest and penalties, are included in Other Group costs within the Income Statement. These costs are expected to be non-recurring. In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of the agreement was to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate and this included the introduction of a new global minimum corporate income tax rate of 15% - referred to as the Pillar Two rules. Legislation has now been enacted in various countries (including the United Kingdom) and draft legislation or announcements have been made in others, with the rules first coming into effect for the Group from 1 January 2024. Under the new rules, the Group may be required to pay top-up taxes either in the UK ultimate parent location or in the overseas jurisdiction if a jurisdiction has an effective tax rate of less than 15%, as calculated under the rules. The Group expects top-up tax to arise in relation to our operations in Gibraltar, where the statutory corporate tax rate is 12.5%. However, since the enacted Pillar Two legislation is only effective from 1 January 2024, the Group has no related current tax impact for the year ended 31 December 2023. If the Pillar Two rules had applied in the year ended 31 December 2023, top-up tax arising in relation to the profits in Gibraltar would have been immaterial to the Group. The Pillar Two rules are complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact for future periods. Current modelling indicates that the top-up tax will primarily be dependent on the profits arising in Gibraltar. Based on current forecasts and the expected profit mix across the Group for the next two financial years (2024 and 2025), it is not expected that the Pillar Two rules will result in a material increase in the Group effective tax rate compared to the average of the last three years (2021-2023: 21% average). The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. In addition to the Pillar Two legislation, the Government of Gibraltar announced on 24 January 2024 that the taxation of interest income as trading income is to be extended to include that of insurers for accounting periods beginning on or after 1 February 2024. This change would result in additional investment and interest income of the Group\u2019s subsidiary, Admiral Insurance (Gibraltar) Limited becoming taxable from 1 January 2025 at the Gibraltar corporation tax rate of 12.5%. If the change in treatment had taken effect for the current financial year ended 31 December 2023, the impact to the Group on current tax and deferred tax is estimated to be immaterial. The Group are continuing to review the draft legislation against the particular nature of the investments held in Gibraltar to determine how widely it applies. It should be noted that there will be interactions between these two legislative changes. Additional corporation tax in Gibraltar payable as a result of the proposed changes to the taxation of interest income will correspondingly reduce the Pillar Two top-up tax required to be paid by the Group for periods ending 31 December 2025 onwards . Analysis of deferred tax asset/(liability)
Tax
treatment Carried Insurance
of share Capital forward Fair value Hedging finance Other
schemes allowances losses reserve reserve reserve differences To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Balance brought forward at
1 January 2022 (restated)
8.5
7.8
8.4
(5.8)
\u2013
3.0
(1.2)
20.7
Tax treatment of share scheme
charges through income or expense
1.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.2
Tax treatment of share scheme
charges through reserves
(6.3)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(6.3)
Capital allowances
\u2013
(0.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.7)
Carried forward losses
\u2013
\u2013
29.2
\u2013
\u2013
\u2013
\u2013
29.2
Movement in fair value reserve
\u2013
\u2013
\u2013
13.0
\u2013
\u2013
\u2013
13.0
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
(7.0)
\u2013
\u2013
(7.0)
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(22.8)
\u2013
(22.8)
Other difference
\u2013
\u2013
\u2013
(0.3)
\u2013
\u2013
1.4
1.1
Balance carried forward at
31 December 2022 (restated)
3.4
7.1
37.6
6.9
(7.0)
(19.8)
0.2
28.4
Tax treatment of share scheme
charges through income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share scheme
charges through reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
(5.7)
Movement in hedging reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
9.7
Other difference
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2023
7.2
(3.9)
53.5
1.2
(2.5)
(10.1)
0.7
46.1
Positive amounts presented above relate to a deferred tax asset position. The deferred tax asset has increased during the year, mainly relating to unused tax losses in the UK and Gibraltar which are recognised as it is considered probable that there are sufficient future taxable profits available to utilise the losses. At 31 December 2023, the Group had unused tax losses amounting to \u00a3233.0 million (2022: \u00a3322.0 million, including losses of compare. com which was disposed of in 2023) and other deductible timing differences of \u00a343.4 million, relating primarily to the Group\u2019s businesses in the US and Spain for which no deferred tax assets have been recognised. This is due to uncertainty over the availability and timing of future taxable profits against which to utilise these deferred tax assets. The earliest expiry date for the US tax losses is 2029, with no expiry for the losses in Spain.", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-541": { "value": "11. Other Assets and Other Liabilities 11a. Accounting policy (i) Property and equipment, and depreciation All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements. The right-of-use asset is measured at cost, which comprises the following: \u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements) \u2022 Any lease payments made at or before the commencement date less any lease incentives received \u2022 Any initial direct costs, and \u2022 Restoration costs. The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis. The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption. (ii) Impairment of property and equipment In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are recognised through the Income Statement. (iii) Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has ceased as required by IAS 38. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to business segment and is reviewed annually for impairment. The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. Software Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems and amortisation commences when the software is available for use. The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. Customer contracts and relationships Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the term of the contract), amortisation commences when the contract begins. The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. (iv) Provisions, contingent liabilities and contingent assets Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably. Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation arising from a past event that is contingent on a future event, a contingent liability is disclosed. Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non- occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed. 11b. Property and equipment
Improvements to ROU
short leasehold Computer Office Furniture and Asset \u2013 Leasehold
buildings equipment equipment fittings buildings To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2022
37.0
68.9
21.9
9.9
103.3
241.0
Additions
1.7
7.0
0.6
0.7
1.3
11.3
Impairment
\u2013
\u2013
\u2013
\u2013
(1.3)
(1.3)
Disposals
(1.6)
(2.7)
(1.5)
(0.1)
(9.7)
(15.6)
Foreign exchange and other
movements
0.4
0.7
0.4
0.2
1.4
3.1
At 31 December 2022
37.5
73.9
21.4
10.7
95.0
238.5
Depreciation
At 1 January 2022
26.3
57.3
19.9
8.5
25.8
137.8
Charge for the year
3.2
5.5
0.8
0.6
8.1
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.7)
(0.7)
Disposals
(1.6)
(2.4)
(1.5)
\u2013
(3.2)
(8.7)
Foreign exchange and other
movements
0.2
0.7
0.3
0.1
0.8
2.1
At 31 December 2022
28.1
61.1
19.5
9.2
30.8
148.7
Net book amount
At 1 January 2022
10.7
11.6
2.0
1.4
77.5
103.2
Net book amount
At 31 December 2022
9.4
12.8
1.9
1.5
64.2
89.8
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions
3.5
4.9
0.2
0.7
3.3
12.6
Impairment
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements
(0.4)
(0.7)
(0.5)
0.1
1.1
(0.4)
At 31 December 2023
29.7
57.3
18.3
9.6
99.9
214.8
Depreciation
At 1 January 2023
28.1
61.1
19.5
9.2
30.8
148.7
Charge for the year
3.1
6.4
0.9
0.8
7.0
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(9.5)
(20.8)
(2.8)
(1.7)
(5.4)
(40.2)
Foreign exchange and other
movements
(0.1)
(0.9)
(0.4)
0.1
(0.5)
(1.8)
At 31 December 2023
21.6
45.8
17.2
8.4
31.7
124.7
Net book amount
At 31 December 2023
8.1
11.5
1.1
1.2
68.2
90.1
11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999. As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the carrying amount and therefore no impairment losses have been recognised. Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying amount of \u00a324.1 million as at 31 December 2023 (2022: \u00a333.4 million) and a remaining amortisation period of 3 years. Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the recoverable amount, no terminal growth rate or discounting is applied. Refer to the accounting policy for goodwill for further information. 11d. Trade and other payables
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Trade payables
42.3
22.7
Other tax and social security
11.9
14.9
Amounts owed to co-insurers
156.9
115.8
Other payables
42.5
38.2
Accruals and deferred income
52.2
63.3
Total trade and other payables
305.8
254.9
Analysis of accruals and deferred income
Accruals
28.3
41.0
Deferred income
23.9
22.3
Total accruals and deferred income as above
52.2
63.3
11e. Leases The Group occupies various properties under leasing arrangements that are now recognised as right of use assets and lease liabilities. Amounts recognised in the Statement of Financial Position are as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Lease liabilities
Current
13.7
8.3
Non-Current
67.5
80.2
To t al
81.2
88.5
See note 11b for right of use assets depreciation and the carrying amount of right of use assets at the end of the reporting period. Only one class of underlying assets is identified as leasehold buildings. Total cash outflows in relation to leases is disclosed under 6i. The Group has no significant financial commitments other than those accounted for as right of use assets and lease liabilities under IFRS 16. 11f. Contingent liabilities The Group\u2019s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by the relevant tax authority. One of the Group\u2019s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which the Company is exposed to has been indemnified by the Admiral Group up to a cap of \u00a322 million. No material provisions have been made in these financial statements in relation to the matters noted above. The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations or similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisers if appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision is established to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts are unclear or because further time is needed to properly assess the merits of the case or form a reliable estimate of its financial effect. In these circumstances, specific disclosure of a contingent liability and an estimate of its financial effect will be made where material, unless it is not practicable to do so. The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group\u2019s financial position, operations or cashflows, and as such, no material provisions are currently held in relation to such matters. A number of the Group\u2019s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-581": { "value": "(i) Property and equipment, and depreciation All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements. The right-of-use asset is measured at cost, which comprises the following: \u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements) \u2022 Any lease payments made at or before the commencement date less any lease incentives received \u2022 Any initial direct costs, and \u2022 Restoration costs. The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis. The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption. (ii) Impairment of property and equipment In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are recognised through the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-571": { "value": "(i) Property and equipment, and depreciation All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements. The right-of-use asset is measured at cost, which comprises the following: \u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements) \u2022 Any lease payments made at or before the commencement date less any lease incentives received \u2022 Any initial direct costs, and \u2022 Restoration costs. The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis. The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-554": { "value": "(i) Property and equipment, and depreciation All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are as follows:
Improvements to short leasehold buildings
\u2013 four to ten years
Computer equipment
\u2013 two to four years
Office equipment
\u2013 four years
Furniture and fittings
\u2013 four years
Right-of-use assets
\u2013 two \u2013 twenty years, aligned to lease agreement
As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group\u2019s lease arrangements. The right-of-use asset is measured at cost, which comprises the following: \u2022 The amount of the initial measurement of lease liability (note 6i to the financial statements) \u2022 Any lease payments made at or before the commencement date less any lease incentives received \u2022 Any initial direct costs, and \u2022 Restoration costs. The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset\u2019s useful life on a straight-line basis. The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption. (ii) Impairment of property and equipment In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there are any indicators of impairment. If any such indicators exist, the asset\u2019s recoverable amount is estimated and compared to the carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset\u2019s value in use. Impairment losses are recognised through the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-582": { "value": "(iii) Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has ceased as required by IAS 38. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to business segment and is reviewed annually for impairment. The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. Software Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems and amortisation commences when the software is available for use. The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. Customer contracts and relationships Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the term of the contract), amortisation commences when the contract begins. The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-572": { "value": "(iii) Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has ceased as required by IAS 38. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to business segment and is reviewed annually for impairment. The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. Software Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems and amortisation commences when the software is available for use. The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. Customer contracts and relationships Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the term of the contract), amortisation commences when the contract begins. The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-555": { "value": "(iii) Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in preparing the Group\u2019s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost, which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition, amortisation of goodwill has ceased as required by IAS 38. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according to business segment and is reviewed annually for impairment. The goodwill held on the balance sheet at 31 December 2023 and 2022 is allocated solely to the UK Insurance segment. Impairment of goodwill The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Income Statement and are not subsequently reversed. The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU. The value in use calculations use cashflow projections based on financial budgets approved by management covering a period of up to three years. Cashflows beyond this period are considered, but not included in the calculation. The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes in pricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing based on past practices and expected future changes in the market. The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate this margin. Software Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term which is typically between 2 and 4 years). Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems and amortisation commences when the software is available for use. The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. Customer contracts and relationships Customer contracts and relationships are recognised as an intangible asset and amortised over its expected useful life (generally the term of the contract), amortisation commences when the contract begins. The carrying value of customer contracts and relationships are reviewed every six months for evidence of impairment, with the value being written down if any impairment exists. Impairment may be reversed if conditions subsequently improve. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-556": { "value": "(iv) Provisions, contingent liabilities and contingent assets Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably. Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation arising from a past event that is contingent on a future event, a contingent liability is disclosed. Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non- occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-573": { "value": "(iv) Provisions, contingent liabilities and contingent assets Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance sheet date, when a cash-outflow relating to this obligation is probable and when the amount can be estimated reliably. Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible obligation arising from a past event that is contingent on a future event, a contingent liability is disclosed. Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non- occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-465": { "value": "
11b. Property and equipment
Improvements to ROU
short leasehold Computer Office Furniture and Asset \u2013 Leasehold
buildings equipment equipment fittings buildings To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2022
37.0
68.9
21.9
9.9
103.3
241.0
Additions
1.7
7.0
0.6
0.7
1.3
11.3
Impairment
\u2013
\u2013
\u2013
\u2013
(1.3)
(1.3)
Disposals
(1.6)
(2.7)
(1.5)
(0.1)
(9.7)
(15.6)
Foreign exchange and other
movements
0.4
0.7
0.4
0.2
1.4
3.1
At 31 December 2022
37.5
73.9
21.4
10.7
95.0
238.5
Depreciation
At 1 January 2022
26.3
57.3
19.9
8.5
25.8
137.8
Charge for the year
3.2
5.5
0.8
0.6
8.1
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.7)
(0.7)
Disposals
(1.6)
(2.4)
(1.5)
\u2013
(3.2)
(8.7)
Foreign exchange and other
movements
0.2
0.7
0.3
0.1
0.8
2.1
At 31 December 2022
28.1
61.1
19.5
9.2
30.8
148.7
Net book amount
At 1 January 2022
10.7
11.6
2.0
1.4
77.5
103.2
Net book amount
At 31 December 2022
9.4
12.8
1.9
1.5
64.2
89.8
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions
3.5
4.9
0.2
0.7
3.3
12.6
Impairment
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements
(0.4)
(0.7)
(0.5)
0.1
1.1
(0.4)
At 31 December 2023
29.7
57.3
18.3
9.6
99.9
214.8
Depreciation
At 1 January 2023
28.1
61.1
19.5
9.2
30.8
148.7
Charge for the year
3.1
6.4
0.9
0.8
7.0
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(9.5)
(20.8)
(2.8)
(1.7)
(5.4)
(40.2)
Foreign exchange and other
movements
(0.1)
(0.9)
(0.4)
0.1
(0.5)
(1.8)
At 31 December 2023
21.6
45.8
17.2
8.4
31.7
124.7
Net book amount
At 31 December 2023
8.1
11.5
1.1
1.2
68.2
90.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-531": { "value": "11b. Property and equipment
Improvements to ROU
short leasehold Computer Office Furniture and Asset \u2013 Leasehold
buildings equipment equipment fittings buildings To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2022
37.0
68.9
21.9
9.9
103.3
241.0
Additions
1.7
7.0
0.6
0.7
1.3
11.3
Impairment
\u2013
\u2013
\u2013
\u2013
(1.3)
(1.3)
Disposals
(1.6)
(2.7)
(1.5)
(0.1)
(9.7)
(15.6)
Foreign exchange and other
movements
0.4
0.7
0.4
0.2
1.4
3.1
At 31 December 2022
37.5
73.9
21.4
10.7
95.0
238.5
Depreciation
At 1 January 2022
26.3
57.3
19.9
8.5
25.8
137.8
Charge for the year
3.2
5.5
0.8
0.6
8.1
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.7)
(0.7)
Disposals
(1.6)
(2.4)
(1.5)
\u2013
(3.2)
(8.7)
Foreign exchange and other
movements
0.2
0.7
0.3
0.1
0.8
2.1
At 31 December 2022
28.1
61.1
19.5
9.2
30.8
148.7
Net book amount
At 1 January 2022
10.7
11.6
2.0
1.4
77.5
103.2
Net book amount
At 31 December 2022
9.4
12.8
1.9
1.5
64.2
89.8
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions
3.5
4.9
0.2
0.7
3.3
12.6
Impairment
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements
(0.4)
(0.7)
(0.5)
0.1
1.1
(0.4)
At 31 December 2023
29.7
57.3
18.3
9.6
99.9
214.8
Depreciation
At 1 January 2023
28.1
61.1
19.5
9.2
30.8
148.7
Charge for the year
3.1
6.4
0.9
0.8
7.0
18.2
Impairment
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(9.5)
(20.8)
(2.8)
(1.7)
(5.4)
(40.2)
Foreign exchange and other
movements
(0.1)
(0.9)
(0.4)
0.1
(0.5)
(1.8)
At 31 December 2023
21.6
45.8
17.2
8.4
31.7
124.7
Net book amount
At 31 December 2023
8.1
11.5
1.1
1.2
68.2
90.1
11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-466": { "value": "
11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999.
As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual
impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying
amount of \u00a324.1 million as at 31 December 2023 (2022: \u00a333.4 million) and a remaining amortisation period of 3 years.
Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the
recoverable amount, no terminal growth rate or discounting is applied.
Refer to the accounting policy for goodwill for further information.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-514": { "value": "11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999. As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the carrying amount and therefore no impairment losses have been recognised. Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying amount of \u00a324.1 million as at 31 December 2023 (2022: \u00a333.4 million) and a remaining amortisation period of 3 years. Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the recoverable amount, no terminal growth rate or discounting is applied. Refer to the accounting policy for goodwill for further information. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-488": { "value": "11c. Intangible assets
Customer Software
contracts and \u2013 Internally Software
Goodwill relationships generated \u2013 Other To t a l
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2022
62.3
\u2013
64.4
25.0
151.7
Additions
\u2013
\u2013
83.4
5.2
88.6
Amortisation charge
\u2013
\u2013
(18.3)
(5.4)
(23.7)
Foreign exchange movement
\u2013
\u2013
6.9
(5.9)
1.0
At 31 December 2022
62.3
\u2013
136.4
18.9
217.6
Additions
\u2013
7.9
51.1
7.7
66.7
Amortisation charge
\u2013
\u2013
(34.8)
(5.5)
(40.3)
Disposals
\u2013
\u2013
(0.1)
\u2013
(0.1)
Impairment
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers
\u2013
\u2013
\u2013
\u2013
\u2013
Foreign exchange movement & other
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999. As described in the accounting policies, the amortisation of this asset ceased on transition to IFRS on 1 January 2004. All annual impairment reviews since the transition date have indicated that the estimated recoverable value of the asset is greater than the carrying amount and therefore no impairment losses have been recognised. Internally generated software includes a new claims system implemented within the UK business during 2022 which has a net carrying amount of \u00a324.1 million as at 31 December 2023 (2022: \u00a333.4 million) and a remaining amortisation period of 3 years. Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used to support the recoverable amount, no terminal growth rate or discounting is applied. Refer to the accounting policy for goodwill for further information. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-467": { "value": "
11d. Trade and other payables
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Trade payables
42.3
22.7
Other tax and social security
11.9
14.9
Amounts owed to co-insurers
156.9
115.8
Other payables
42.5
38.2
Accruals and deferred income
52.2
63.3
Total trade and other payables
305.8
254.9
Analysis of accruals and deferred income
Accruals
28.3
41.0
Deferred income
23.9
22.3
Total accruals and deferred income as above
52.2
63.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-515": { "value": "11d. Trade and other payables
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Trade payables
42.3
22.7
Other tax and social security
11.9
14.9
Amounts owed to co-insurers
156.9
115.8
Other payables
42.5
38.2
Accruals and deferred income
52.2
63.3
Total trade and other payables
305.8
254.9
Analysis of accruals and deferred income
Accruals
28.3
41.0
Deferred income
23.9
22.3
Total accruals and deferred income as above
52.2
63.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-489": { "value": "11d. Trade and other payables
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Trade payables
42.3
22.7
Other tax and social security
11.9
14.9
Amounts owed to co-insurers
156.9
115.8
Other payables
42.5
38.2
Accruals and deferred income
52.2
63.3
Total trade and other payables
305.8
254.9
Analysis of accruals and deferred income
Accruals
28.3
41.0
Deferred income
23.9
22.3
Total accruals and deferred income as above
52.2
63.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-468": { "value": "
11f. Contingent liabilities
The Group\u2019s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by the relevant
tax authority.
One of the Group\u2019s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the
application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish
Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way
similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which
the Company is exposed to has been indemnified by the Admiral Group up to a cap of \u00a322 million.
No material provisions have been made in these financial statements in relation to the matters noted above.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations or
similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisers if
appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision is established
to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts are unclear or
because further time is needed to properly assess the merits of the case or form a reliable estimate of its financial effect. In these
circumstances, specific disclosure of a contingent liability and an estimate of its financial effect will be made where material, unless it is
not practicable to do so.
The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group\u2019s financial
position, operations or cashflows, and as such, no material provisions are currently held in relation to such matters.
A number of the Group\u2019s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to
recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-490": { "value": "11f. Contingent liabilities The Group\u2019s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by the relevant tax authority. One of the Group\u2019s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying the application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent liability which the Company is exposed to has been indemnified by the Admiral Group up to a cap of \u00a322 million. No material provisions have been made in these financial statements in relation to the matters noted above. The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations or similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisers if appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision is established to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts are unclear or because further time is needed to properly assess the merits of the case or form a reliable estimate of its financial effect. In these circumstances, specific disclosure of a contingent liability and an estimate of its financial effect will be made where material, unless it is not practicable to do so. The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group\u2019s financial position, operations or cashflows, and as such, no material provisions are currently held in relation to such matters. A number of the Group\u2019s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers to recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-469": { "value": "12. Dividends, Earnings and Share Capital The Group\u2019s capital includes share capital and the share premium account, other reserves which are comprised of the fair value reserve, insurance finance reserve, hedging reserve and foreign exchange reserve, and retained earnings. 12a. Accounting policies (i) Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets. (ii) Fair value reserve For investments recognised as Fair Value through Other Comprehensive Income (FVOCI), changes in fair value are accumulated within the fair value reserve within equity. The accumulated changes in fair value are transferred to profit or loss when the investment is derecognised or impaired. (iii) Hedging reserve The hedging reserve includes the cash flow hedge reserve. The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently reclassified to profit or loss as appropriate. (iv) Insurance finance reserve The insurance finance reserve relates to the impact of changes in market interest rates on the value of the insurance and reinsurance assets and liabilities. These changes are reflected in the insurance finance reserve in order to minimise accounting mismatches between the accounting for financial assets and insurance assets and liabilities. (v) Dividends Dividends are recorded in the period in which they are declared and paid . (vi) Earnings per share Basic earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company, Admiral Group plc by the weighted average number of ordinary shares during the period. Diluted earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company by the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.
12b. Dividends
Dividends were proposed, approved and paid as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Proposed March 2022 (118.0 pence per share, approved April 2022 and paid June 2022)
\u2013
348.1
Declared August 2022 (105.0 pence per share, paid October 2022)
\u2013
310.2
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
154.9
\u2013
Declared August 2023 (51.0 pence per share, paid October 2023)
152.2
\u2013
Total dividends
307.1
658.3
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2021 and 2022 financial years.
The dividends declared in August are interim distributions in respect of 2022 and 2023.
A 2023 final dividend of 52.0 pence per share (approximately \u00a3156.2 million) has been proposed. Refer to the financial narrative for
further detail.
12c. Earnings per share
31 December2022
31 December 2023 (restated)
\u00a3m \u00a3m
Profit for the financial year after taxation attributable to equity shareholders
338.0
286.5
Weighted average number of shares \u2013 basic
303,989,170
300,207,330
Unadjusted earnings per share \u2013 basic
111.2p
95.4p
Weighted average number of shares \u2013 diluted
305,052,941
301,543,390
Unadjusted earnings per share \u2013 diluted
110.8p
95.0p
The difference between the basic and diluted number of shares at the end of 2023 (being 1,063,771; 2022: 1,336,060) relates to awards
committed, but not yet issued under the Group\u2019s share schemes. Refer to note 9 for further detail.
12d. Share capital
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Authorised
500,000,000 ordinary shares of 0.1 pence
0.5
0.5
Issued, called up and fully paid
306,304,676 ordinary shares of 0.1 pence
0.3
\u2013
302,837,726 ordinary shares of 0.1 pence
\u2013
0.3
0.3
0.3
During 2023, 3,466,950 (2022: 3,283,006) new ordinary shares of 0.1 pence were issued to the trusts administering the Group\u2019s
share schemes.
806,950 (2022: 675,927) of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme
resulting in cumulative shares issued to the Trust at 31 December 2023 of 14,500,249 (31 December 2022: 13,693,299). Of the shares
issued, 4,028,579 remain in the Trust at 31 December 2023 (2022: 3,851,967). These shares are entitled to receive dividends.
2,660,000 (2022: 2,607,079) shares were issued to the Admiral Group Employee Benefit Trust for the purposes of the Discretionary
Free Share Scheme resulting in cumulative shares issued to the Trust of 33,209,027 (31 December 2022: 30,549,027). Of the shares
issued 5,868,352 remain in the Trust at 31 December 2023 (2022: 5,111,601) to be used for future vesting, the remaining issued shares
having vested.
The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed is 8,755,431
(2022: 8,302,363).
The Trustees have waived the right to dividend payments, other than to the extent of 0.001 pence per share, unless and to the extent
otherwise directed by the Company from time to time.
There is one class of share with no unusual restrictions.
12e. Group related undertakings
The Parent Company\u2019s subsidiaries are as follows:
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Ordinary
95
Legal Company
Insurance
Able Insurance Services Limited
Ordinary
100
Intermediary
Insurance
EUI Limited*
Ordinary
100
Intermediary
Insurance
Admiral Insurance Company Limited
Ordinary
100
Company
Admiral Syndicate Limited
Ordinary
100
Dormant*
Admiral Syndicate Management Limited
Ordinary
100
Dormant*\uf662
Bell Direct Limited*
Ordinary
100
Dormant*
Diamond Motor Insurance Services Limited*
Ordinary
100
Dormant*
Elephant Insurance Services Limited*
Ordinary
100
Dormant*
Admiral Life Limited*
Ordinary
100
Dormant*
Financial
Services
Admiral Financial Services Limited
Ordinary
100
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA Insurance
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Company
Incorporated in France
Registered office: la Bo\u00e9tie, 75008 Paris Insurance
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma Financial
services
Admiral Financial Services Italia S.P.A.
Ordinary
100
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid Insurance
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla Insurance
Admiral Intermediary Services S.A.
*3
Ordinary
100
Intermediary
2
4
4
4
4
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227 Insurance
Elephant Insurance Company
Ordinary
100 (indirect)
company
Insurance
Grove General Agency Inc
Ordinary
100 (indirect)
intermediary
Insurance
Platinum General Agency Inc
Ordinary
100 (indirect)
intermediary
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Insurance
Elephant Insurance Services LLC
Ordinary
100 (indirect)
intermediary
Holding
Elephant Holding Company LLC
Ordinary
100
Company
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU Special purpose
Seren One Limited
n/a
0
entity
Special purpose
Seren Two Limited
n/a
0
entity
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006. *2. EUI Limited has branches in India and Canada. *3. Admiral Intermediary Services S.A. has branches in Italy and France. *4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved. For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report . 12f. Related party transactions The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel. A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration and shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report. Key management personnel received short term employee benefits in the year of \u00a32,900,278 (2022: \u00a33,058,170), post-employment benefits of \u00a330,000 (2022: \u00a330,000) and share based payments of \u00a31,608,776 (2022: \u00a31,561,768). Key management personnel are able to obtain discounted motor insurance at the same rates as all other Group employees, typically at a reduction of 15%. 12g. Post balance sheet events No events have occurred since the reporting date that materially impact these financial statements", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-557": { "value": "
(i) Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-558": { "value": "(v) Dividends Dividends are recorded in the period in which they are declared and paid ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-559": { "value": "
(vi) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company, Admiral Group
plc by the weighted average number of ordinary shares during the period.
Diluted earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group Parent Company by the
weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-491": { "value": "12b. Dividends Dividends were proposed, approved and paid as follows:
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Proposed March 2022 (118.0 pence per share, approved April 2022 and paid June 2022)
\u2013
348.1
Declared August 2022 (105.0 pence per share, paid October 2022)
\u2013
310.2
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
154.9
\u2013
Declared August 2023 (51.0 pence per share, paid October 2023)
152.2
\u2013
Total dividends
307.1
658.3
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2021 and 2022 financial years. The dividends declared in August are interim distributions in respect of 2022 and 2023. A 2023 final dividend of 52.0 pence per share (approximately \u00a3156.2 million) has been proposed. Refer to the financial narrative for further detail. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-492": { "value": "12c. Earnings per share
31 December2022
31 December 2023 (restated)
\u00a3m \u00a3m
Profit for the financial year after taxation attributable to equity shareholders
338.0
286.5
Weighted average number of shares \u2013 basic
303,989,170
300,207,330
Unadjusted earnings per share \u2013 basic
111.2p
95.4p
Weighted average number of shares \u2013 diluted
305,052,941
301,543,390
Unadjusted earnings per share \u2013 diluted
110.8p
95.0p
The difference between the basic and diluted number of shares at the end of 2023 (being 1,063,771; 2022: 1,336,060) relates to awards committed, but not yet issued under the Group\u2019s share schemes. Refer to note 9 for further detail. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-493": { "value": "12d. Share capital
31 December 2022
31 December 2023 (restated)
\u00a3m \u00a3m
Authorised
500,000,000 ordinary shares of 0.1 pence
0.5
0.5
Issued, called up and fully paid
306,304,676 ordinary shares of 0.1 pence
0.3
\u2013
302,837,726 ordinary shares of 0.1 pence
\u2013
0.3
0.3
0.3
During 2023, 3,466,950 (2022: 3,283,006) new ordinary shares of 0.1 pence were issued to the trusts administering the Group\u2019s share schemes. 806,950 (2022: 675,927) of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme resulting in cumulative shares issued to the Trust at 31 December 2023 of 14,500,249 (31 December 2022: 13,693,299). Of the shares issued, 4,028,579 remain in the Trust at 31 December 2023 (2022: 3,851,967). These shares are entitled to receive dividends. 2,660,000 (2022: 2,607,079) shares were issued to the Admiral Group Employee Benefit Trust for the purposes of the Discretionary Free Share Scheme resulting in cumulative shares issued to the Trust of 33,209,027 (31 December 2022: 30,549,027). Of the shares issued 5,868,352 remain in the Trust at 31 December 2023 (2022: 5,111,601) to be used for future vesting, the remaining issued shares having vested. The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed is 8,755,431 (2022: 8,302,363). The Trustees have waived the right to dividend payments, other than to the extent of 0.001 pence per share, unless and to the extent otherwise directed by the Company from time to time. There is one class of share with no unusual restrictions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-538": { "value": "12e. Group related undertakings The Parent Company\u2019s subsidiaries are as follows:
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Ordinary
95
Legal Company
Insurance
Able Insurance Services Limited
Ordinary
100
Intermediary
Insurance
EUI Limited*
Ordinary
100
Intermediary
Insurance
Admiral Insurance Company Limited
Ordinary
100
Company
Admiral Syndicate Limited
Ordinary
100
Dormant*
Admiral Syndicate Management Limited
Ordinary
100
Dormant*\uf662
Bell Direct Limited*
Ordinary
100
Dormant*
Diamond Motor Insurance Services Limited*
Ordinary
100
Dormant*
Elephant Insurance Services Limited*
Ordinary
100
Dormant*
Admiral Life Limited*
Ordinary
100
Dormant*
Financial
Services
Admiral Financial Services Limited
Ordinary
100
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA Insurance
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Company
Incorporated in France
Registered office: la Bo\u00e9tie, 75008 Paris Insurance
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma Financial
services
Admiral Financial Services Italia S.P.A.
Ordinary
100
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid Insurance
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla Insurance
Admiral Intermediary Services S.A.
*3
Ordinary
100
Intermediary
2 4 4 4 4
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227 Insurance
Elephant Insurance Company
Ordinary
100 (indirect)
company
Insurance
Grove General Agency Inc
Ordinary
100 (indirect)
intermediary
Insurance
Platinum General Agency Inc
Ordinary
100 (indirect)
intermediary
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Insurance
Elephant Insurance Services LLC
Ordinary
100 (indirect)
intermediary
Holding
Elephant Holding Company LLC
Ordinary
100
Company
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU Special purpose
Seren One Limited
n/a
0
entity
Special purpose
Seren Two Limited
n/a
0
entity
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006. *2. EUI Limited has branches in India and Canada. *3. Admiral Intermediary Services S.A. has branches in Italy and France. *4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved. For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report ", "dimensions": { "concept": "ifrs-full:DisclosureOfCompositionOfGroupExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-532": { "value": "12e. Group related undertakings The Parent Company\u2019s subsidiaries are as follows:
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Ordinary
95
Legal Company
Insurance
Able Insurance Services Limited
Ordinary
100
Intermediary
Insurance
EUI Limited*
Ordinary
100
Intermediary
Insurance
Admiral Insurance Company Limited
Ordinary
100
Company
Admiral Syndicate Limited
Ordinary
100
Dormant*
Admiral Syndicate Management Limited
Ordinary
100
Dormant*\uf662
Bell Direct Limited*
Ordinary
100
Dormant*
Diamond Motor Insurance Services Limited*
Ordinary
100
Dormant*
Elephant Insurance Services Limited*
Ordinary
100
Dormant*
Admiral Life Limited*
Ordinary
100
Dormant*
Financial
Services
Admiral Financial Services Limited
Ordinary
100
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA Insurance
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Company
Incorporated in France
Registered office: la Bo\u00e9tie, 75008 Paris Insurance
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma Financial
services
Admiral Financial Services Italia S.P.A.
Ordinary
100
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid Insurance
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla Insurance
Admiral Intermediary Services S.A.
*3
Ordinary
100
Intermediary
2 4 4 4 4
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227 Insurance
Elephant Insurance Company
Ordinary
100 (indirect)
company
Insurance
Grove General Agency Inc
Ordinary
100 (indirect)
intermediary
Insurance
Platinum General Agency Inc
Ordinary
100 (indirect)
intermediary
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Insurance
Elephant Insurance Services LLC
Ordinary
100 (indirect)
intermediary
Holding
Elephant Holding Company LLC
Ordinary
100
Company
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU Special purpose
Seren One Limited
n/a
0
entity
Special purpose
Seren Two Limited
n/a
0
entity
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006. *2. EUI Limited has branches in India and Canada. *3. Admiral Intermediary Services S.A. has branches in Italy and France. *4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved. For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report . ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-516": { "value": "12e. Group related undertakings The Parent Company\u2019s subsidiaries are as follows:
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Ordinary
95
Legal Company
Insurance
Able Insurance Services Limited
Ordinary
100
Intermediary
Insurance
EUI Limited*
Ordinary
100
Intermediary
Insurance
Admiral Insurance Company Limited
Ordinary
100
Company
Admiral Syndicate Limited
Ordinary
100
Dormant*
Admiral Syndicate Management Limited
Ordinary
100
Dormant*\uf662
Bell Direct Limited*
Ordinary
100
Dormant*
Diamond Motor Insurance Services Limited*
Ordinary
100
Dormant*
Elephant Insurance Services Limited*
Ordinary
100
Dormant*
Admiral Life Limited*
Ordinary
100
Dormant*
Financial
Services
Admiral Financial Services Limited
Ordinary
100
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA Insurance
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Company
Incorporated in France
Registered office: la Bo\u00e9tie, 75008 Paris Insurance
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma Financial
services
Admiral Financial Services Italia S.P.A.
Ordinary
100
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid Insurance
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla Insurance
Admiral Intermediary Services S.A.
*3
Ordinary
100
Intermediary
2 4 4 4 4
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227 Insurance
Elephant Insurance Company
Ordinary
100 (indirect)
company
Insurance
Grove General Agency Inc
Ordinary
100 (indirect)
intermediary
Insurance
Platinum General Agency Inc
Ordinary
100 (indirect)
intermediary
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Insurance
Elephant Insurance Services LLC
Ordinary
100 (indirect)
intermediary
Holding
Elephant Holding Company LLC
Ordinary
100
Company
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU Special purpose
Seren One Limited
n/a
0
entity
Special purpose
Seren Two Limited
n/a
0
entity
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006. *2. EUI Limited has branches in India and Canada. *3. Admiral Intermediary Services S.A. has branches in Italy and France. *4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved. For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report . ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-494": { "value": "12e. Group related undertakings The Parent Company\u2019s subsidiaries are as follows:
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in England and Wales
Registered office: Ty Admiral, David Street, Cardiff, United Kingdom, CF10 2EH
Admiral Law Limited
Ordinary
95
Legal Company
Insurance
Able Insurance Services Limited
Ordinary
100
Intermediary
Insurance
EUI Limited*
Ordinary
100
Intermediary
Insurance
Admiral Insurance Company Limited
Ordinary
100
Company
Admiral Syndicate Limited
Ordinary
100
Dormant*
Admiral Syndicate Management Limited
Ordinary
100
Dormant*\uf662
Bell Direct Limited*
Ordinary
100
Dormant*
Diamond Motor Insurance Services Limited*
Ordinary
100
Dormant*
Elephant Insurance Services Limited*
Ordinary
100
Dormant*
Admiral Life Limited*
Ordinary
100
Dormant*
Financial
Services
Admiral Financial Services Limited
Ordinary
100
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23, Ocean Village
Promenade, Gibraltar, GX11 1AA Insurance
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Company
Incorporated in France
Registered office: la Bo\u00e9tie, 75008 Paris Insurance
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma Financial
services
Admiral Financial Services Italia S.P.A.
Ordinary
100
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid Insurance
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla Insurance
Admiral Intermediary Services S.A.
*3
Ordinary
100
Intermediary
2 4 4 4 4
Class of
Subsidiary
shares held
% ownership
Principal Activity
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227 Insurance
Elephant Insurance Company
Ordinary
100 (indirect)
company
Insurance
Grove General Agency Inc
Ordinary
100 (indirect)
intermediary
Insurance
Platinum General Agency Inc
Ordinary
100 (indirect)
intermediary
Registered office: Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801
Insurance
Elephant Insurance Services LLC
Ordinary
100 (indirect)
intermediary
Holding
Elephant Holding Company LLC
Ordinary
100
Company
Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance with IFRS 10,
as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU Special purpose
Seren One Limited
n/a
0
entity
Special purpose
Seren Two Limited
n/a
0
entity
Associates
Registered office: Tramshed Tech, Pendyris Street, Capital Tower,
Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
23.56 (indirect)
Internet-based
Subscription
Platform
*1. Exempt from audit under S480 of Companies Act 2006.
*2. EUI Limited has branches in India and Canada.
*3. Admiral Intermediary Services S.A. has branches in Italy and France.
*4. At the balance sheet date Admiral Life Limited, Bell Direct Limited, Diamond Motor Insurance Services Limited and Elephant Insurance Services Limited were in the process of being dissolved.
For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report .
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-7": { "value": "UK, Europe and the US", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-495": { "value": "
12f. Related party transactions
The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel.
A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration and
shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report.
Key management personnel received short term employee benefits in the year of \u00a32,900,278 (2022: \u00a33,058,170), post-employment
benefits of \u00a330,000 (2022: \u00a330,000) and share based payments of \u00a31,608,776 (2022: \u00a31,561,768). Key management personnel are able to
obtain discounted motor insurance at the same rates as all other Group employees, typically at a reduction of 15%.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-533": { "value": "12f. Related party transactions The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel. A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration and shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report. Key management personnel received short term employee benefits in the year of \u00a32,900,278 (2022: \u00a33,058,170), post-employment benefits of \u00a330,000 (2022: \u00a330,000) and share based payments of \u00a31,608,776 (2022: \u00a31,561,768). Key management personnel are able to obtain discounted motor insurance at the same rates as all other Group employees, typically at a reduction of 15%. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-517": { "value": "12f. Related party transactions The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel. A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration and shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report. Key management personnel received short term employee benefits in the year of \u00a32,900,278 (2022: \u00a33,058,170), post-employment benefits of \u00a330,000 (2022: \u00a330,000) and share based payments of \u00a31,608,776 (2022: \u00a31,561,768). Key management personnel are able to obtain discounted motor insurance at the same rates as all other Group employees, typically at a reduction of 15%. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-496": { "value": "
12g. Post balance sheet events
No events have occurred since the reporting date that materially impact these financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-470": { "value": "
13. Reconciliation of turnover to reported insurance premium and other revenue as per the financial statements
The following table reconciles turnover, a significant Key Performance Indicators (KPIs) and non-GAAP measure presented within the
Strategic Report, to insurance revenue, as presented in note 4 to the financial statements
31 December 2022
31 December 2023 (restated)
Note \u00a3m \u00a3m
Insurance premium revenue
5b
3,283.3
2,782.1
Movement in unearned premium
528.3
142.7
Premiums written after co-insurance
3,811.6
2,924.8
Co-insurer share of written premiums
577.8
393.4
Total premiums written
4,389.4
3,318.2
Other insurance revenue
5b
202.8
174.8
Other revenue
8
127.2
128.9
Interest income
92.1
58.7
Turnover as per note 4b of financial statements
4,811.5
3,680.6
Intra-group income elimination
\u2013
0.3
Total turnover
4,811.5
3,680.9
*1
*1. Total insurance revenue of \u00a33,486.1 million (2022: \u00a32,956.9 million), comprised of insurance premium revenue of \u00a33,283.3 million (2022: \u00a32,782.1 million) and Other insurance revenue of
\u00a3202.8 million (2022: \u00a3174.8 million).
*2. Intra-group income elimination relates to comparison income earned by compare.com from other Group entities.
APPENDIX 1 TO THE GROUP FINANCIAL STATEMENTS (unaudited)
The following tables reconcile significant Key Performance Indicators (KPIs) and non-GAAP measures included in the Strategic Report to
items included in the financial statements.
1a. Reconciliation of reported loss and expense ratios: Group
31 December 2023
Consolidated
financial Core Ancillary Total Total, net of XoL
\u00a3m statement note product income gross reinsurance
Insurance premium revenue
3,152.3
131.0
3,283.3
3,170.6
Administration fees, instalment income and
non-separable ancillary commission
\u2013
202.8
202.8
202.8
Insurance revenue (A)
5b/5d
3,152.3
333.8
3,486.1
3,373.4
Insurance expenses (B)
5c
(795.2)
(41.6)
(836.8)
(836.8)
Claims incurred (C)
5c/5d
(2,624.6)
(40.5)
(2,665.1)
(2,605.8)
Claims releases (D)
5c/5d
440.6
\u2013
440.6
447.3
Quota share reinsurance result (40.4)
Onerous loss component movement 4.9
Underwriting result (E)
342.6
Net share scheme costs (36.8)
Insurance service result
305.8
Reported loss ratio ((C+D)/A)
63.9%
Reported expense ratio (B/A)
24.8%
Insurance service margin (E/A)
10.2%
*1
*2
3
31 December 2022 (restated)
Consolidated
financial Core Ancillary Total Total, net of XoL
\u00a3m statement note product income gross reinsurance
Insurance premium revenue
2,646.5
135.6
2,782.1
2,704.0
Administration fees, instalment income and
non-separable ancillary commission
\u2013
174.8
174.8
174.8
Insurance revenue (A)
5b/5d
2,646.5
310.4
2,956.9
2,878.8
Insurance expenses (B)
5c
(710.4)
(44.6)
(755.0)
(755.0)
Claims incurred (C)
5c/5d
(2,339.3)
(33.0)
(2,372.3)
(2,341.0)
Claims releases (D)
5c/5d
420.5
\u2013
420.5
309.8
Quota share reinsurance result 117.4
Onerous loss component movement 4.1
Underwriting result (E)
214.1
Net share scheme costs (32.8)
Insurance service result
181.3
Reported loss ratio ((C+D)/A)
70.6%
Reported expense ratio (B/A)
26.2%
Insurance service margin
7.4%
*1
*2
*3
*1. Quota share reinsurance result excludes quota share reinsurers\u2019 share of share scheme costs and movement in onerous loss-recovery component.
*2. Onerous loss component movement is shown net of all reinsurance.
*3. Net share scheme costs of \u00a336.8 million (2022: \u00a332.8 million), being gross costs of \u00a355.3 million (2022: \u00a353.0 million, see note 5c) less reinsurers\u2019 share of share scheme costs of \u00a318.5 million
(2022: \u00a320.2 million) are excluded from the underwriting result.
1b. Reconciliation of reported loss and expense ratios: UK Motor
31 December 2023
Consolidated Total, net Core product
financial Core Ancillary Total of XoL net of XoL
\u00a3m statement note product income gross reinsurance reinsurance
Total premiums written
3,004.3
113.9
3,118.2
3,016.8
2,903.0
Gross premiums written
2,453.9
113.9
2,567.8
2,485.0
2,371.1
Insurance premium revenue
2,007.6
107.8
2,115.4
2,053.8
1,946.0
Instalment income
\u2013
99.0
99.0
99.0
\u2013
Administration fees non-separable
ancillary commission
\u2013
35.8
35.8
35.8
\u2013
Insurance revenue (A)
5b/5d
2,007.6
242.6
2,250.2
2,188.6
1,946.0
Insurance expenses (B)
5c
(416.8)
(34.4)
(451.2)
(451.2)
(416.8)
Claims incurred (C)
5c/5d
(1,719.9)
(35.6)
(1,755.5)
(1,729.0)
(1,693.4)
Claims releases (D)
5c/5d
406.9
\u2013
406.9
392.8
392.8
Current period loss ratio (C/A)
79.0%
87.0%
Claims releases (D/A)
(17.9%)
(20.2%)
Reported loss ratio ((C+D)/A)
61.1%
66.8%
Reported expense ratio (B/A)
20.6%
21.4%
*1
31 December 2022 (restated)
Consolidated Total, net Core product
financial Core Ancillary Total of XoL net of XoL
\u00a3m statement note product income gross reinsurance reinsurance
Total premiums written
2,157.7
113.6
2,271.3
2,213.5
2,099.9
Gross premiums written
1,772.8
113.6
1,886.4
1,838.9
1,725.3
Insurance premium revenue
1,682.4
113.3
1,795.7
1,751.1
1,637.8
Instalment income
\u2013
75.3
75.3
75.3
\u2013
Administration fees and non-
separable ancillary commission
\u2013
38.7
38.7
38.7
\u2013
Insurance revenue (A)
5b/5d
1,682.4
227.3
1,909.7
1,865.1
1,637.8
Insurance expenses (B)
5c
(354.4)
(35.2)
(389.6)
(389.6)
(354.4)
Claims incurred (C)
5c/5d
(1,592.2)
(28.2)
(1,620.4)
(1,596.0)
(1,567.8)
Claims releases (D)
5c/5d
437.2
\u2013
437.2
327.2
327.2
Current period loss ratio (C/A)
85.5%
95.7%
Claims releases (D/A)
(17.5%)
(20.0%)
Reported loss ratio ((C+D)/A)
68.0%
75.7%
Reported expense ratio (B/A)
20.9%
21.6%
*1 *1. Ancillary income combined with other net income is presented as part of UK motor insurance other revenue in reporting \u201cOther revenue per vehicle\u201d. Total other revenue was \u00a3247.3 million (2022: \u00a3236.8 million)", "dimensions": { "concept": "admiralgroupplc:DisclosureOfReconcilations", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-8": { "value": "Admiral Group plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }