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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 9.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-427": { "value": "Admiral Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-428": { "value": "Admiral Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-429": { "value": "public limited Company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-430": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-431": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-432": { "value": "T\u0177 Admiral, David Street, Cardiff, CF10 2EH", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-433": { "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\u00a0all 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\u00a0the 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\u00a0deficit balance.
The Group has securitised certain loans and advances to customers by the transfer of the loans to special purpose entities (SPEs)
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.
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 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\u00a0the 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\u00a0change occurs. Further information regarding the Group\u2019s critical accounting judgements and estimates is provided in note 2
to\u00a0the 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 Projected cost of settling claims across all of the Group\u2019s insurance businesses, including the impact of continuing, albeit
reducing, high levels of inflation
\u2013 Projected trends in motor claims frequency
\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 Motor 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 impact of the More Than acquisition, which completed in the first half of 2024, with renewals starting in the second
half\u00a0of\u00a02024.
\u2022 The Group\u2019s solvency position, which continues to be closely monitored. 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\u00a0impact 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\u00a0continue 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\u00a0cashflows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, note 3 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 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 application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and
cashflows.
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 IFRS 18: Presentation and Disclosure in Financial Statements (effective 1 January 2027)
\u2013 IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new
requirements. The group will apply the new standard from its mandatory effective date of 1 January 2027. Even though IFRS
18\u00a0will not impact the recognition or measurement of items in the financial statements, it is anticipated that the application
of\u00a0these amendments may have an impact on the presentation group's consolidated financial statements in future periods.
\u2022 IFRS 19: Subsidiaries without Public Accountability: Disclosures (effective 1 January 2027).
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.
Representation of Consolidated Cashflow Statement
The 2023 Consolidated Cashflow Statement has been re-presented to reflect the gross cashflows relating to the subordinated loan
note, loan backed securities and other borrowings which were previously all presented on a net basis within the financial statement
line items \u2018proceeds from other financial liabilities\u2019 and \u2018proceeds on issue of loan backed securities\u2019. This has resulted in \u00a3292.2
million additional cash outflows within \u2018repayment of other financial liabilities\u2019 and the same inflow within \u2018proceeds from other
financial liabilities\u2019 and \u00a3246.8 million additional cash outflows within \u2018repayment of loan backed securities\u2019 and the same inflow
within \u2018proceeds on issue of loan backed securities\u2019. There is no overall impact on resulting cash, or the Consolidated Statement
of\u00a0Financial Position, Consolidated Income Statement or the Earnings per share calculations within.
Representation of Consolidated Statement of Comprehensive Income
The 2023 Consolidated Statement of Comprehensive Income has been re-presented to show the breakdown of the movements
in\u00a0the insurance finance reserve between that attributed to insurance contracts and that attributed to reinsurance contracts.
The\u00a0resulting deferred tax movement has also been re-presented. The\u00a0movements in the insurance finance reserve are included
within the Insurance finance reserve within the Statement of Changes in Equity. For the breakdown of the insurance finance reserve
between insurance contracts and reinsurance contracts, see note 5e to the financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-435": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-434": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-436": { "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 Projected cost of settling claims across all of the Group\u2019s insurance businesses, including the impact of continuing, albeit
reducing, high levels of inflation
\u2013 Projected trends in motor claims frequency
\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 Motor 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 impact of the More Than acquisition, which completed in the first half of 2024, with renewals starting in the second
half\u00a0of\u00a02024.
\u2022 The Group\u2019s solvency position, which continues to be closely monitored. 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\u00a0impact 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\u00a0continue 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\u00a0cashflows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, note 3 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-437": { "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 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 application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and
cashflows.
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 IFRS 18: Presentation and Disclosure in Financial Statements (effective 1 January 2027)
\u2013 IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new
requirements. The group will apply the new standard from its mandatory effective date of 1 January 2027. Even though IFRS
18\u00a0will not impact the recognition or measurement of items in the financial statements, it is anticipated that the application
of\u00a0these amendments may have an impact on the presentation group's consolidated financial statements in future periods.
\u2022 IFRS 19: Subsidiaries without Public Accountability: Disclosures (effective 1 January 2027).
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-438": { "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 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 application of the amendments listed above has not had a material impact on the Group\u2019s results, financial position and
cashflows.", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-439": { "value": "
Representation of Consolidated Cashflow Statement
The 2023 Consolidated Cashflow Statement has been re-presented to reflect the gross cashflows relating to the subordinated loan
note, loan backed securities and other borrowings which were previously all presented on a net basis within the financial statement
line items \u2018proceeds from other financial liabilities\u2019 and \u2018proceeds on issue of loan backed securities\u2019. This has resulted in \u00a3292.2
million additional cash outflows within \u2018repayment of other financial liabilities\u2019 and the same inflow within \u2018proceeds from other
financial liabilities\u2019 and \u00a3246.8 million additional cash outflows within \u2018repayment of loan backed securities\u2019 and the same inflow
within \u2018proceeds on issue of loan backed securities\u2019. There is no overall impact on resulting cash, or the Consolidated Statement
of\u00a0Financial Position, Consolidated Income Statement or the Earnings per share calculations within.
Representation of Consolidated Statement of Comprehensive Income
The 2023 Consolidated Statement of Comprehensive Income has been re-presented to show the breakdown of the movements
in\u00a0the insurance finance reserve between that attributed to insurance contracts and that attributed to reinsurance contracts.
The\u00a0resulting deferred tax movement has also been re-presented. The\u00a0movements in the insurance finance reserve are included
within the Insurance finance reserve within the Statement of Changes in Equity. For the breakdown of the insurance finance reserve
between insurance contracts and reinsurance contracts, see note 5e to the financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-440": { "value": "-292200000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:OtherInflowsOutflowsOfCashClassifiedAsFinancingActivities", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-441": { "value": "-246800000.0", "decimals": -5, "dimensions": { "concept": "admiralgroupplc:RepaymentOfLoanBackedSecuritiesClassifiedAsFinancingActivities", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-442": { "value": "
2. Critical accounting judgements and estimates
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\u00a0the 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\u00a0premiums within the contract boundary. The Group does not consider the existing products with more than 12 months coverage
to\u00a0be 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\u00a0contracts 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 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\u00a0such 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 services 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\u00a0performing 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\u00a0significant 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 contacts and are,
therefore, non-distinct investment components which are not accounted for separately. Given that the receipt and payment
of\u00a0these 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\u00a0presented 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\u00a0only 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\u00a0the 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\u00a0discussed 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\u00a0projection 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\u00a0sources 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\u00a0challenged as part of the process for making allowance for the uncertainties noted.
The Group also provides a best estimate for remediation cost relating to UK Motor total loss claims settled in previous periods
and\u00a0related processes. Management exercise judgement in assessing which customers should be remediated and apply estimation
techniques in deriving the remediation amounts included in these financial statements.
Refer to the analysis in note 5 to the financial statements for further detail on the methodology used to estimate future cashflows
to\u00a0fulfil insurance contracts.
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 (\u2018VaR\u2019)) on an ultimate basis, the Group estimates the probability distribution
of\u00a0the present value of the future cashflows from insurance contracts at each reporting date and calculates the risk adjustment
for\u00a0non-financial risk as the excess of the value at risk at the target confidence level over the expected present value of the future
cashflows. Factors included in the scenarios used to derive the risk adjustment distribution include the impact of future claims
inflation, Ogden shocks, and increases in claims costs due to regulatory decisions, and internal operational changes.
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\u00a0reflect 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\u00a0inform 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.
Refer to the analysis in note 5 to the financial statements for further detail on the methods used in the period to measure risk
adjustment for non-financial risk.
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\u00a0critical 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\u00a02 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.
Impact of climate-related risks on accounting judgements and estimates
Directors have assessed the impact of climate-related risks on the Group\u2019s Statement of Financial Position. Whilst there is inherent
uncertainty in performing such an assessment, no material impact has been identified in respect of specific judgements or
estimates related to climate-related risks on valuations included within the financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-443": { "value": "2. Critical accounting judgements and estimates 2.1 Critical accounting judgementsThe 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\u00a0the 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\u00a0premiums within the contract boundary. The Group does not consider the existing products with more than 12 months coverage to\u00a0be 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 contractsA 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\u00a0contracts 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 componentsThe 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 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\u00a0such 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 services 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\u00a0performing 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\u00a0significant 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 contacts and are, therefore, non-distinct investment components which are not accounted for separately. Given that the receipt and payment of\u00a0these 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\u00a0presented net of the minimum guaranteed amount that the Group will always receive). Presentation of reinsurance \u2018funds withheld\u2019 contractsThe 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\u00a0only 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\u00a0the 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 uncertaintyThe 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\u00a0discussed below. Best estimate of future cashflows to fulfil insurance contractsThe 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\u00a0projection 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\u00a0sources 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\u00a0challenged as part of the process for making allowance for the uncertainties noted.The Group also provides a best estimate for remediation cost relating to UK Motor total loss claims settled in previous periods and\u00a0related processes. Management exercise judgement in assessing which customers should be remediated and apply estimation techniques in deriving the remediation amounts included in these financial statements.Refer to the analysis in note 5 to the financial statements for further detail on the methodology used to estimate future cashflows to\u00a0fulfil insurance contracts.Methods used to measure the risk adjustment for non-financial riskThe 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 (\u2018VaR\u2019)) on an ultimate basis, the Group estimates the probability distribution of\u00a0the present value of the future cashflows from insurance contracts at each reporting date and calculates the risk adjustment for\u00a0non-financial risk as the excess of the value at risk at the target confidence level over the expected present value of the future cashflows. Factors included in the scenarios used to derive the risk adjustment distribution include the impact of future claims inflation, Ogden shocks, and increases in claims costs due to regulatory decisions, and internal operational changes.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\u00a0reflect 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\u00a0inform 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.Refer to the analysis in note 5 to the financial statements for further detail on the methods used in the period to measure risk adjustment for non-financial risk.Calculation of expected credit loss provisionThe 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\u00a0critical 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\u00a02 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.Impact of climate-related risks on accounting judgements and estimatesDirectors have assessed the impact of climate-related risks on the Group\u2019s Statement of Financial Position. Whilst there is inherent uncertainty in performing such an assessment, no material impact has been identified in respect of specific judgements or estimates related to climate-related risks on valuations included within the financial statements.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-444": { "value": "
3. Financial risk
The Group\u2019s activities expose it primarily to financial risk including insurance, reinsurance and reserve risk, credit risks and wider
market risks. The Board of Directors is ultimately responsible for the management of financial risks, although it has delegated
the\u00a0detailed 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.
The Group\u2019s primary business is the issuance of insurance contracts that transfer risk from policyholders to the Group and its
co-insurance partners. Primary risks arising from the issuance of insurance contracts include reserve risk; where claims reserves
may prove inadequate to cover the ultimate cost of claims which are by nature uncertain, and insurance risk; where inappropriate
premiums are charged for its insurance products leading to either insufficient premiums to cover claims costs or uncompetitive
rates resulting in reduced business volumes.
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 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 which monitor reserving risks. 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 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. 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\u00a0management 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. See note 3.4
for related sensitivity disclosures.
There have been no significant changes to the underlying methods to calibrate the reserve distribution during 2024, with the
reserve risk modelling in 2024. There has been a slight reduction in the volatility of the reserve risk distribution from which the
percentile is selected as a result of the strong reserve releases following the change in Ogden discount rate; otherwise it has not
changed significantly since the end of 2023.
The reserves including risk adjustment at 31\u00a0December 2024 equated to a 95th percentile confidence level position (2023: 93rd
percentile) to the nearest whole percentile. The change in the confidence level from 2023 is reflective of the Group\u2019s risk appetite,
taking into account an assessment of uncertainty, including the strong releases in the best estimate, inherent uncertainty in bodily
injury claims, growth in the UK motor book along with an assessment of other external factors.
3.2. Pricing risk
As noted above, the Group defines pricing 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. Pricing risk is considered within Insurance risk within the Group\u2019s principal
risks and uncertainties.
Key processes and controls operating to mitigate pricing 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.
3.3. Reinsurance risk
Reinsurance risk is the risk of placement of ineffective reinsurance arrangements, or the economic risk of reduced availability
of\u00a0reinsurance arrangements in future periods.
The Group mitigates these risks by ensuring that it has a diverse range of financially secure reinsurance partners, including
a\u00a0long-term relationship with Munich Re and a number of other large reinsurers.
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.
Amounts recoverable from reinsurers are estimated in a manner consistent with underlying insurance contract liabilities and
in\u00a0accordance 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\u00a0unable to meet its obligations.
Information regarding reinsurance credit risk is provided in note 3.5.
3.4. 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.
Risk adjustment
The sensitivities reflect the impact on profit before tax in 2024 and equity as at the end of 2024 for changes in the selection of the
UK Motor risk adjustment confidence level at 31\u00a0December 2024, with all other assumptions remaining unchanged.
2024
\u00a3m
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
Impact on equity
gross of reinsurance
Impact on equity net
of reinsurance
Risk adjustment decrease to 90th percentile
123.5
112.2
100.8
91.4
Risk adjustment decrease to 85th percentile
199.3
180.8
162.5
147.2
Undiscounted loss ratios, including risk adjustment
The sensitivities reflect the impact on profit before tax in 2024 and equity as at the end of 2024, of a change in in the booked loss
ratios for individual underwriting years (UWY) as at 31\u00a0December 2024, with all other assumptions remaining unchanged.
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
UWY 2024 impact on:
\u00a3m1
PBT
Equity
PBT
Equity
PBT
Equity
PBT
Equity
Increase of 1%: gross of reinsurance
(14.8)
(11.2)
(15.8)
(13.1)
(21.0)
(17.8)
(16.4)
(13.8)
Increase of 5%: gross of reinsurance
(67.5)
(51.2)
(72.4)
(60.2)
(98.5)
(83.8)
(75.4)
(63.9)
Increase of 10%: gross of reinsurance
(133.3)
(101.1)
(143.2)
(119.2)
(195.3)
(166.3)
(149.2)
(126.6)
Decrease of 1%: gross of reinsurance
16.7
12.7
16.1
13.3
22.5
18.9
16.8
14.0
Decrease of 5%: gross of reinsurance
76.7
58.1
85.7
70.2
118.7
98.9
88.8
73.9
Decrease of 10%: gross of reinsurance
164.5
124.5
171.8
140.7
232.3
194.1
180.9
150.3
Increase of 1%: net of reinsurance
(11.7)
(8.8)
(9.0)
(7.2)
(21.0)
(17.8)
(16.4)
(13.8)
Increase of 5%: net of reinsurance
(51.9)
(38.8)
(37.6)
(30.8)
(79.8)
(67.7)
(69.8)
(59.0)
Increase of 10%: net of reinsurance
(102.1)
(76.3)
(73.5)
(60.3)
(124.7)
(105.4)
(111.7)
(94.2)
Decrease of 1%: net of reinsurance
13.6
10.2
9.1
7.3
22.5
18.9
16.8
14.0
Decrease of 5%: net of reinsurance
63.1
47.2
54.0
43.4
118.7
98.9
88.8
73.9
Decrease of 10%: net of reinsurance
148.3
111.6
118.0
95.2
232.3
194.1
180.9
150.3
1\u2018Booked\u2019 loss ratios are undiscounted underwriting year loss ratios, including risk adjustment.
The sensitivities below reflect the impact on co-insurance profit commission within profit before tax in 2024, of a change in in the
booked loss ratios for individual underwriting years (UWY) as at 31\u00a0December 2024.
\u00a3m
UWY 2021
UWY 2022
UWY 2023
UWY 2024
Increase of 1%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Increase of 5%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Increase of 10%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Decrease of 1%: gross of reinsurance
3.6
2.0
3.1
2.0
Decrease of 5%: gross of reinsurance
10.9
14.9
21.8
15.0
Decrease of 10%: gross of reinsurance
32.8
30.3
38.7
33.4
3.5. Credit risk
The Group defines credit risk as the risk of financial loss if another party, with whom the group has contracted, fails to perform
or\u00a0meet 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 other 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
2024 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 corporate, government and private
debt as well as asset backed securities. The investment guidelines ensure management of credit risk. Generally, the duration
of\u00a0the securities is relatively short and similar to the duration of the on book claims liabilities
\u2022 Equity securities including private equity and infrastructure equity are held within diversified funds.
\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\u00a0amortised cost.
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.
The\u00a0Company manages risks through a comprehensive framework of key risk indicators (KRIs). These indicators are regularly
monitored and reviewed to ensure effective risk identification, measurement, and control. See note 7 for further information.
Other receivables
Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness
of\u00a0all 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 2024
AAA
AA
A
BBB and
Sub-BBB
Not rated
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments measured at FVTPL
Money market and other funds
184.8
469.6
405.1
31.3
285.7
1,376.5
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
46.9
46.9
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
(2.4)
(2.4)
Financial investments classified as FVOCI
Corporate and private debt securities
631.7
202.4
1,072.0
513.5
143.6
2,563.2
Government debt securities
53.4
711.1
5.1
2.6
\u2013
772.2
Financial assets measured at amortised cost
Deposits with credit institutions
\u2013
\u2013
81.7
10.0
\u2013
91.7
Total financial investments
869.9
1,383.1
1,563.9
557.4
473.8
4,848.1
Cash and cash equivalents
\u2013
12.7
288.7
12.0
0.2
313.6
Reinsurance contract assets
114.0
681.5
192.9
0.2
\u2013
988.6
Other receivables
\u2013
\u2013
\u2013
\u2013
110.4
110.4
Loans and advances to customers (note 7)1
\u2013
\u2013
\u2013
\u2013
1,106.9
1,106.9
Total exposure
983.9
2,077.3
2,045.5
569.6
1,691.3
7,367.6
31 December 2023
AAA
AA
A
BBB and
Sub-BBB
Not rated
Total
\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
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
Other
Investment in associate
\u2013
\u2013
\u2013
\u2013
1.0
1.0
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)1
879.4
879.4
Total exposure
666.3
1,853.1
2,028.5
564.5
1,249.4
6,361.8
1Loans 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.
\u00a3126 million of unrated exposure stems from securities with AAA/AA rated money market funds. Not rated corporate and private
debt represents debt securities without a public rating, here credit analysis is undertaken by Admiral\u2019s asset managers, while
Admiral review the asset managers and their credit process. A watchlist is maintained across rated and not rated exposure to determine
credit deterioration. Typical exposure stems from real estate debt, infrastructure debt, corporate loans and other assets.
There were no significant financial assets that were past due at the close of either 2024 or 2023.
3.6. Market risk
The Group\u2019s activities expose it primarily to market risks of credit spread, interest rate, liquidity and currency 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.
3.6.1. 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 realised 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
2024
31 December
2023
\u00a3m
\u00a3m
Reduction in equity \u2013 100bps
(50.6)
(75.4)
Reduction in equity \u2013 200bps
(99.0)
(150.8)
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.
3.6.2. 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\u00a0exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates. Money
market funds and other funds, and private debt are not materially affected by interest rate movements. As at 31 December 2024,
debt securities of \u00a3815.0 million are floating rate and \u00a32,675.2 million are fixed rate.
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
The Group holds a financial liability in the form of 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. This liability is recorded at amortised cost and therefore neither
the\u00a0carrying 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\u00a0cost.
Sensitivity to interest rate risk
The impact on profit (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 as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
Impact on equity
gross of reinsurance
Impact on equity net
of reinsurance
Increase of 100 basis points
\u2013
\u2013
60.8
58.3
Decrease of 100 basis points
\u2013
\u2013
(69.7)
(67.1)
Increase of 200 basis points
\u2013
\u2013
115.1
110.3
Decrease of 200 basis points
\u2013
\u2013
(152.2)
(146.9)
The impact on profit (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases
in interest rates on investments and cash as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit before tax
Impact on equity
Increase of 100 basis points
\u2013
(83.4)
Decrease of 100 basis points
\u2013
90.4
Increase of 200 basis points
\u2013
(161.0)
Decrease of 200 basis points
\u2013
189.2
Admiral invests in fixed and floating rate securities. Investment income on floating rate securities increases with changes in interest
rates, where as the market value of fixed rate securities is negatively correlated with changes in interest rates. Admiral\u2019s Money
Market and Other funds and Private Debt are predominantly floating rate securities, whereas Corporate and Government debt are
mostly fixed rate securities. Sensitivities for the 2023 comparative period are not significantly different to those provided above.
Changes in interest rates as at 31 December 2024 have no material impact on profit before tax (refer to Appendix 2 for the impact
on profit before tax arising from the impact of 100 bps and 200 basis point increases and decreases in interest rates during 2024).
The changes impact equity as follows:
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, 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.
3.6.3. 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\u00a0obligations 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\u00a0that 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.
Insurance contract liabilities
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
747.5
421.6
330.7
256.2
181.3
840.0
UK Non-motor insurance
142.3
32.4
11.5
4.6
1.4
0.2
International
287.3
121.1
60.8
34.8
24.0
128.8
31 December 2023
UK Motor
667.1
382.1
309.1
246.8
182.0
791.9
UK Non-motor insurance
152.1
28.4
10.4
5.1
2.7
0.5
International
277.1
104.1
59.0
32.8
19.1
123.5
Reinsurance contract assets
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
27.0
14.1
14.1
17.7
59.3
153.5
UK Non-motor insurance
125.9
21.3
7.3
4.6
2.0
0.7
International
227.7
70.8
41.3
25.3
16.7
94.8
31 December 2023
UK Motor
37.5
34.3
22.3
21.2
37.2
271.5
UK Non-motor insurance
115.2
32.2
8.6
5.0
2.9
0.6
International
255.5
57.3
32.7
23.3
17.9
120.0
Financial liabilities
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
21.3
42.5
42.5
345.6
Loan backed securities
275.0
407.5
202.5
52.7
Other borrowings
117.4
\u2013
\u2013
\u2013
Trade and other payables2
79.5
0.2
3.1
3.6
Lease liabilities1
7.2
14.6
11.2
51.9
Total financial liabilities
500.4
464.8
259.3
453.8
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
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 payables2
303.8
1.9
0.1
\u2013
Lease liabilities1
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
1Maturity analysis has been performed on a cash-settled basis.
2Trade and other payables as at 31 December 2024 exclude deferred income, accruals and other tax and social security of \u00a388.9 million.
A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade
and\u00a0other 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.
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other funds
1,237.9
31.0
67.6
40.0
Derivative financial instruments
(2.2)
0.4
(0.4)
(0.2)
Deposits with credit institutions
91.7
\u2013
\u2013
\u2013
Debt securities
390.5
1,155.5
955.4
834.0
Total financial investments
1,717.9
1,186.9
1,022.6
873.8
Cash and cash equivalents
313.6
\u2013
\u2013
\u2013
Total financial investments and cash
2,031.5
1,186.9
1,022.6
873.8
Insurance, trade and other receivables1
146.7
\u2013
\u2013
\u2013
Loans and advances to customers
265.5
533.7
263.6
44.1
Total financial assets
2,443.7
1,720.6
1,286.2
917.9
1Trade and other receivables as at 31 December 2024 exclude contract assets of \u00a314.8 million.
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other 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
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.
3.6.4. Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation
of\u00a0overseas assets and liabilities.
The Group is exposed to foreign exchange risk mainly 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.
Beyond the overseas operations, the Group is exposed to foreign exchange risk arising through investments denominated in dollars
and euros within its UK subsidiaries. The group mitigates the risk through the application of derivative positions resulting in an
immaterial exposure.
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.\u00a0The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a39.9 million (2023: \u00a33.9 million);
the exposure to net assets held in euros was \u00a3123.4 million (2023: \u00a376.8 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 \u00a31.2 million (2023: \u00a32.0 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 \u00a32.9 million (2023: \u00a31.3 million).
3.7. Concentration of risk
The Directors do not believe there are significant concentrations of insurance risk and/or reserve risk. This is because the risks are
spread across a large number of policies across a wide regional base. The International 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\u00a0the 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.
As seen in the notes above, there is no significant concentration of market or credit risk given that investments are diversified.
3.8. 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\u00a0assessed 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. Current risk appetite and dividend policy is consistent
with\u00a0the prior period.
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\u00a0regulatory approval, is 203% (2023: 200%). This includes the recognition of the 2024 final dividend of 121.0 pence per share
(2023:\u00a052.0\u00a0pence per share).
The Group\u2019s 2024 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 198%, with the reconciliation between this ratio and the 203% noted
above being as follows:
31 December
2024
31 December
2023
\u00a3m
\u00a3m
Regulatory solvency ratio (estimated and unaudited)
Solvency ratio as reported above
203%
200%
Change in valuation date1
(9%)
(11%)
Other (including impact of updated, unapproved capital add-on)
4%
(6%)
Solvency ratio to be reported (SFCR)
198%
183%
1The 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-445": { "value": "
3.4. 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.
Risk adjustment
The sensitivities reflect the impact on profit before tax in 2024 and equity as at the end of 2024 for changes in the selection of the
UK Motor risk adjustment confidence level at 31\u00a0December 2024, with all other assumptions remaining unchanged.
2024
\u00a3m
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
Impact on equity
gross of reinsurance
Impact on equity net
of reinsurance
Risk adjustment decrease to 90th percentile
123.5
112.2
100.8
91.4
Risk adjustment decrease to 85th percentile
199.3
180.8
162.5
147.2
Undiscounted loss ratios, including risk adjustment
The sensitivities reflect the impact on profit before tax in 2024 and equity as at the end of 2024, of a change in in the booked loss
ratios for individual underwriting years (UWY) as at 31\u00a0December 2024, with all other assumptions remaining unchanged.
UWY 2021 impact on:
UWY 2022 impact on:
UWY 2023 impact on:
UWY 2024 impact on:
\u00a3m1
PBT
Equity
PBT
Equity
PBT
Equity
PBT
Equity
Increase of 1%: gross of reinsurance
(14.8)
(11.2)
(15.8)
(13.1)
(21.0)
(17.8)
(16.4)
(13.8)
Increase of 5%: gross of reinsurance
(67.5)
(51.2)
(72.4)
(60.2)
(98.5)
(83.8)
(75.4)
(63.9)
Increase of 10%: gross of reinsurance
(133.3)
(101.1)
(143.2)
(119.2)
(195.3)
(166.3)
(149.2)
(126.6)
Decrease of 1%: gross of reinsurance
16.7
12.7
16.1
13.3
22.5
18.9
16.8
14.0
Decrease of 5%: gross of reinsurance
76.7
58.1
85.7
70.2
118.7
98.9
88.8
73.9
Decrease of 10%: gross of reinsurance
164.5
124.5
171.8
140.7
232.3
194.1
180.9
150.3
Increase of 1%: net of reinsurance
(11.7)
(8.8)
(9.0)
(7.2)
(21.0)
(17.8)
(16.4)
(13.8)
Increase of 5%: net of reinsurance
(51.9)
(38.8)
(37.6)
(30.8)
(79.8)
(67.7)
(69.8)
(59.0)
Increase of 10%: net of reinsurance
(102.1)
(76.3)
(73.5)
(60.3)
(124.7)
(105.4)
(111.7)
(94.2)
Decrease of 1%: net of reinsurance
13.6
10.2
9.1
7.3
22.5
18.9
16.8
14.0
Decrease of 5%: net of reinsurance
63.1
47.2
54.0
43.4
118.7
98.9
88.8
73.9
Decrease of 10%: net of reinsurance
148.3
111.6
118.0
95.2
232.3
194.1
180.9
150.3
1\u2018Booked\u2019 loss ratios are undiscounted underwriting year loss ratios, including risk adjustment.
The sensitivities below reflect the impact on co-insurance profit commission within profit before tax in 2024, of a change in in the
booked loss ratios for individual underwriting years (UWY) as at 31\u00a0December 2024.
\u00a3m
UWY 2021
UWY 2022
UWY 2023
UWY 2024
Increase of 1%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Increase of 5%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Increase of 10%: gross of reinsurance
(1.7)
(1.7)
(1.7)
(1.7)
Decrease of 1%: gross of reinsurance
3.6
2.0
3.1
2.0
Decrease of 5%: gross of reinsurance
10.9
14.9
21.8
15.0
Decrease of 10%: gross of reinsurance
32.8
30.3
38.7
33.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityAnalysisToChangesInRiskExposuresThatAriseFromContractsWithinScopeOfIFRS17Explanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-446": { "value": "
3.5. Credit risk
The Group defines credit risk as the risk of financial loss if another party, with whom the group has contracted, fails to perform
or\u00a0meet 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 other 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
2024 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 corporate, government and private
debt as well as asset backed securities. The investment guidelines ensure management of credit risk. Generally, the duration
of\u00a0the securities is relatively short and similar to the duration of the on book claims liabilities
\u2022 Equity securities including private equity and infrastructure equity are held within diversified funds.
\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\u00a0amortised cost.
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.
The\u00a0Company manages risks through a comprehensive framework of key risk indicators (KRIs). These indicators are regularly
monitored and reviewed to ensure effective risk identification, measurement, and control. See note 7 for further information.
Other receivables
Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthiness
of\u00a0all 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 2024
AAA
AA
A
BBB and
Sub-BBB
Not rated
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments measured at FVTPL
Money market and other funds
184.8
469.6
405.1
31.3
285.7
1,376.5
Equity Investments (designated FVTPL)
\u2013
\u2013
\u2013
\u2013
46.9
46.9
Derivative financial instruments
\u2013
\u2013
\u2013
\u2013
(2.4)
(2.4)
Financial investments classified as FVOCI
Corporate and private debt securities
631.7
202.4
1,072.0
513.5
143.6
2,563.2
Government debt securities
53.4
711.1
5.1
2.6
\u2013
772.2
Financial assets measured at amortised cost
Deposits with credit institutions
\u2013
\u2013
81.7
10.0
\u2013
91.7
Total financial investments
869.9
1,383.1
1,563.9
557.4
473.8
4,848.1
Cash and cash equivalents
\u2013
12.7
288.7
12.0
0.2
313.6
Reinsurance contract assets
114.0
681.5
192.9
0.2
\u2013
988.6
Other receivables
\u2013
\u2013
\u2013
\u2013
110.4
110.4
Loans and advances to customers (note 7)1
\u2013
\u2013
\u2013
\u2013
1,106.9
1,106.9
Total exposure
983.9
2,077.3
2,045.5
569.6
1,691.3
7,367.6
31 December 2023
AAA
AA
A
BBB and
Sub-BBB
Not rated
Total
\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
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
Other
Investment in associate
\u2013
\u2013
\u2013
\u2013
1.0
1.0
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)1
879.4
879.4
Total exposure
666.3
1,853.1
2,028.5
564.5
1,249.4
6,361.8
1Loans 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.
\u00a3126 million of unrated exposure stems from securities with AAA/AA rated money market funds. Not rated corporate and private
debt represents debt securities without a public rating, here credit analysis is undertaken by Admiral\u2019s asset managers, while
Admiral review the asset managers and their credit process. A watchlist is maintained across rated and not rated exposure to determine
credit deterioration. Typical exposure stems from real estate debt, infrastructure debt, corporate loans and other assets.
There were no significant financial assets that were past due at the close of either 2024 or 2023.
3.6.1. 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 realised 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
2024
31 December
2023
\u00a3m
\u00a3m
Reduction in equity \u2013 100bps
(50.6)
(75.4)
Reduction in equity \u2013 200bps
(99.0)
(150.8)
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-447": { "value": "
3.6. Market risk
The Group\u2019s activities expose it primarily to market risks of credit spread, interest rate, liquidity and currency 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.
3.6.1. 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 realised 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
2024
31 December
2023
\u00a3m
\u00a3m
Reduction in equity \u2013 100bps
(50.6)
(75.4)
Reduction in equity \u2013 200bps
(99.0)
(150.8)
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.
3.6.2. 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\u00a0exposed to the risk of adverse changes in fair values or future cashflows because of changes in market interest rates. Money
market funds and other funds, and private debt are not materially affected by interest rate movements. As at 31 December 2024,
debt securities of \u00a3815.0 million are floating rate and \u00a32,675.2 million are fixed rate.
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
The Group holds a financial liability in the form of 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. This liability is recorded at amortised cost and therefore neither
the\u00a0carrying 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\u00a0cost.
Sensitivity to interest rate risk
The impact on profit (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 as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
Impact on equity
gross of reinsurance
Impact on equity net
of reinsurance
Increase of 100 basis points
\u2013
\u2013
60.8
58.3
Decrease of 100 basis points
\u2013
\u2013
(69.7)
(67.1)
Increase of 200 basis points
\u2013
\u2013
115.1
110.3
Decrease of 200 basis points
\u2013
\u2013
(152.2)
(146.9)
The impact on profit (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases
in interest rates on investments and cash as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit before tax
Impact on equity
Increase of 100 basis points
\u2013
(83.4)
Decrease of 100 basis points
\u2013
90.4
Increase of 200 basis points
\u2013
(161.0)
Decrease of 200 basis points
\u2013
189.2
Admiral invests in fixed and floating rate securities. Investment income on floating rate securities increases with changes in interest
rates, where as the market value of fixed rate securities is negatively correlated with changes in interest rates. Admiral\u2019s Money
Market and Other funds and Private Debt are predominantly floating rate securities, whereas Corporate and Government debt are
mostly fixed rate securities. Sensitivities for the 2023 comparative period are not significantly different to those provided above.
Changes in interest rates as at 31 December 2024 have no material impact on profit before tax (refer to Appendix 2 for the impact
on profit before tax arising from the impact of 100 bps and 200 basis point increases and decreases in interest rates during 2024).
The changes impact equity as follows:
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, 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.
3.6.3. 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\u00a0obligations 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\u00a0that 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.
Insurance contract liabilities
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
747.5
421.6
330.7
256.2
181.3
840.0
UK Non-motor insurance
142.3
32.4
11.5
4.6
1.4
0.2
International
287.3
121.1
60.8
34.8
24.0
128.8
31 December 2023
UK Motor
667.1
382.1
309.1
246.8
182.0
791.9
UK Non-motor insurance
152.1
28.4
10.4
5.1
2.7
0.5
International
277.1
104.1
59.0
32.8
19.1
123.5
Reinsurance contract assets
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
27.0
14.1
14.1
17.7
59.3
153.5
UK Non-motor insurance
125.9
21.3
7.3
4.6
2.0
0.7
International
227.7
70.8
41.3
25.3
16.7
94.8
31 December 2023
UK Motor
37.5
34.3
22.3
21.2
37.2
271.5
UK Non-motor insurance
115.2
32.2
8.6
5.0
2.9
0.6
International
255.5
57.3
32.7
23.3
17.9
120.0
Financial liabilities
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
21.3
42.5
42.5
345.6
Loan backed securities
275.0
407.5
202.5
52.7
Other borrowings
117.4
\u2013
\u2013
\u2013
Trade and other payables2
79.5
0.2
3.1
3.6
Lease liabilities1
7.2
14.6
11.2
51.9
Total financial liabilities
500.4
464.8
259.3
453.8
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
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 payables2
303.8
1.9
0.1
\u2013
Lease liabilities1
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
1Maturity analysis has been performed on a cash-settled basis.
2Trade and other payables as at 31 December 2024 exclude deferred income, accruals and other tax and social security of \u00a388.9 million.
A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade
and\u00a0other 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.
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other funds
1,237.9
31.0
67.6
40.0
Derivative financial instruments
(2.2)
0.4
(0.4)
(0.2)
Deposits with credit institutions
91.7
\u2013
\u2013
\u2013
Debt securities
390.5
1,155.5
955.4
834.0
Total financial investments
1,717.9
1,186.9
1,022.6
873.8
Cash and cash equivalents
313.6
\u2013
\u2013
\u2013
Total financial investments and cash
2,031.5
1,186.9
1,022.6
873.8
Insurance, trade and other receivables1
146.7
\u2013
\u2013
\u2013
Loans and advances to customers
265.5
533.7
263.6
44.1
Total financial assets
2,443.7
1,720.6
1,286.2
917.9
1Trade and other receivables as at 31 December 2024 exclude contract assets of \u00a314.8 million.
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other 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
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.
3.6.4. Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation
of\u00a0overseas assets and liabilities.
The Group is exposed to foreign exchange risk mainly 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.
Beyond the overseas operations, the Group is exposed to foreign exchange risk arising through investments denominated in dollars
and euros within its UK subsidiaries. The group mitigates the risk through the application of derivative positions resulting in an
immaterial exposure.
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.\u00a0The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a39.9 million (2023: \u00a33.9 million);
the exposure to net assets held in euros was \u00a3123.4 million (2023: \u00a376.8 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 \u00a31.2 million (2023: \u00a32.0 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 \u00a32.9 million (2023: \u00a31.3 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-450": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-449": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-448": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-451": { "value": "
Sensitivity to interest rate risk
The impact on profit (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 as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit
before tax gross of
reinsurance
Impact on profit
before tax net of
reinsurance
Impact on equity
gross of reinsurance
Impact on equity net
of reinsurance
Increase of 100 basis points
\u2013
\u2013
60.8
58.3
Decrease of 100 basis points
\u2013
\u2013
(69.7)
(67.1)
Increase of 200 basis points
\u2013
\u2013
115.1
110.3
Decrease of 200 basis points
\u2013
\u2013
(152.2)
(146.9)
The impact on profit (before tax) and equity arising from the impact of 100 basis point and 200 basis point increases and decreases
in interest rates on investments and cash as at 31 December 2024, is as follows:
31 December 2024
\u00a3m
Impact on profit before tax
Impact on equity
Increase of 100 basis points
\u2013
(83.4)
Decrease of 100 basis points
\u2013
90.4
Increase of 200 basis points
\u2013
(161.0)
Decrease of 200 basis points
\u2013
189.2
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-452": { "value": "
3.6.3. 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\u00a0obligations 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\u00a0that 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.
Insurance contract liabilities
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
747.5
421.6
330.7
256.2
181.3
840.0
UK Non-motor insurance
142.3
32.4
11.5
4.6
1.4
0.2
International
287.3
121.1
60.8
34.8
24.0
128.8
31 December 2023
UK Motor
667.1
382.1
309.1
246.8
182.0
791.9
UK Non-motor insurance
152.1
28.4
10.4
5.1
2.7
0.5
International
277.1
104.1
59.0
32.8
19.1
123.5
Reinsurance contract assets
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
27.0
14.1
14.1
17.7
59.3
153.5
UK Non-motor insurance
125.9
21.3
7.3
4.6
2.0
0.7
International
227.7
70.8
41.3
25.3
16.7
94.8
31 December 2023
UK Motor
37.5
34.3
22.3
21.2
37.2
271.5
UK Non-motor insurance
115.2
32.2
8.6
5.0
2.9
0.6
International
255.5
57.3
32.7
23.3
17.9
120.0
Financial liabilities
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
21.3
42.5
42.5
345.6
Loan backed securities
275.0
407.5
202.5
52.7
Other borrowings
117.4
\u2013
\u2013
\u2013
Trade and other payables2
79.5
0.2
3.1
3.6
Lease liabilities1
7.2
14.6
11.2
51.9
Total financial liabilities
500.4
464.8
259.3
453.8
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial liabilities
Subordinated notes1
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 payables2
303.8
1.9
0.1
\u2013
Lease liabilities1
14.9
15.1
11.5
50.5
Total financial liabilities
712.0
401.1
182.4
448.2
1Maturity analysis has been performed on a cash-settled basis.
2Trade and other payables as at 31 December 2024 exclude deferred income, accruals and other tax and social security of \u00a388.9 million.
A breakdown of the Group\u2019s other borrowings, trade payables and other payables is shown in note 11. The majority of trade
and\u00a0other 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.
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other funds
1,237.9
31.0
67.6
40.0
Derivative financial instruments
(2.2)
0.4
(0.4)
(0.2)
Deposits with credit institutions
91.7
\u2013
\u2013
\u2013
Debt securities
390.5
1,155.5
955.4
834.0
Total financial investments
1,717.9
1,186.9
1,022.6
873.8
Cash and cash equivalents
313.6
\u2013
\u2013
\u2013
Total financial investments and cash
2,031.5
1,186.9
1,022.6
873.8
Insurance, trade and other receivables1
146.7
\u2013
\u2013
\u2013
Loans and advances to customers
265.5
533.7
263.6
44.1
Total financial assets
2,443.7
1,720.6
1,286.2
917.9
1Trade and other receivables as at 31 December 2024 exclude contract assets of \u00a314.8 million.
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other 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
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-453": { "value": "
Insurance contract liabilities
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
747.5
421.6
330.7
256.2
181.3
840.0
UK Non-motor insurance
142.3
32.4
11.5
4.6
1.4
0.2
International
287.3
121.1
60.8
34.8
24.0
128.8
31 December 2023
UK Motor
667.1
382.1
309.1
246.8
182.0
791.9
UK Non-motor insurance
152.1
28.4
10.4
5.1
2.7
0.5
International
277.1
104.1
59.0
32.8
19.1
123.5
Reinsurance contract assets
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
31 December 2024
UK Motor
27.0
14.1
14.1
17.7
59.3
153.5
UK Non-motor insurance
125.9
21.3
7.3
4.6
2.0
0.7
International
227.7
70.8
41.3
25.3
16.7
94.8
31 December 2023
UK Motor
37.5
34.3
22.3
21.2
37.2
271.5
UK Non-motor insurance
115.2
32.2
8.6
5.0
2.9
0.6
International
255.5
57.3
32.7
23.3
17.9
120.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisForLiquidityRiskThatArisesFromContractsWithinScopeOfIFRS17Explanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-454": { "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.
31 December 2024
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other funds
1,237.9
31.0
67.6
40.0
Derivative financial instruments
(2.2)
0.4
(0.4)
(0.2)
Deposits with credit institutions
91.7
\u2013
\u2013
\u2013
Debt securities
390.5
1,155.5
955.4
834.0
Total financial investments
1,717.9
1,186.9
1,022.6
873.8
Cash and cash equivalents
313.6
\u2013
\u2013
\u2013
Total financial investments and cash
2,031.5
1,186.9
1,022.6
873.8
Insurance, trade and other receivables1
146.7
\u2013
\u2013
\u2013
Loans and advances to customers
265.5
533.7
263.6
44.1
Total financial assets
2,443.7
1,720.6
1,286.2
917.9
1Trade and other receivables as at 31 December 2024 exclude contract assets of \u00a314.8 million.
31 December 2023
<1 year
1-3 years
3-5 years
>5 years
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial investments
Money market and other 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
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-455": { "value": "
3.6.4. Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation
of\u00a0overseas assets and liabilities.
The Group is exposed to foreign exchange risk mainly 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.
Beyond the overseas operations, the Group is exposed to foreign exchange risk arising through investments denominated in dollars
and euros within its UK subsidiaries. The group mitigates the risk through the application of derivative positions resulting in an
immaterial exposure.
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.\u00a0The Group\u2019s exposure to net assets held in dollars at the balance sheet date was \u00a39.9 million (2023: \u00a33.9 million);
the exposure to net assets held in euros was \u00a3123.4 million (2023: \u00a376.8 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 \u00a31.2 million (2023: \u00a32.0 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 \u00a32.9 million (2023: \u00a31.3 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-456": { "value": "
3.8. 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\u00a0assessed 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. Current risk appetite and dividend policy is consistent
with\u00a0the prior period.
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-457": { "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\u00a0December 2024 and comparative figures
for the year ended 31\u00a0December 2023. 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\u00a0accordance 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\u00a0translated 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\u00a0the Income Statement.
4b. Segment reporting
The Group has four reportable segments, as described below. These segments represent the principal split of business that
is\u00a0regularly 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 consumer finance and car finance products
in the UK, through the comparison channel, credit scoring applications and direct channels including car dealers and brokers.
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.
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\u00a0December 2024, by reportable segment, is shown below.
The\u00a0accounting 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 2024
UK
Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral
Money
\u00a3m
Other
\u00a3m
Eliminations3
\u00a3m
Total
\u00a3m
Turnover1
5,108.5
840.0
108.3
89.9
\u2013
6,146.7
Insurance revenue
3,873.4
829.5
\u2013
73.3
\u2013
4,776.2
Insurance revenue net of XoL
3,751.1
794.2
\u2013
65.8
\u2013
4,611.1
Insurance services expenses
(745.7)
(236.5)
\u2013
(33.7)
\u2013
(1,015.9)
Insurance claims net of XoL
(1,952.1)
(564.5)
\u2013
(39.0)
\u2013
(2,555.6)
Quota share reinsurance result
(290.0)
(4.1)
\u2013
\u2013
\u2013
(294.1)
Net movement in onerous loss component
1.1
0.4
\u2013
\u2013
\u2013
1.5
Underwriting result
764.4
(10.5)
\u2013
(6.9)
\u2013
747.0
Net investment income2
70.5
6.1
0.3
0.7
(7.9)
69.7
Net interest income from financial services
\u2013
\u2013
69.3
0.9
6.1
76.3
Net other revenue and operating expenses
141.8
(0.9)
(56.6)
(12.1)
\u2013
72.2
Segment profit/(loss) before tax4
976.7
(5.3)
13.0
(17.4)
(1.8)
965.2
Other central revenue and expenses, including share
scheme charges
(115.0)
Investment and interest income
13.5
Finance costs
(24.5)
Consolidated profit before tax
839.2
Taxation expense
(176.3)
Consolidated profit after tax
662.9
Revenue and results for the corresponding reportable segments for the year ended 31\u00a0December 2023 are shown below.
Year ended 31 December 2023
UK
Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral
Money
\u00a3m
Other
\u00a3m
Eliminations3
\u00a3m
Total
\u00a3m
Turnover1
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 services 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 income2
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 tax4
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
1Turnover is an Alternative Performance Measure presented before intra-group eliminations. Refer to the glossary and note 14 for further information.
2Net Investment income is reported net of impairment of financial assets, in line with management reporting.
3Eliminations are in respect of the intra-group interest charges related to the UK Insurance and Admiral Money segment.
4Segment results exclude gross share scheme charges, and any quota share reinsurance recoveries; these net share scheme charges are presented within \u2018Other central revenue
and\u00a0expenses, 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.
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\u00a0December 2024 are as follows:
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 and balances included in insurance and other receivables.
The segment assets and liabilities at 31\u00a0December 2023 are as follows:
Year ended 31 December 2023
UK Insurance
International
Insurance
Admiral
Money
Other
Eliminations
Total
\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
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-458": { "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\u00a0December 2024 and comparative figures
for the year ended 31\u00a0December 2023. 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\u00a0accordance 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\u00a0translated 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\u00a0the Income Statement.
5a. 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\u00a0reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made
by\u00a0management 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\u00a0a\u00a0proportional 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:
1) A group of contracts that are onerous at initial recognition, if any
2) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
3) 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\u00a0a\u00a0group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract
is\u00a0initially 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\u00a0measuring 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\u00a0new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with
the\u00a0contract 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\u00a0provide 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\u00a0benefits that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
1. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and,
as\u00a0a\u00a0result, can set a price or level of benefits that fully reflects the risk of that portfolio
2. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to\u00a0periods 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\u00a0amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the
policyholder to\u00a0the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk,
are\u00a0not 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\u00a0in\u00a0which 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\u00a0assets 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.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation
approach (\u2018PAA\u2019)
eligibility
Subject to specified criteria, the PAA can
be\u00a0adopted as a simplified approach to the
IFRS\u00a017\u00a0general model.
Coverage period for the Group\u2019s insurance
contracts assumed is one year or less and so
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
cashflows for insurance
contracts issued
Where the coverage period of all contracts
within a group is not longer than one year,
insurance acquisition cashflows can either be
expensed as 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.
The Group\u2019s insurance contracts are all one year
or\u00a0less. The Group has therefore taken the option
to expense acquisition costs as incurred.
Liability for Remaining
Coverage (\u2018LRC\u2019),
adjusted for financial
risk and time value of
money
Where there is no significant financing
component in relation to the LRC, or where
the\u00a0time between providing each part of the
services and the related premium due date is
no more than a year, an entity is not required
to\u00a0make an adjustment for accretion of
interest\u00a0on the LRC.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
Liability for Incurred
Claims (\u2018LIC\u2019) adjusted
for time value of money
For PAA groups, where claims or directly
attributable insurance expenses are expected
to be paid within a year of the date that the
claim is incurred, it is not required to adjust
these amounts for the time value of money.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses,
no\u00a0adjustment 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
income and expense
There is an option to disaggregate part of
the\u00a0movement in the LIC, LRC, AIC and ARC
resulting from changes in discount rates,
and\u00a0present this in Other Comprehensive
Income (\u2018OCI\u2019).
The impact on LIC, LRC, AIC and ARC of changes
in discount rates will be captured within OCI, in line
with the accounting for assets backing the
insurance claims liabilities.
Interim reporting
Where an entity is required to apply IAS 34
(as\u00a0for the Group) there is an option as to
whether to choose a \u2018year-to-date\u2019 basis or
a\u00a0\u201cperiod to date\u201d basis for financial reporting.
The Group has opted to apply the option to use
year-to-date accounting for interim 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\u00a0contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect
the\u00a0timing 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\u00a0market 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\u00a0non-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\u00a0contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group
of\u00a0reinsurance 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\u00a0risk-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\u00a0terms 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\u00a0published 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.\u00a0The illiquidity premium is determined
by\u00a0management considering various internal benchmarks. This includes considering the cost of liquidity for the Group (through
its\u00a0Revolving Credit Facilities), by deducting the risk-free rate and credit risk premium from a corporate bond reference portfolio,
and by deducting public market yields from similarly rated private market yields. Each method points to a different mathematical
result and judgement is applied when determining the illiquidity premium. \u00a0
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 2024
31 December 2023
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.0%
4.7%
4.5%
4.6%
5.4%
4.3%
4.0%
3.9%
International
(European motor)
2.7%
2.6%
2.6%
2.8%
4.0%
3.1%
3.0%
3.0%
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).\u00a0Quantitative
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\u00a0change 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\u00a0performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are
required to\u00a0fulfil 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 14 for further information regarding the disaggretation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees from insurance revenue derived from
the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Please see note 8a for
the treatment of the co-insurance share retained by the group of instalment income and administration fees.
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 (such as employee costs, depreciation
and amortisation) 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.
Non-cash costs that are directly attributable, such as depreciation, amortisation and IFRS 2 equity-settled share scheme costs,
are\u00a0recognised within insurance service expenses; these are transferred out of the LIC into the appropriate Financial Statement line
item for presentation in the Statement of Financial Position.
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\u00a0lower premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 3 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 \u2018net\u2019 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:
1. The effect of the time value of money and changes in the time value of money
2. The effect of financial risk and changes in financial risk.
The Group has taken the option to disaggregate insurance finance income or expenses on insurance contracts issued between
the\u00a0Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income.
As a result, applying the premium allocation approach, claims incurred are discounted at the date of initial recognition and the
finance expense recognised in the Consolidated Income Statement reflects the unwind of this discounting, at the locked in discount
rate, over the expected payment period. The same approach is taken for reinsurance claims assets. Discounting on the liability and
asset for remaining coverage only occurs in the case of the recognition of an onerous loss component (and related loss-recovery
component) and as a result is not material.
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 re-measured 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\u00a0remaining 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\u00a0a 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\u00a0expenses 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\u00a0zero 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\u00a0a\u00a0result 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:
1. The Group\u2019s business model for managing the financial assets, and
2. 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\u00a0not 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\u00a0customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised
in\u00a0interest\u00a0income.
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\u00a0the 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. These represent open
ended private debt securities held in investment funds.
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, closed ended private debt funds\u00a0
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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, 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\u00a0derivatives 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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
7a. Accounting policies
Loans and advances to customers consist of unsecured personal loans and car finance products.\u00a0\u00a0
Classification\u00a0
Loans and advances to customers are measured at amortised cost. This is because assets are held\u00a0in order to\u00a0collect 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.\u00a0\u00a0
Interest income and expense\u00a0
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.
Interest expense is calculated\u00a0using the effective interest rate appropriate to each source of funding.\u00a0
Finance leases\u00a0
Included within\u00a0loans and advances to customers are\u00a0personal contract purchase\u00a0(PCP)\u00a0and hire purchase\u00a0(HP)\u00a0arrangements
which are classified as finance leases under IFRS 16.\u00a0A receivable equal to the net investment in the lease has been
recognised.\u00a0The\u00a0net investment is equal to the gross investment in the lease discounted at the rate implicit in the lease.\u00a0\u00a0
Lease\u00a0interest\u00a0income is recognised within\u00a0interest income\u00a0in the income statement over the term of the lease using the\u00a0effective
interest rate\u00a0method.\u00a0\u00a0
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\u00a0provide protection against deterioration in that value.
8a. Accounting policies
(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 note 5).
Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue is 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 note 5) due to the income being separable from the host insurance contract. This instalment income is recognised over time
in\u00a0line with the provision of the service.
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\u00a0subsidiary 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, including
instalment income and
administration fees:
where\u00a0the income
is\u00a0separable from
the\u00a0underlying
insurance\u00a0contract
The performance obligation is the provision of insurance intermediary services, being a successful
sale of ancillary product at which point the performance obligation is met, and in the case
of\u00a0instalment income, the provision of credit. Revenue for intermediary services is therefore
recognised at a point in time, whilst revenue for the provision of credit is recognised over time,
matching the Group\u2019s provision of services. Where the Group has no remaining obligations, the
revenue is recognised immediately. An allowance is made for expected cancellations where the
customer may 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 law firm
The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
on\u00a0behalf 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 closed 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\u00a0performance completed to date and the work performed to date has no alternative use
to\u00a0the\u00a0Group.
A contract asset is recognised equal to the work performed up to the balance sheet date.
Refer\u00a0to\u00a0note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission
from\u00a0co-insurers
Profit commission is generated if an individual year is profitable, based on the premiums written
and expenses and claims costs incurred. Given that the ultimate outcome of the claims cost is
uncertain for a period of time until final settlement, profit commission is therefore variable.\u00a0
The cumulative profit commission recognised at each point in time 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\u00a0the conclusion of each underwriting year and are not subject to judgement, the claims cost
is\u00a0subject 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\u00a0no 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\u00a0note 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 income
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at\u00a0a\u00a0point 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.
Under IFRS 17 a significant proportion of \u201cOther revenue\u201d recognised as insurance revenue given that it is not separable from the
underlying insurance contract.
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\u00a0incurred 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\u00a0to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result
in\u00a0a\u00a0cash 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 DFSS shares awarded are subject to financial and non-financial performance conditions. The financial performance
conditions are Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment
companies) over a three-year period. The non-financial performance conditions include measures for group net promoter scores,
diversity and inclusion. The other 50% of DFSS shares awarded 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\u00a0shares 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 represents the fair value of the employee services received and to which is measured
by reference to the fair value of the shares granted, is recognised as an expense, with a corresponding increase in equity, as shown
in Consolidated statement of changes in equity (2024: \u00a367.8 million; 2023: \u00a363.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in\u00a0liabilities.
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\u00a0receive 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
3-5 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\u00a0the balance sheet date.
10a. Accounting policies
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\u00a0substantively 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\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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.
11a. Accounting policies
(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 on acquisitions of trade
and assets representing a business and/or acquisition of subsidiaries and represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
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 every six months for evidence of impairment and tested annually for impairment.
The goodwill held on the balance sheet at 31\u00a0December 2024 includes goodwill from acquisition of EUI Limited which has been
allocated to the UK insurance segment, and goodwill arising from the acquisition of Home and Pet renewal rights from RSA
Insurance Group Limited which has been allocated to the UK Pet and Household CGUs.
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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the license 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 (generally between 3 and 4 years) 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.
(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\u00a0non-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 except for impairment gains and losses which are recognised in the income statement.
The accumulated changes in fair value are transferred to profit or loss when the investment is derecognised or reclassified.
(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\u00a0profit 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-459": { "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\u00a0December 2024 and comparative figures
for the year ended 31\u00a0December 2023. 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\u00a0accordance 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-460": { "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\u00a0December 2024 and comparative figures
for the year ended 31\u00a0December 2023. 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-461": { "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\u00a0translated 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\u00a0the Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-462": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-463": { "value": "
The Group has four reportable segments, as described below. These segments represent the principal split of business that
is\u00a0regularly 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-464": { "value": "
5. Insurance Service result
5a. 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\u00a0reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made
by\u00a0management 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\u00a0a\u00a0proportional 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:
1) A group of contracts that are onerous at initial recognition, if any
2) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
3) 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\u00a0a\u00a0group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract
is\u00a0initially 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\u00a0measuring 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\u00a0new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with
the\u00a0contract 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\u00a0provide 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\u00a0benefits that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
1. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and,
as\u00a0a\u00a0result, can set a price or level of benefits that fully reflects the risk of that portfolio
2. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to\u00a0periods 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\u00a0amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the
policyholder to\u00a0the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk,
are\u00a0not 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\u00a0in\u00a0which 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\u00a0assets 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.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation
approach (\u2018PAA\u2019)
eligibility
Subject to specified criteria, the PAA can
be\u00a0adopted as a simplified approach to the
IFRS\u00a017\u00a0general model.
Coverage period for the Group\u2019s insurance
contracts assumed is one year or less and so
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
cashflows for insurance
contracts issued
Where the coverage period of all contracts
within a group is not longer than one year,
insurance acquisition cashflows can either be
expensed as 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.
The Group\u2019s insurance contracts are all one year
or\u00a0less. The Group has therefore taken the option
to expense acquisition costs as incurred.
Liability for Remaining
Coverage (\u2018LRC\u2019),
adjusted for financial
risk and time value of
money
Where there is no significant financing
component in relation to the LRC, or where
the\u00a0time between providing each part of the
services and the related premium due date is
no more than a year, an entity is not required
to\u00a0make an adjustment for accretion of
interest\u00a0on the LRC.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
Liability for Incurred
Claims (\u2018LIC\u2019) adjusted
for time value of money
For PAA groups, where claims or directly
attributable insurance expenses are expected
to be paid within a year of the date that the
claim is incurred, it is not required to adjust
these amounts for the time value of money.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses,
no\u00a0adjustment 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
income and expense
There is an option to disaggregate part of
the\u00a0movement in the LIC, LRC, AIC and ARC
resulting from changes in discount rates,
and\u00a0present this in Other Comprehensive
Income (\u2018OCI\u2019).
The impact on LIC, LRC, AIC and ARC of changes
in discount rates will be captured within OCI, in line
with the accounting for assets backing the
insurance claims liabilities.
Interim reporting
Where an entity is required to apply IAS 34
(as\u00a0for the Group) there is an option as to
whether to choose a \u2018year-to-date\u2019 basis or
a\u00a0\u201cperiod to date\u201d basis for financial reporting.
The Group has opted to apply the option to use
year-to-date accounting for interim 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\u00a0contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect
the\u00a0timing 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\u00a0market 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\u00a0non-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\u00a0contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group
of\u00a0reinsurance 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\u00a0risk-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\u00a0terms 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\u00a0published 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.\u00a0The illiquidity premium is determined
by\u00a0management considering various internal benchmarks. This includes considering the cost of liquidity for the Group (through
its\u00a0Revolving Credit Facilities), by deducting the risk-free rate and credit risk premium from a corporate bond reference portfolio,
and by deducting public market yields from similarly rated private market yields. Each method points to a different mathematical
result and judgement is applied when determining the illiquidity premium. \u00a0
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 2024
31 December 2023
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.0%
4.7%
4.5%
4.6%
5.4%
4.3%
4.0%
3.9%
International
(European motor)
2.7%
2.6%
2.6%
2.8%
4.0%
3.1%
3.0%
3.0%
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).\u00a0Quantitative
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\u00a0change 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\u00a0performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are
required to\u00a0fulfil 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 14 for further information regarding the disaggretation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees from insurance revenue derived from
the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Please see note 8a for
the treatment of the co-insurance share retained by the group of instalment income and administration fees.
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 (such as employee costs, depreciation
and amortisation) 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.
Non-cash costs that are directly attributable, such as depreciation, amortisation and IFRS 2 equity-settled share scheme costs,
are\u00a0recognised within insurance service expenses; these are transferred out of the LIC into the appropriate Financial Statement line
item for presentation in the Statement of Financial Position.
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\u00a0lower premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 3 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 \u2018net\u2019 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:
1. The effect of the time value of money and changes in the time value of money
2. The effect of financial risk and changes in financial risk.
The Group has taken the option to disaggregate insurance finance income or expenses on insurance contracts issued between
the\u00a0Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income.
As a result, applying the premium allocation approach, claims incurred are discounted at the date of initial recognition and the
finance expense recognised in the Consolidated Income Statement reflects the unwind of this discounting, at the locked in discount
rate, over the expected payment period. The same approach is taken for reinsurance claims assets. Discounting on the liability and
asset for remaining coverage only occurs in the case of the recognition of an onerous loss component (and related loss-recovery
component) and as a result is not material.
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 re-measured 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\u00a0remaining 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\u00a0a 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\u00a0expenses 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\u00a0zero 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\u00a0a\u00a0result 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\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
3,369.5
503.9
829.5
73.3
4,776.2
Insurance revenue for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
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\u00a0duration, lasting for between 6 and 12 months.
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Incurred claims
Claims incurred in the period
2,107.2
298.2
583.7
48.9
3,038.0
Changes to liabilities for incurred claims
(496.1)
(51.4)
(11.1)
(1.3)
(559.9)
Total incurred claims
1,611.1
246.8
572.6
47.6
2,478.1
Movement in onerous contracts
(5.1)
0.1
(0.1)
\u2013
(5.1)
Directly attributable expenses
Administration expenses
461.5
113.7
175.2
18.7
769.1
Acquisition expenses
125.3
45.2
61.3
15.0
246.8
Insurance expenses
586.8
158.9
236.5
33.7
1,015.9
Share scheme expenses
40.7
5.4
11.1
1.4
58.6
Total insurance expenses including share scheme expenses
627.5
164.3
247.6
35.1
1,074.5
Total Insurance service expenses
2,233.5
411.2
820.1
82.7
3,547.5
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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 including 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
5d. Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2024
are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Allocation of reinsurance premiums
145.8
45.8
153.9
7.6
353.1
Amounts recoverable from reinsurers for incurred insurance
service expenses
Incurred claims
(29.2)
3.1
(275.9)
(8.5)
(310.5)
Changes to liabilities for incurred claims
291.6
34.3
146.3
\u2013
472.2
Net expense from reinsurance contracts excluding
movement in onerous loss component
408.2
83.2
24.3
(0.9)
514.8
Other reinsurance recoveries including movement in onerous
loss component
4.0
(0.1)
(0.3)
\u2013
3.6
Net expenses/(income) from reinsurance contracts held
412.2
83.1
24.0
(0.9)
518.4
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2023
are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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
5e. Finance expenses /(income) from insurance contracts held and reinsurance contracts issued
\u00a3m
31 December
2024
31 December
2023
Amounts recognised through the income statement
Insurance finance expenses from insurance contracts issued
128.4
94.5
Insurance finance income from reinsurance contracts held
(35.9)
(28.9)
Net finance expense from insurance / reinsurance contracts issued
92.5
65.6
\u00a3m
31 December
2024
31 December
2023
Insurance finance reserve
Insurance finance reserve \u2013 insurance contracts
119.0
111.1
Deferred tax in relation to insurance finance reserve - insurance contracts
(18.6)
(13.5)
Insurance finance reserve \u2013 reinsurance contracts
(32.4)
(35.7)
Deferred tax in relation to insurance finance reserve - reinsurance contracts
4.7
3.4
Total insurance finance reserve
72.7
65.3
See note 6b for details of the relationship between finance (expenses)/ income from insurance contracts held and reinsurance
contracts issued, and investment return.
5f. Insurance Liabilities and Reinsurance assets
(i) Analysis of recognised amounts
Year ended 31 December 2024
Year ended 31 December 2023
\u00a3m
Liability for
remaining
coverage
Liability for
incurred claims
Total
Liability for
remaining
coverage
Liability for
incurred claims
Total
Insurance contracts issued
UK Motor
883.3
2,691.1
3,574.4
769.0
2,546.7
3,315.7
UK Non-motor
195.3
214.7
410.0
136.2
217.5
353.7
International Motor
201.4
690.2
891.6
221.0
641.5
862.5
Other
8.6
76.8
85.4
3.5
46.3
49.8
Total insurance contracts issued
1,288.6
3,672.8
4,961.4
1,129.7
3,452.0
4,581.7
Asset/(liability)
for remaining
coverage
Asset for
incurred claims
Total
Asset/(liability)
for remaining
coverage
Asset for
incurred claims
Total
Reinsurance contracts held
UK Motor
34.0
236.5
270.5
23.1
496.8
519.9
UK Non-Motor
11.2
173.5
184.7
21.4
170.2
191.6
International Motor
43.1
481.5
524.6
(21.0)
502.8
481.8
Other
(0.1)
8.9
8.8
(1.4)
\u2013
(1.4)
Total reinsurance contracts held
88.2
900.4
988.6
22.1
1,169.8
1,191.9
Liability/(asset)
for remaining
coverage
Liability/(asset)
for incurred
claims
Total
Liability/(asset)
for remaining
coverage
Liability/(asset)
for incurred
claims
Total
Net
UK Motor
849.3
2,454.6
3,303.9
745.9
2,049.9
2,795.8
UK Non-Motor
184.1
41.2
225.3
114.8
47.3
162.1
International Motor
158.3
208.7
367.0
242.0
138.7
380.7
Other
8.7
67.9
76.6
4.9
46.3
51.2
Total insurance contracts issued
1,200.4
2,772.4
3,972.8
1,107.6
2,282.2
3,389.8
(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.
Liability for remaining coverage
Liability for incurred claims
2024
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
Net opening balance
(766.0)
(3.0)
(769.0)
(2,202.8)
(343.9)
(2,546.7)
(3,315.7)
Insurance revenue
3,369.5
\u2013
3,369.5
\u2013
\u2013
\u2013
3,369.5
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(2,548.7)
(186.0)
(2,734.7)
(2,734.7)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
343.4
152.7
496.1
496.1
Losses and reversals of losses on
onerous contracts
\u2013
5.1
5.1
\u2013
\u2013
\u2013
5.1
Insurance service result
3,369.5
5.1
3,374.6
(2,205.3)
(33.3)
(2,238.6)
1,136.0
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
(2.4)
(2.4)
(86.5)
(15.3)
(101.8)
(104.2)
Insurance finance income/
(expense) recognised in OCI
\u2013
0.3
0.3
16.2
2.2
18.4
18.7
Total changes in comprehensive
income
3,369.5
3.0
3,372.5
(2,275.6)
(46.4)
(2,322.0)
1,050.5
Other changes
35.9
\u2013
35.9
79.3
\u2013
79.3
115.2
Cashflows
Premiums received
(3,522.7)
\u2013
(3,522.7)
\u2013
\u2013
\u2013
(3,522.7)
Claims and other insurance service
expenses paid
\u2013
\u2013
\u2013
2,098.3
\u2013
2,098.3
2,098.3
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(3,522.7)
\u2013
(3,522.7)
2,098.3
\u2013
2,098.3
(1,424.4)
Net closing balance
(883.3)
\u2013
(883.3)
(2,300.8)
(390.3)
(2,691.1)
(3,574.4)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(883.3)
\u2013
(883.3)
(2,300.8)
(390.3)
(2,691.1)
(3,574.4)
Liability for remaining coverage
Liability for incurred claims
2023
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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 changes1
\u2013
\u2013
64.0
\u2013
64.0
64.0
Cashflows
Premiums received
(2,482.1)
\u2013
(2,482.1)
\u2013
\u2013
\u2013
(2,482.1)
Claims and other insurance service
expenses paid1
\u2013
\u2013
\u2013
1,802.2
\u2013
1,802.2
1,802.2
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(2,482.1)
\u2013
(2,482.1)
1,802.2
\u2013
1,802.2
(679.9)
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)
1Claims paid and other changes have been re-presented to separately present the transfer of non-cash insurance service expenses,\u00a0 (primarily depreciation, amortisation and IFRS 2
equity-settled share based payments), out of the LIC.\u00a0 There is no impact on the closing balance.
UK Non-motor Insurance
The following tables reconcile the opening and closing balances of the LRC and LIC for other UK insurance (UK Household,
Pet\u00a0and\u00a0Travel).
Liability for remaining coverage
Liability for incurred claims
2024
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
Net opening balance
(136.2)
\u2013
(136.2)
(193.6)
(23.9)
(217.5)
(353.7)
Insurance revenue
503.9
\u2013
503.9
\u2013
\u2013
\u2013
503.9
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(444.8)
(17.7)
(462.5)
(462.5)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
32.6
18.8
51.4
51.4
Losses and reversals of losses on
onerous contracts
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
(0.2)
Insurance service result
503.9
\u2013
503.9
(412.2)
0.9
(411.3)
92.6
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
(8.0)
(0.9)
(8.9)
(8.9)
Insurance finance income/
(expense) recognised in OCI
\u2013
\u2013
\u2013
0.1
\u2013
0.1
0.1
Total changes in comprehensive
income
503.9
\u2013
503.9
(420.1)
\u2013
(420.1)
83.8
Other changes
\u2013
\u2013
\u2013
14.9
\u2013
14.9
14.9
Cashflows
Premiums received
(563.0)
\u2013
(563.0)
\u2013
\u2013
\u2013
(563.0)
Claims and other insurance service
expenses paid
\u2013
\u2013
\u2013
408.0
\u2013
408.0
408.0
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(563.0)
\u2013
(563.0)
408.0
\u2013
408.0
(155.0)
Net closing balance
(195.3)
\u2013
(195.3)
(190.8)
(23.9)
(214.7)
(410.0)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(195.3)
\u2013
(195.3)
(190.8)
(23.9)
(214.7)
(410.0)
Liability for remaining coverage
Liability for incurred claims
2023
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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 changes1
\u2013
\u2013
\u2013
6.7
\u2013
6.7
6.7
Cashflows
Premiums received
(381.9)
\u2013
(381.9)
\u2013
\u2013
\u2013
(381.9)
Claims and other insurance service
expenses paid1
\u2013
\u2013
\u2013
307.0
\u2013
307.0
307.0
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(381.9)
\u2013
(381.9)
307.0
\u2013
307.0
(74.9)
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)
1Claims paid and other changes have been re-presented to separately present the transfer of non-cash insurance service expenses,\u00a0 (primarily depreciation, amortisation and IFRS 2
equity-settled share based payments), out of the LIC.\u00a0 There is no impact on the closing balance.
International Insurance
The following tables reconcile the opening and closing balances of the LRC and LIC for International Insurance.
Liability for remaining coverage
Liability for incurred claims
2024
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Opening liabilities
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
Net opening balance
(218.1)
(2.9)
(221.0)
(565.5)
(76.0)
(641.5)
(862.5)
Insurance revenue
829.5
\u2013
829.5
\u2013
\u2013
\u2013
829.5
Insurance service expenses
Incurred claims and insurance
service expenses
\u2013
\u2013
\u2013
(770.7)
(60.6)
(831.3)
(831.3)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(50.1)
61.2
11.1
11.1
Losses and reversals of losses on
onerous contracts
\u2013
0.1
0.1
\u2013
\u2013
\u2013
0.1
Insurance service result
829.5
0.1
829.6
(820.8)
0.6
(820.2)
9.4
Insurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
(12.7)
(2.4)
(15.1)
(15.1)
Insurance finance income/
(expense) recognised in OCI
\u2013
(0.1)
(0.1)
(7.8)
(0.9)
(8.7)
(8.8)
Foreign exchange impact
9.3
(0.1)
9.2
21.3
3.2
24.5
33.7
Total changes in comprehensive
income
838.8
(0.1)
838.7
(820.0)
0.5
(819.5)
19.2
Other changes
11.3
\u2013
11.3
17.1
\u2013
17.1
28.4
Cashflows
Premiums received
(830.4)
\u2013
(830.4)
\u2013
\u2013
\u2013
(830.4)
Claims and other insurance service
expenses paid
\u2013
\u2013
\u2013
753.7
\u2013
753.7
753.7
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(830.4)
\u2013
(830.4)
753.7
\u2013
753.7
(76.7)
Net closing balance
(198.4)
(3.0)
(201.4)
(614.7)
(75.5)
(690.2)
(891.6)
Closing assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Closing liabilities
(198.4)
(3.0)
(201.4)
(614.7)
(75.5)
(690.2)
(891.6)
Liability for remaining coverage
Liability for incurred claims
2023
Excluding
loss
component
Loss
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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 changes1
\u2013
\u2013
16.1
0.1
16.2
16.2
Cashflows
Premiums received
(862.3)
\u2013
(862.3)
\u2013
\u2013
\u2013
(862.3)
Claims and other insurance service
expenses paid1
\u2013
\u2013
\u2013
777.1
\u2013
777.1
777.1
Other movements
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
(862.3)
\u2013
(862.3)
777.1
\u2013
777.1
(85.2)
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)
1Claims paid and other changes have been re-presented to separately present the transfer of non-cash insurance service expenses,\u00a0 (primarily depreciation, amortisation and IFRS 2
equity-settled share based payments), out of the LIC.\u00a0 There is no impact on the closing balance.
(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 Non-UK 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\u00a0the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims
in\u00a0its other lines of business or related directly attributable expenses.
Gross claims development
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
394
436
552
686
701
552
688
845
973
1,241
At end of year two
701
829
1,144
1,175
1,067
985
1,326
1,584
1,812
At end of year three
707
788
994
1,109
1,010
954
1,294
1,544
At end of year four
680
727
947
1,064
996
921
1,270
At end of year five
636
713
912
1,008
981
910
At end of year six
619
690
890
1,000
938
At end of year seven
606
656
865
959
At end of year eight
594
652
849
At end of year nine
585
657
Ten years later
583
Gross best estimates
of undiscounted claims
3,803
583
657
849
959
938
910
1,270
1,544
1,812
1,241
14,566
Cumulative gross
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Gross undiscounted
best estimate liabilities
137
15
39
67
53
116
177
346
440
707
680
2,777
Risk adjustment
(undiscounted)
480
Effect of discounting
(673)
Gross claims liabilities
2,584
Ancillary claims and
expense liabilities
107
UK Motor Gross
liabilities for incurred
claims
2,691
UK Non-motor (core)
At end of year one
26
29
56
55
53
58
116
146
160
At end of year two
34
50
78
102
105
96
128
224
253
At end of year three
35
47
76
102
103
95
124
227
At end of year four
34
47
75
102
102
90
126
At end of year five
33
47
76
102
93
93
At end of year six
33
47
76
100
96
At end of year seven
33
47
75
102
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Gross best estimates
of undiscounted claims
24
33
48
77
102
96
93
126
227
253
160
1,239
Cumulative gross
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(202)
(187)
(69)
(1,047)
Gross undiscounted
best estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
6
25
66
91
192
Risk adjustment
(undiscounted)
25
Effect of discounting
(7)
Gross claims liabilities
210
Ancillary claims and
expense liabilities
5
UK Non-motor Gross
liabilities for incurred
claims
215
International
Insurance
At end of year one
177
236
204
270
313
338
300
At end of year two
259
356
382
368
496
601
580
At end of year three
237
304
349
388
364
498
603
At end of year four
181
253
300
350
384
365
499
At end of year five
211
251
300
350
364
361
At end of year six
211
251
300
339
362
At end of year seven
211
251
296
338
At end of year eight
212
248
294
At end of year nine
233
247
Ten years later
226
Gross best estimates
of undiscounted claims
540
226
247
294
338
362
361
499
603
580
300
4,350
Cumulative gross
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(436)
(490)
(408)
(127)
(3,693)
Gross undiscounted
best estimate liabilities
7
38
2
14
17
21
37
63
113
172
173
657
Risk adjustment
(undiscounted)
81
Effect of discounting
(81)
Gross claims liabilities
657
Ancillary claims and
expense liabilities
33
International
Insurance Gross
liabilities for incurred
claims
690
Claims development net of XoL reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
510
646
675
520
661
825
951
1,220
At end of year two
682
783
1,053
1,123
1,033
949
1,292
1,550
1,776
At end of year three
667
743
917
1,053
986
927
1,257
1,517
At end of year four
637
692
883
1,024
969
892
1,240
At end of year five
607
677
860
974
950
886
At end of year six
599
663
840
978
925
At end of year seven
586
640
820
946
At end of year eight
579
635
825
At end of year nine
577
644
Ten years later
580
Net of XoL best
estimates of
undiscounted claims
3,773
580
644
825
946
925
886
1,240
1,517
1,776
1,220
14,332
Cumulative
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Net of XoL
undiscounted best
estimate liabilities
107
12
26
43
40
103
153
316
413
671
659
2,543
Risk adjustment
(undiscounted)
428
Effect of discounting
(543)
Net of XoL
claims liabilities
2,428
Ancillary claims and
expense liabilities
107
UK Motor Net of XoL
liabilities for incurred
claims
2,535
UK Non-motor (core)
At end of year one
26
29
56
54
50
57
116
127
152
At end of year two
34
50
78
102
96
91
126
220
229
At end of year three
35
47
75
101
94
90
124
221
At end of year four
34
47
75
101
93
90
127
At end of year five
33
47
76
101
93
93
At end of year six
33
47
75
100
96
At end of year seven
33
47
75
102
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Net of XoL best
estimates of
undiscounted claims
24
33
48
77
102
96
93
127
221
229
152
1,202
Cumulative
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(200)
(178)
(69)
(1,036)
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
7
21
51
83
166
Risk adjustment
(undiscounted)
22
Effect of discounting
(6)
Net of XoL
claims liabilities
182
Ancillary claims and
expense liabilities
5
UK Non-motor Net of
XoL liabilities for
incurred claims
187
International
Insurance
At end of year one
177
236
204
270
313
335
299
At end of year two
259
356
382
368
496
559
569
At end of year three
237
304
349
388
364
477
561
At end of year four
181
253
300
350
384
355
472
At end of year five
211
251
300
350
360
353
At end of year six
211
251
300
337
358
At end of year seven
211
251
290
337
At end of year eight
212
248
290
At end of year nine
210
248
Ten years later
204
Net of XoL best
estimates of
undiscounted claims
537
204
248
290
337
358
353
472
561
569
299
4,228
Cumulative
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(431)
(486)
(406)
(128)
(3,683)
Net of XoL
undiscounted best
estimate liabilities
4
16
3
10
16
17
29
41
75
163
171
545
Risk adjustment
(undiscounted)
73
Effect of discounting
(36)
Net of XoL
claims liabilities
582
Ancillary claims and
expense liabilities
32
International
Insurance Net of XoL
liabilities for incurred
claims
614
Claims development net of reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
493
625
626
520
657
762
939
1,220
At end of year two
682
783
1,016
1,086
1,033
949
1,259
1,442
1,776
At end of year three
667
743
886
1,018
986
927
1,239
1,470
At end of year four
637
692
853
990
969
892
1,236
At end of year five
607
677
830
957
950
886
At end of year six
599
663
811
944
925
At end of year seven
586
640
793
913
At end of year eight
579
635
798
At end of year nine
577
644
Ten years later
580
Net best estimates of
undiscounted claims
3,773
580
644
798
913
925
886
1,236
1,470
1,776
1,220
14,221
Cumulative net
claims paid
(3,666)
(568)
(618)
(755)
(874)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,730)
Net undiscounted best
estimate liabilities
107
12
26
43
39
103
153
312
366
671
659
2,491
Risk adjustment
(undiscounted)
419
Effect of discounting
(528)
Net claims liabilities
2,382
Ancillary claims and
expense liabilities
72
UK Motor Net
liabilities for
incurred claims
2,454
UK Non-motor (core)
At end of year one
7
6
20
18
16
16
43
68
78
At end of year two
10
14
22
34
25
12
41
94
108
At end of year three
10
12
24
33
31
19
36
88
At end of year four
9
12
22
37
30
18
40
At end of year five
9
12
24
37
29
21
At end of year six
8
12
24
36
33
At end of year seven
9
12
24
39
At end of year eight
9
13
25
At end of year nine
9
13
Ten years later
9
Net best estimates of
undiscounted claims
8
9
13
25
39
33
21
40
88
108
78
462
Cumulative net
claims paid
(8)
(9)
(13)
(25)
(38)
(32)
(20)
(36)
(86)
(106)
(59)
(432)
Net undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
1
4
2
2
19
30
Risk adjustment
(undiscounted)
10
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Effect of discounting
(2)
Net claims liabilities
38
Ancillary claims and
expense liabilities
3
UK Non-motor Net
liabilities for
incurred claims
41
International
Insurance
At end of year one
61
79
83
100
114
140
145
At end of year two
85
120
129
145
185
218
224
At end of year three
115
97
117
129
144
187
211
At end of year four
92
132
96
119
130
144
192
At end of year five
82
131
101
119
123
149
At end of year six
83
86
101
115
128
At end of year seven
70
86
99
118
At end of year eight
70
85
103
At end of year nine
83
87
Ten years later
80
Net best estimates of
undiscounted claims
207
80
87
103
118
128
149
192
211
224
145
1,644
Cumulative net
claims paid
(205)
(65)
(86)
(99)
(112)
(121)
(138)
(175)
(180)
(195)
(88)
(1,464)
Net undiscounted best
estimate liabilities
2
15
1
4
6
7
11
17
31
29
57
180
Risk adjustment
(undiscounted)
27
Effect of discounting
(20)
Net claims liabilities
187
Ancillary claims and
expense liabilities
21
International
Insurance Net
liabilities\u00a0
incurred claims
208
(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 - undiscounted*, net of excess of
loss reinsurance
31 December
2021
2022
2023
2024
Underwriting year
2019
73%
71%
67%
64%
2020
68%
65%
58%
57%
2021
95%
91%
86%
82%
2022
\u2013
104%
96%
91%
2023
\u2013
\u2013
94%
80%
2024
\u2013
\u2013
\u2013
77%
* Booked undiscounted loss ratios presented from the transition date of IFRS 17 (1 January 2022) onwards.
UK Motor Insurance loss ratio development - discounted*, net of excess of
loss reinsurance
31 December
2021
2022
2023
2024
Underwriting year
2019
71%
69%
65%
63%
2020
67%
63%
57%
55%
2021
92%
86%
81%
77%
2022
\u2013
97%
88%
83%
2023
\u2013
\u2013
86%
72%
2024
\u2013
\u2013
\u2013
71%
* 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
2024
\u00a3m
31 December
2023
\u00a3m
Gross
Underwriting year
2019 & prior
173.7
152.9
2020
41.8
98.2
2021
87.0
76.4
2022
107.1
79.4
2023
83.8
\u2013
2024
\u2013
\u2013
Total UK Motor gross changes to liabilities for incurred claims
493.4
406.9
Net
Underwriting year
2019 & prior
99.6
145.6
2020
30.5
97.7
2021
70.6
80.1
2022
94.5
69.4
2023
76.7
\u2013
2024
\u2013
\u2013
Total UK Motor net of excess of loss changes to liabilities for incurred claims
371.9
392.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-465": { "value": "
5a. 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\u00a0reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made
by\u00a0management 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\u00a0a\u00a0proportional 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:
1) A group of contracts that are onerous at initial recognition, if any
2) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
3) 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\u00a0a\u00a0group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract
is\u00a0initially 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\u00a0measuring 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\u00a0new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with
the\u00a0contract 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\u00a0provide 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\u00a0benefits that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
1. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and,
as\u00a0a\u00a0result, can set a price or level of benefits that fully reflects the risk of that portfolio
2. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to\u00a0periods 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\u00a0amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the
policyholder to\u00a0the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk,
are\u00a0not 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\u00a0in\u00a0which 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\u00a0assets 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.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation
approach (\u2018PAA\u2019)
eligibility
Subject to specified criteria, the PAA can
be\u00a0adopted as a simplified approach to the
IFRS\u00a017\u00a0general model.
Coverage period for the Group\u2019s insurance
contracts assumed is one year or less and so
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
cashflows for insurance
contracts issued
Where the coverage period of all contracts
within a group is not longer than one year,
insurance acquisition cashflows can either be
expensed as 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.
The Group\u2019s insurance contracts are all one year
or\u00a0less. The Group has therefore taken the option
to expense acquisition costs as incurred.
Liability for Remaining
Coverage (\u2018LRC\u2019),
adjusted for financial
risk and time value of
money
Where there is no significant financing
component in relation to the LRC, or where
the\u00a0time between providing each part of the
services and the related premium due date is
no more than a year, an entity is not required
to\u00a0make an adjustment for accretion of
interest\u00a0on the LRC.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
Liability for Incurred
Claims (\u2018LIC\u2019) adjusted
for time value of money
For PAA groups, where claims or directly
attributable insurance expenses are expected
to be paid within a year of the date that the
claim is incurred, it is not required to adjust
these amounts for the time value of money.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses,
no\u00a0adjustment 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
income and expense
There is an option to disaggregate part of
the\u00a0movement in the LIC, LRC, AIC and ARC
resulting from changes in discount rates,
and\u00a0present this in Other Comprehensive
Income (\u2018OCI\u2019).
The impact on LIC, LRC, AIC and ARC of changes
in discount rates will be captured within OCI, in line
with the accounting for assets backing the
insurance claims liabilities.
Interim reporting
Where an entity is required to apply IAS 34
(as\u00a0for the Group) there is an option as to
whether to choose a \u2018year-to-date\u2019 basis or
a\u00a0\u201cperiod to date\u201d basis for financial reporting.
The Group has opted to apply the option to use
year-to-date accounting for interim 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\u00a0contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect
the\u00a0timing 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\u00a0market 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\u00a0non-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\u00a0contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group
of\u00a0reinsurance 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\u00a0risk-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\u00a0terms 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\u00a0published 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.\u00a0The illiquidity premium is determined
by\u00a0management considering various internal benchmarks. This includes considering the cost of liquidity for the Group (through
its\u00a0Revolving Credit Facilities), by deducting the risk-free rate and credit risk premium from a corporate bond reference portfolio,
and by deducting public market yields from similarly rated private market yields. Each method points to a different mathematical
result and judgement is applied when determining the illiquidity premium. \u00a0
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 2024
31 December 2023
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.0%
4.7%
4.5%
4.6%
5.4%
4.3%
4.0%
3.9%
International
(European motor)
2.7%
2.6%
2.6%
2.8%
4.0%
3.1%
3.0%
3.0%
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).\u00a0Quantitative
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\u00a0change 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\u00a0performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are
required to\u00a0fulfil 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 14 for further information regarding the disaggretation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees from insurance revenue derived from
the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Please see note 8a for
the treatment of the co-insurance share retained by the group of instalment income and administration fees.
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 (such as employee costs, depreciation
and amortisation) 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.
Non-cash costs that are directly attributable, such as depreciation, amortisation and IFRS 2 equity-settled share scheme costs,
are\u00a0recognised within insurance service expenses; these are transferred out of the LIC into the appropriate Financial Statement line
item for presentation in the Statement of Financial Position.
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\u00a0lower premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 3 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 \u2018net\u2019 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:
1. The effect of the time value of money and changes in the time value of money
2. The effect of financial risk and changes in financial risk.
The Group has taken the option to disaggregate insurance finance income or expenses on insurance contracts issued between
the\u00a0Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income.
As a result, applying the premium allocation approach, claims incurred are discounted at the date of initial recognition and the
finance expense recognised in the Consolidated Income Statement reflects the unwind of this discounting, at the locked in discount
rate, over the expected payment period. The same approach is taken for reinsurance claims assets. Discounting on the liability and
asset for remaining coverage only occurs in the case of the recognition of an onerous loss component (and related loss-recovery
component) and as a result is not material.
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 re-measured 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\u00a0remaining 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\u00a0a 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\u00a0expenses 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\u00a0zero 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\u00a0a\u00a0result 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\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
3,369.5
503.9
829.5
73.3
4,776.2
Insurance revenue for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
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\u00a0duration, lasting for between 6 and 12 months.
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Incurred claims
Claims incurred in the period
2,107.2
298.2
583.7
48.9
3,038.0
Changes to liabilities for incurred claims
(496.1)
(51.4)
(11.1)
(1.3)
(559.9)
Total incurred claims
1,611.1
246.8
572.6
47.6
2,478.1
Movement in onerous contracts
(5.1)
0.1
(0.1)
\u2013
(5.1)
Directly attributable expenses
Administration expenses
461.5
113.7
175.2
18.7
769.1
Acquisition expenses
125.3
45.2
61.3
15.0
246.8
Insurance expenses
586.8
158.9
236.5
33.7
1,015.9
Share scheme expenses
40.7
5.4
11.1
1.4
58.6
Total insurance expenses including share scheme expenses
627.5
164.3
247.6
35.1
1,074.5
Total Insurance service expenses
2,233.5
411.2
820.1
82.7
3,547.5
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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 including 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
5d. Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2024
are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Allocation of reinsurance premiums
145.8
45.8
153.9
7.6
353.1
Amounts recoverable from reinsurers for incurred insurance
service expenses
Incurred claims
(29.2)
3.1
(275.9)
(8.5)
(310.5)
Changes to liabilities for incurred claims
291.6
34.3
146.3
\u2013
472.2
Net expense from reinsurance contracts excluding
movement in onerous loss component
408.2
83.2
24.3
(0.9)
514.8
Other reinsurance recoveries including movement in onerous
loss component
4.0
(0.1)
(0.3)
\u2013
3.6
Net expenses/(income) from reinsurance contracts held
412.2
83.1
24.0
(0.9)
518.4
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2023
are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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
5e. Finance expenses /(income) from insurance contracts held and reinsurance contracts issued
\u00a3m
31 December
2024
31 December
2023
Amounts recognised through the income statement
Insurance finance expenses from insurance contracts issued
128.4
94.5
Insurance finance income from reinsurance contracts held
(35.9)
(28.9)
Net finance expense from insurance / reinsurance contracts issued
92.5
65.6
\u00a3m
31 December
2024
31 December
2023
Insurance finance reserve
Insurance finance reserve \u2013 insurance contracts
119.0
111.1
Deferred tax in relation to insurance finance reserve - insurance contracts
(18.6)
(13.5)
Insurance finance reserve \u2013 reinsurance contracts
(32.4)
(35.7)
Deferred tax in relation to insurance finance reserve - reinsurance contracts
4.7
3.4
Total insurance finance reserve
72.7
65.3
See note 6b for details of the relationship between finance (expenses)/ income from insurance contracts held and reinsurance
contracts issued, and investment return.
5f. Insurance Liabilities and Reinsurance assets
(i) Analysis of recognised amounts
Year ended 31 December 2024
Year ended 31 December 2023
\u00a3m
Liability for
remaining
coverage
Liability for
incurred claims
Total
Liability for
remaining
coverage
Liability for
incurred claims
Total
Insurance contracts issued
UK Motor
883.3
2,691.1
3,574.4
769.0
2,546.7
3,315.7
UK Non-motor
195.3
214.7
410.0
136.2
217.5
353.7
International Motor
201.4
690.2
891.6
221.0
641.5
862.5
Other
8.6
76.8
85.4
3.5
46.3
49.8
Total insurance contracts issued
1,288.6
3,672.8
4,961.4
1,129.7
3,452.0
4,581.7
Asset/(liability)
for remaining
coverage
Asset for
incurred claims
Total
Asset/(liability)
for remaining
coverage
Asset for
incurred claims
Total
Reinsurance contracts held
UK Motor
34.0
236.5
270.5
23.1
496.8
519.9
UK Non-Motor
11.2
173.5
184.7
21.4
170.2
191.6
International Motor
43.1
481.5
524.6
(21.0)
502.8
481.8
Other
(0.1)
8.9
8.8
(1.4)
\u2013
(1.4)
Total reinsurance contracts held
88.2
900.4
988.6
22.1
1,169.8
1,191.9
Liability/(asset)
for remaining
coverage
Liability/(asset)
for incurred
claims
Total
Liability/(asset)
for remaining
coverage
Liability/(asset)
for incurred
claims
Total
Net
UK Motor
849.3
2,454.6
3,303.9
745.9
2,049.9
2,795.8
UK Non-Motor
184.1
41.2
225.3
114.8
47.3
162.1
International Motor
158.3
208.7
367.0
242.0
138.7
380.7
Other
8.7
67.9
76.6
4.9
46.3
51.2
Total insurance contracts issued
1,200.4
2,772.4
3,972.8
1,107.6
2,282.2
3,389.8
(iii). Roll-forward of net asset or liability for reinsurance contracts issued
UK Motor
The following tables reconcile the opening and closing balances of the ARC and AIC for UK Motor.
Asset for remaining coverage
Asset for incurred claims
2024
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
20.8
2.3
23.1
313.2
183.6
496.8
519.9
Allocation of reinsurance
premiums
(145.8)
\u2013
(145.8)
\u2013
\u2013
\u2013
(145.8)
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
\u2013
\u2013
\u2013
22.2
7.0
29.2
29.2
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(158.6)
(133.0)
(291.6)
(291.6)
Changes in the loss
recovery component
\u2013
(4.0)
(4.0)
\u2013
\u2013
\u2013
(4.0)
Net income/ (expense) from
reinsurance contracts held
(145.8)
(4.0)
(149.8)
(136.4)
(126.0)
(262.4)
(412.2)
Reinsurance finance income/
(expense) recognised in
profit or loss
\u2013
1.8
1.8
11.1
7.9
19.0
20.8
Reinsurance finance income/
(expense) recognised in OCI
\u2013
(0.1)
(0.1)
(2.8)
(1.5)
(4.3)
(4.4)
Total changes in comprehensive
income
(145.8)
(2.3)
(148.1)
(128.1)
(119.6)
(247.7)
(395.8)
Cashflows
Premiums paid
159.0
\u2013
159.0
\u2013
\u2013
\u2013
159.0
Claims recoveries
\u2013
\u2013
\u2013
(0.9)
\u2013
(0.9)
(0.9)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
(11.7)
\u2013
(11.7)
(11.7)
Total cashflows
159.0
\u2013
159.0
(12.6)
\u2013
(12.6)
146.4
Net closing balance
34.0
\u2013
34.0
172.5
64.0
236.5
270.5
Closing assets
34.0
\u2013
34.0
172.5
64.0
236.5
270.5
Closing liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Asset for remaining coverage
Asset for incurred claims
2023
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
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
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
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
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).
Asset for remaining coverage
Asset for incurred claims
2024
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
21.4
\u2013
21.4
154.9
15.3
170.2
191.6
Opening liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net opening balance
21.4
\u2013
21.4
154.9
15.3
170.2
191.6
Allocation of reinsurance
premiums
(45.8)
\u2013
(45.8)
\u2013
\u2013
\u2013
(45.8)
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
\u2013
\u2013
\u2013
(8.2)
5.1
(3.1)
(3.1)
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(12.3)
(22.0)
(34.3)
(34.3)
Changes in the loss
recovery component
\u2013
0.1
0.1
\u2013
\u2013
\u2013
0.1
Net income/ (expense) from
reinsurance contracts held
(45.8)
0.1
(45.7)
(20.5)
(16.9)
(37.4)
(83.1)
Reinsurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
6.1
0.6
6.7
6.7
Reinsurance finance income/
(expense) recognised in OCI
\u2013
\u2013
\u2013
(0.3)
\u2013
(0.3)
(0.3)
Total changes in comprehensive
income
(45.8)
0.1
(45.7)
(14.7)
(16.3)
(31.0)
(76.7)
Reinsurance investment
components
(178.6)
\u2013
(178.6)
178.6
\u2013
178.6
\u2013
Cashflows
Premiums paid
214.1
\u2013
214.1
\u2013
\u2013
\u2013
214.1
Claims recoveries
\u2013
\u2013
\u2013
(144.3)
\u2013
(144.3)
(144.3)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
214.1
\u2013
214.1
(144.3)
\u2013
(144.3)
69.8
Net closing balance
11.1
0.1
11.2
174.5
(1.0)
173.5
184.7
Closing assets
11.1
0.1
11.2
174.5
(1.0)
173.5
184.7
Closing liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Asset for remaining coverage
Asset for incurred claims
2023
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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 recoveries
\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 cashflows
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
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
International Insurance
The following tables reconcile the opening and closing balances of the ARC and AIC for International Insurance.
Asset for remaining coverage
Asset for incurred claims
2024
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
Opening assets
\u2013
2.2
2.2
465.4
37.4
502.8
505.0
Opening liabilities
(23.2)
\u2013
(23.2)
\u2013
\u2013
\u2013
(23.2)
Net opening balance
(23.2)
2.2
(21.0)
465.4
37.4
502.8
481.8
Allocation of reinsurance
premiums
(153.9)
\u2013
(153.9)
\u2013
\u2013
\u2013
(153.9)
Amounts recoverable from
reinsurers for incurred claims
Incurred claims
\u2013
\u2013
\u2013
212.3
63.6
275.9
275.9
Changes to liabilities for
incurred claims
\u2013
\u2013
\u2013
(82.4)
(63.9)
(146.3)
(146.3)
Changes in the loss
recovery component
\u2013
0.3
0.3
\u2013
\u2013
\u2013
0.3
Net income/ (expense) from
reinsurance contracts held
(153.9)
0.3
(153.6)
129.9
(0.3)
129.6
(24.0)
Reinsurance finance income/
(expense) recognised in
profit or loss
\u2013
\u2013
\u2013
7.4
1.1
8.5
8.5
Reinsurance finance income/
(expense) recognised in OCI
\u2013
\u2013
\u2013
6.5
0.6
7.1
7.1
Foreign exchange impact
(0.6)
(0.1)
(0.7)
(19.3)
0.3
(19.0)
(19.7)
Total changes in comprehensive
income
(154.5)
0.2
(154.3)
124.5
1.7
126.2
(28.1)
Reinsurance investment
components
(175.0)
\u2013
(175.0)
175.0
\u2013
175.0
\u2013
Cashflows
Premiums paid
393.4
\u2013
393.4
\u2013
\u2013
\u2013
393.4
Claims recoveries
\u2013
\u2013
\u2013
(322.5)
\u2013
(322.5)
(322.5)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cashflows
393.4
\u2013
393.4
(322.5)
\u2013
(322.5)
70.9
Net closing balance
40.7
2.4
43.1
442.4
39.1
481.5
524.6
Closing assets
40.7
2.4
43.1
442.4
39.1
481.5
524.6
Closing liabilities
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Asset for remaining coverage
Asset for incurred claims
2023
Excluding
loss
component
Loss-
recovery
component
Total
Present value
of future
cashflows
Risk adj. for
non-financial
risk
Total
Total
\u00a3m
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
Claims recoveries
\u2013
\u2013
\u2013
(269.8)
\u2013
(269.8)
(269.8)
Recoveries as a result of
commutations
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
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)
(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 Non-UK 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\u00a0the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims
in\u00a0its other lines of business or related directly attributable expenses.
Gross claims development
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
394
436
552
686
701
552
688
845
973
1,241
At end of year two
701
829
1,144
1,175
1,067
985
1,326
1,584
1,812
At end of year three
707
788
994
1,109
1,010
954
1,294
1,544
At end of year four
680
727
947
1,064
996
921
1,270
At end of year five
636
713
912
1,008
981
910
At end of year six
619
690
890
1,000
938
At end of year seven
606
656
865
959
At end of year eight
594
652
849
At end of year nine
585
657
Ten years later
583
Gross best estimates
of undiscounted claims
3,803
583
657
849
959
938
910
1,270
1,544
1,812
1,241
14,566
Cumulative gross
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Gross undiscounted
best estimate liabilities
137
15
39
67
53
116
177
346
440
707
680
2,777
Risk adjustment
(undiscounted)
480
Effect of discounting
(673)
Gross claims liabilities
2,584
Ancillary claims and
expense liabilities
107
UK Motor Gross
liabilities for incurred
claims
2,691
UK Non-motor (core)
At end of year one
26
29
56
55
53
58
116
146
160
At end of year two
34
50
78
102
105
96
128
224
253
At end of year three
35
47
76
102
103
95
124
227
At end of year four
34
47
75
102
102
90
126
At end of year five
33
47
76
102
93
93
At end of year six
33
47
76
100
96
At end of year seven
33
47
75
102
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Gross best estimates
of undiscounted claims
24
33
48
77
102
96
93
126
227
253
160
1,239
Cumulative gross
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(202)
(187)
(69)
(1,047)
Gross undiscounted
best estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
6
25
66
91
192
Risk adjustment
(undiscounted)
25
Effect of discounting
(7)
Gross claims liabilities
210
Ancillary claims and
expense liabilities
5
UK Non-motor Gross
liabilities for incurred
claims
215
International
Insurance
At end of year one
177
236
204
270
313
338
300
At end of year two
259
356
382
368
496
601
580
At end of year three
237
304
349
388
364
498
603
At end of year four
181
253
300
350
384
365
499
At end of year five
211
251
300
350
364
361
At end of year six
211
251
300
339
362
At end of year seven
211
251
296
338
At end of year eight
212
248
294
At end of year nine
233
247
Ten years later
226
Gross best estimates
of undiscounted claims
540
226
247
294
338
362
361
499
603
580
300
4,350
Cumulative gross
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(436)
(490)
(408)
(127)
(3,693)
Gross undiscounted
best estimate liabilities
7
38
2
14
17
21
37
63
113
172
173
657
Risk adjustment
(undiscounted)
81
Effect of discounting
(81)
Gross claims liabilities
657
Ancillary claims and
expense liabilities
33
International
Insurance Gross
liabilities for incurred
claims
690
Claims development net of XoL reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
510
646
675
520
661
825
951
1,220
At end of year two
682
783
1,053
1,123
1,033
949
1,292
1,550
1,776
At end of year three
667
743
917
1,053
986
927
1,257
1,517
At end of year four
637
692
883
1,024
969
892
1,240
At end of year five
607
677
860
974
950
886
At end of year six
599
663
840
978
925
At end of year seven
586
640
820
946
At end of year eight
579
635
825
At end of year nine
577
644
Ten years later
580
Net of XoL best
estimates of
undiscounted claims
3,773
580
644
825
946
925
886
1,240
1,517
1,776
1,220
14,332
Cumulative
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Net of XoL
undiscounted best
estimate liabilities
107
12
26
43
40
103
153
316
413
671
659
2,543
Risk adjustment
(undiscounted)
428
Effect of discounting
(543)
Net of XoL
claims liabilities
2,428
Ancillary claims and
expense liabilities
107
UK Motor Net of XoL
liabilities for incurred
claims
2,535
UK Non-motor (core)
At end of year one
26
29
56
54
50
57
116
127
152
At end of year two
34
50
78
102
96
91
126
220
229
At end of year three
35
47
75
101
94
90
124
221
At end of year four
34
47
75
101
93
90
127
At end of year five
33
47
76
101
93
93
At end of year six
33
47
75
100
96
At end of year seven
33
47
75
102
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Net of XoL best
estimates of
undiscounted claims
24
33
48
77
102
96
93
127
221
229
152
1,202
Cumulative
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(200)
(178)
(69)
(1,036)
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
7
21
51
83
166
Risk adjustment
(undiscounted)
22
Effect of discounting
(6)
Net of XoL
claims liabilities
182
Ancillary claims and
expense liabilities
5
UK Non-motor Net of
XoL liabilities for
incurred claims
187
International
Insurance
At end of year one
177
236
204
270
313
335
299
At end of year two
259
356
382
368
496
559
569
At end of year three
237
304
349
388
364
477
561
At end of year four
181
253
300
350
384
355
472
At end of year five
211
251
300
350
360
353
At end of year six
211
251
300
337
358
At end of year seven
211
251
290
337
At end of year eight
212
248
290
At end of year nine
210
248
Ten years later
204
Net of XoL best
estimates of
undiscounted claims
537
204
248
290
337
358
353
472
561
569
299
4,228
Cumulative
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(431)
(486)
(406)
(128)
(3,683)
Net of XoL
undiscounted best
estimate liabilities
4
16
3
10
16
17
29
41
75
163
171
545
Risk adjustment
(undiscounted)
73
Effect of discounting
(36)
Net of XoL
claims liabilities
582
Ancillary claims and
expense liabilities
32
International
Insurance Net of XoL
liabilities for incurred
claims
614
Claims development net of reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
493
625
626
520
657
762
939
1,220
At end of year two
682
783
1,016
1,086
1,033
949
1,259
1,442
1,776
At end of year three
667
743
886
1,018
986
927
1,239
1,470
At end of year four
637
692
853
990
969
892
1,236
At end of year five
607
677
830
957
950
886
At end of year six
599
663
811
944
925
At end of year seven
586
640
793
913
At end of year eight
579
635
798
At end of year nine
577
644
Ten years later
580
Net best estimates of
undiscounted claims
3,773
580
644
798
913
925
886
1,236
1,470
1,776
1,220
14,221
Cumulative net
claims paid
(3,666)
(568)
(618)
(755)
(874)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,730)
Net undiscounted best
estimate liabilities
107
12
26
43
39
103
153
312
366
671
659
2,491
Risk adjustment
(undiscounted)
419
Effect of discounting
(528)
Net claims liabilities
2,382
Ancillary claims and
expense liabilities
72
UK Motor Net
liabilities for
incurred claims
2,454
UK Non-motor (core)
At end of year one
7
6
20
18
16
16
43
68
78
At end of year two
10
14
22
34
25
12
41
94
108
At end of year three
10
12
24
33
31
19
36
88
At end of year four
9
12
22
37
30
18
40
At end of year five
9
12
24
37
29
21
At end of year six
8
12
24
36
33
At end of year seven
9
12
24
39
At end of year eight
9
13
25
At end of year nine
9
13
Ten years later
9
Net best estimates of
undiscounted claims
8
9
13
25
39
33
21
40
88
108
78
462
Cumulative net
claims paid
(8)
(9)
(13)
(25)
(38)
(32)
(20)
(36)
(86)
(106)
(59)
(432)
Net undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
1
4
2
2
19
30
Risk adjustment
(undiscounted)
10
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Effect of discounting
(2)
Net claims liabilities
38
Ancillary claims and
expense liabilities
3
UK Non-motor Net
liabilities for
incurred claims
41
International
Insurance
At end of year one
61
79
83
100
114
140
145
At end of year two
85
120
129
145
185
218
224
At end of year three
115
97
117
129
144
187
211
At end of year four
92
132
96
119
130
144
192
At end of year five
82
131
101
119
123
149
At end of year six
83
86
101
115
128
At end of year seven
70
86
99
118
At end of year eight
70
85
103
At end of year nine
83
87
Ten years later
80
Net best estimates of
undiscounted claims
207
80
87
103
118
128
149
192
211
224
145
1,644
Cumulative net
claims paid
(205)
(65)
(86)
(99)
(112)
(121)
(138)
(175)
(180)
(195)
(88)
(1,464)
Net undiscounted best
estimate liabilities
2
15
1
4
6
7
11
17
31
29
57
180
Risk adjustment
(undiscounted)
27
Effect of discounting
(20)
Net claims liabilities
187
Ancillary claims and
expense liabilities
21
International
Insurance Net
liabilities\u00a0
incurred claims
208
(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 - undiscounted*, net of excess of
loss reinsurance
31 December
2021
2022
2023
2024
Underwriting year
2019
73%
71%
67%
64%
2020
68%
65%
58%
57%
2021
95%
91%
86%
82%
2022
\u2013
104%
96%
91%
2023
\u2013
\u2013
94%
80%
2024
\u2013
\u2013
\u2013
77%
* Booked undiscounted loss ratios presented from the transition date of IFRS 17 (1 January 2022) onwards.
UK Motor Insurance loss ratio development - discounted*, net of excess of
loss reinsurance
31 December
2021
2022
2023
2024
Underwriting year
2019
71%
69%
65%
63%
2020
67%
63%
57%
55%
2021
92%
86%
81%
77%
2022
\u2013
97%
88%
83%
2023
\u2013
\u2013
86%
72%
2024
\u2013
\u2013
\u2013
71%
* 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
2024
\u00a3m
31 December
2023
\u00a3m
Gross
Underwriting year
2019 & prior
173.7
152.9
2020
41.8
98.2
2021
87.0
76.4
2022
107.1
79.4
2023
83.8
\u2013
2024
\u2013
\u2013
Total UK Motor gross changes to liabilities for incurred claims
493.4
406.9
Net
Underwriting year
2019 & prior
99.6
145.6
2020
30.5
97.7
2021
70.6
80.1
2022
94.5
69.4
2023
76.7
\u2013
2024
\u2013
\u2013
Total UK Motor net of excess of loss changes to liabilities for incurred claims
371.9
392.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-467": { "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\u00a0reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made
by\u00a0management 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\u00a0a\u00a0proportional 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:
1) A group of contracts that are onerous at initial recognition, if any
2) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
3) 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\u00a0a\u00a0group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract
is\u00a0initially 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\u00a0measuring 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\u00a0new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with
the\u00a0contract 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\u00a0provide 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\u00a0benefits that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
1. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and,
as\u00a0a\u00a0result, can set a price or level of benefits that fully reflects the risk of that portfolio
2. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to\u00a0periods 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\u00a0amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the
policyholder to\u00a0the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk,
are\u00a0not 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\u00a0in\u00a0which 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\u00a0assets 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.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation
approach (\u2018PAA\u2019)
eligibility
Subject to specified criteria, the PAA can
be\u00a0adopted as a simplified approach to the
IFRS\u00a017\u00a0general model.
Coverage period for the Group\u2019s insurance
contracts assumed is one year or less and so
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
cashflows for insurance
contracts issued
Where the coverage period of all contracts
within a group is not longer than one year,
insurance acquisition cashflows can either be
expensed as 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.
The Group\u2019s insurance contracts are all one year
or\u00a0less. The Group has therefore taken the option
to expense acquisition costs as incurred.
Liability for Remaining
Coverage (\u2018LRC\u2019),
adjusted for financial
risk and time value of
money
Where there is no significant financing
component in relation to the LRC, or where
the\u00a0time between providing each part of the
services and the related premium due date is
no more than a year, an entity is not required
to\u00a0make an adjustment for accretion of
interest\u00a0on the LRC.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
Liability for Incurred
Claims (\u2018LIC\u2019) adjusted
for time value of money
For PAA groups, where claims or directly
attributable insurance expenses are expected
to be paid within a year of the date that the
claim is incurred, it is not required to adjust
these amounts for the time value of money.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses,
no\u00a0adjustment 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
income and expense
There is an option to disaggregate part of
the\u00a0movement in the LIC, LRC, AIC and ARC
resulting from changes in discount rates,
and\u00a0present this in Other Comprehensive
Income (\u2018OCI\u2019).
The impact on LIC, LRC, AIC and ARC of changes
in discount rates will be captured within OCI, in line
with the accounting for assets backing the
insurance claims liabilities.
Interim reporting
Where an entity is required to apply IAS 34
(as\u00a0for the Group) there is an option as to
whether to choose a \u2018year-to-date\u2019 basis or
a\u00a0\u201cperiod to date\u201d basis for financial reporting.
The Group has opted to apply the option to use
year-to-date accounting for interim 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\u00a0contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect
the\u00a0timing 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\u00a0market 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\u00a0non-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\u00a0contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group
of\u00a0reinsurance 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\u00a0risk-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\u00a0terms 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\u00a0published 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.\u00a0The illiquidity premium is determined
by\u00a0management considering various internal benchmarks. This includes considering the cost of liquidity for the Group (through
its\u00a0Revolving Credit Facilities), by deducting the risk-free rate and credit risk premium from a corporate bond reference portfolio,
and by deducting public market yields from similarly rated private market yields. Each method points to a different mathematical
result and judgement is applied when determining the illiquidity premium. \u00a0
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 2024
31 December 2023
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.0%
4.7%
4.5%
4.6%
5.4%
4.3%
4.0%
3.9%
International
(European motor)
2.7%
2.6%
2.6%
2.8%
4.0%
3.1%
3.0%
3.0%
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).\u00a0Quantitative
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\u00a0change 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\u00a0performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are
required to\u00a0fulfil 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 14 for further information regarding the disaggretation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees from insurance revenue derived from
the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Please see note 8a for
the treatment of the co-insurance share retained by the group of instalment income and administration fees.
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 (such as employee costs, depreciation
and amortisation) 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.
Non-cash costs that are directly attributable, such as depreciation, amortisation and IFRS 2 equity-settled share scheme costs,
are\u00a0recognised within insurance service expenses; these are transferred out of the LIC into the appropriate Financial Statement line
item for presentation in the Statement of Financial Position.
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\u00a0lower premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 3 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 \u2018net\u2019 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:
1. The effect of the time value of money and changes in the time value of money
2. The effect of financial risk and changes in financial risk.
The Group has taken the option to disaggregate insurance finance income or expenses on insurance contracts issued between
the\u00a0Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income.
As a result, applying the premium allocation approach, claims incurred are discounted at the date of initial recognition and the
finance expense recognised in the Consolidated Income Statement reflects the unwind of this discounting, at the locked in discount
rate, over the expected payment period. The same approach is taken for reinsurance claims assets. Discounting on the liability and
asset for remaining coverage only occurs in the case of the recognition of an onerous loss component (and related loss-recovery
component) and as a result is not material.
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 re-measured 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\u00a0remaining 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\u00a0a 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\u00a0expenses 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\u00a0zero 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\u00a0a\u00a0result 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-466": { "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\u00a0reinsurance contract in these financial statements where there is significant insurance risk transfer, after an assessment made
by\u00a0management 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\u00a0a\u00a0proportional 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:
1) A group of contracts that are onerous at initial recognition, if any
2) A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any
3) 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\u00a0a\u00a0group of reinsurance contracts held that provide fully proportionate coverage until the date any underlying insurance contract
is\u00a0initially 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\u00a0measuring 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\u00a0new contract.
When a modification is not treated as a derecognition, the Group recognises amounts paid or received for the modification with
the\u00a0contract 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\u00a0provide 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\u00a0benefits that fully reflects those risks, or
\u2022 Both of the following criteria are satisfied:
1. The Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and,
as\u00a0a\u00a0result, can set a price or level of benefits that fully reflects the risk of that portfolio
2. The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to\u00a0periods 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\u00a0amounts relate to future insurance contracts. In assessing the practical ability to reprice, risks transferred from the
policyholder to\u00a0the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender risk,
are\u00a0not 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\u00a0in\u00a0which 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\u00a0assets 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.
(vi) Measurement
Accounting policy choices
Area
IFRS 17 options
Adopted approach
Premium allocation
approach (\u2018PAA\u2019)
eligibility
Subject to specified criteria, the PAA can
be\u00a0adopted as a simplified approach to the
IFRS\u00a017\u00a0general model.
Coverage period for the Group\u2019s insurance
contracts assumed is one year or less and so
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
cashflows for insurance
contracts issued
Where the coverage period of all contracts
within a group is not longer than one year,
insurance acquisition cashflows can either be
expensed as 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.
The Group\u2019s insurance contracts are all one year
or\u00a0less. The Group has therefore taken the option
to expense acquisition costs as incurred.
Liability for Remaining
Coverage (\u2018LRC\u2019),
adjusted for financial
risk and time value of
money
Where there is no significant financing
component in relation to the LRC, or where
the\u00a0time between providing each part of the
services and the related premium due date is
no more than a year, an entity is not required
to\u00a0make an adjustment for accretion of
interest\u00a0on the LRC.
There is no allowance made for accretion of
interest on the LRC given that the premiums are
received within one year of the coverage period.
Liability for Incurred
Claims (\u2018LIC\u2019) adjusted
for time value of money
For PAA groups, where claims or directly
attributable insurance expenses are expected
to be paid within a year of the date that the
claim is incurred, it is not required to adjust
these amounts for the time value of money.
For some claims, for example within the travel
product line in the UK, and other immaterial
product lines across the Group, the incurred claims
are expected to be paid out in less than one year.
Similarly, the majority of directly attributable
insurance expenses are expected to be settled
within one year. For these claims and expenses,
no\u00a0adjustment 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
income and expense
There is an option to disaggregate part of
the\u00a0movement in the LIC, LRC, AIC and ARC
resulting from changes in discount rates,
and\u00a0present this in Other Comprehensive
Income (\u2018OCI\u2019).
The impact on LIC, LRC, AIC and ARC of changes
in discount rates will be captured within OCI, in line
with the accounting for assets backing the
insurance claims liabilities.
Interim reporting
Where an entity is required to apply IAS 34
(as\u00a0for the Group) there is an option as to
whether to choose a \u2018year-to-date\u2019 basis or
a\u00a0\u201cperiod to date\u201d basis for financial reporting.
The Group has opted to apply the option to use
year-to-date accounting for interim 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\u00a0contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect
the\u00a0timing 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\u00a0market 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\u00a0non-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\u00a0contracts.
The Group uses consistent assumptions to measure the estimates of the present value of future cashflows for the group
of\u00a0reinsurance 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\u00a0risk-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\u00a0terms 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\u00a0published 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.\u00a0The illiquidity premium is determined
by\u00a0management considering various internal benchmarks. This includes considering the cost of liquidity for the Group (through
its\u00a0Revolving Credit Facilities), by deducting the risk-free rate and credit risk premium from a corporate bond reference portfolio,
and by deducting public market yields from similarly rated private market yields. Each method points to a different mathematical
result and judgement is applied when determining the illiquidity premium. \u00a0
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 2024
31 December 2023
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
UK Insurance
5.0%
4.7%
4.5%
4.6%
5.4%
4.3%
4.0%
3.9%
International
(European motor)
2.7%
2.6%
2.6%
2.8%
4.0%
3.1%
3.0%
3.0%
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).\u00a0Quantitative
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\u00a0change 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\u00a0performance obligation is the change in a customer\u2019s policy and given that the obligation related to activities that are
required to\u00a0fulfil 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 14 for further information regarding the disaggretation of insurance revenue.
As stated in note 2, the Group has excluded any instalment income and administration fees from insurance revenue derived from
the proportion of insurance coverage under the co-insurance arrangements where the Group bears no risks. Please see note 8a for
the treatment of the co-insurance share retained by the group of instalment income and administration fees.
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 (such as employee costs, depreciation
and amortisation) 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.
Non-cash costs that are directly attributable, such as depreciation, amortisation and IFRS 2 equity-settled share scheme costs,
are\u00a0recognised within insurance service expenses; these are transferred out of the LIC into the appropriate Financial Statement line
item for presentation in the Statement of Financial Position.
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\u00a0lower premium (with no corresponding ceding commission or expense recovery).
In addition, as set out in note 3 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 \u2018net\u2019 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:
1. The effect of the time value of money and changes in the time value of money
2. The effect of financial risk and changes in financial risk.
The Group has taken the option to disaggregate insurance finance income or expenses on insurance contracts issued between
the\u00a0Consolidated Income Statement and the Consolidated Statement of Other Comprehensive Income.
As a result, applying the premium allocation approach, claims incurred are discounted at the date of initial recognition and the
finance expense recognised in the Consolidated Income Statement reflects the unwind of this discounting, at the locked in discount
rate, over the expected payment period. The same approach is taken for reinsurance claims assets. Discounting on the liability and
asset for remaining coverage only occurs in the case of the recognition of an onerous loss component (and related loss-recovery
component) and as a result is not material.
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 re-measured 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\u00a0remaining 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\u00a0a 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\u00a0expenses 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\u00a0zero 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\u00a0a\u00a0result 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-468": { "value": "
5b. Insurance revenue
Insurance revenue for the corresponding reportable segments for the period ended 31\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
3,369.5
503.9
829.5
73.3
4,776.2
Insurance revenue for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Insurance revenue related movement in liability for
remaining coverage
2,250.2
346.6
842.6
46.7
3,486.1
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\u00a0duration, lasting for between 6 and 12 months.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsurancePremiumRevenueExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-469": { "value": "
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2024 are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Incurred claims
Claims incurred in the period
2,107.2
298.2
583.7
48.9
3,038.0
Changes to liabilities for incurred claims
(496.1)
(51.4)
(11.1)
(1.3)
(559.9)
Total incurred claims
1,611.1
246.8
572.6
47.6
2,478.1
Movement in onerous contracts
(5.1)
0.1
(0.1)
\u2013
(5.1)
Directly attributable expenses
Administration expenses
461.5
113.7
175.2
18.7
769.1
Acquisition expenses
125.3
45.2
61.3
15.0
246.8
Insurance expenses
586.8
158.9
236.5
33.7
1,015.9
Share scheme expenses
40.7
5.4
11.1
1.4
58.6
Total insurance expenses including share scheme expenses
627.5
164.3
247.6
35.1
1,074.5
Total Insurance service expenses
2,233.5
411.2
820.1
82.7
3,547.5
Insurance service expenses for the corresponding reportable segments for the period ended 31\u00a0December 2023 are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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 including 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
5d. Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2024
are shown below.
31 December 2024
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Allocation of reinsurance premiums
145.8
45.8
153.9
7.6
353.1
Amounts recoverable from reinsurers for incurred insurance
service expenses
Incurred claims
(29.2)
3.1
(275.9)
(8.5)
(310.5)
Changes to liabilities for incurred claims
291.6
34.3
146.3
\u2013
472.2
Net expense from reinsurance contracts excluding
movement in onerous loss component
408.2
83.2
24.3
(0.9)
514.8
Other reinsurance recoveries including movement in onerous
loss component
4.0
(0.1)
(0.3)
\u2013
3.6
Net expenses/(income) from reinsurance contracts held
412.2
83.1
24.0
(0.9)
518.4
Net expenses from reinsurance contracts held for the corresponding reportable segments for the period ended 31\u00a0December 2023
are shown below.
31 December 2023
UK Motor
\u00a3m
UK Non-motor
\u00a3m
Int. Insurance
\u00a3m
Other
\u00a3m
Total Group
\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
(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 Non-UK 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\u00a0the claims payments is typically resolved within one year. Therefore, the Group has not disclosed information about the claims
in\u00a0its other lines of business or related directly attributable expenses.
Gross claims development
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
394
436
552
686
701
552
688
845
973
1,241
At end of year two
701
829
1,144
1,175
1,067
985
1,326
1,584
1,812
At end of year three
707
788
994
1,109
1,010
954
1,294
1,544
At end of year four
680
727
947
1,064
996
921
1,270
At end of year five
636
713
912
1,008
981
910
At end of year six
619
690
890
1,000
938
At end of year seven
606
656
865
959
At end of year eight
594
652
849
At end of year nine
585
657
Ten years later
583
Gross best estimates
of undiscounted claims
3,803
583
657
849
959
938
910
1,270
1,544
1,812
1,241
14,566
Cumulative gross
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Gross undiscounted
best estimate liabilities
137
15
39
67
53
116
177
346
440
707
680
2,777
Risk adjustment
(undiscounted)
480
Effect of discounting
(673)
Gross claims liabilities
2,584
Ancillary claims and
expense liabilities
107
UK Motor Gross
liabilities for incurred
claims
2,691
UK Non-motor (core)
At end of year one
26
29
56
55
53
58
116
146
160
At end of year two
34
50
78
102
105
96
128
224
253
At end of year three
35
47
76
102
103
95
124
227
At end of year four
34
47
75
102
102
90
126
At end of year five
33
47
76
102
93
93
At end of year six
33
47
76
100
96
At end of year seven
33
47
75
102
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Gross best estimates
of undiscounted claims
24
33
48
77
102
96
93
126
227
253
160
1,239
Cumulative gross
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(202)
(187)
(69)
(1,047)
Gross undiscounted
best estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
6
25
66
91
192
Risk adjustment
(undiscounted)
25
Effect of discounting
(7)
Gross claims liabilities
210
Ancillary claims and
expense liabilities
5
UK Non-motor Gross
liabilities for incurred
claims
215
International
Insurance
At end of year one
177
236
204
270
313
338
300
At end of year two
259
356
382
368
496
601
580
At end of year three
237
304
349
388
364
498
603
At end of year four
181
253
300
350
384
365
499
At end of year five
211
251
300
350
364
361
At end of year six
211
251
300
339
362
At end of year seven
211
251
296
338
At end of year eight
212
248
294
At end of year nine
233
247
Ten years later
226
Gross best estimates
of undiscounted claims
540
226
247
294
338
362
361
499
603
580
300
4,350
Cumulative gross
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(436)
(490)
(408)
(127)
(3,693)
Gross undiscounted
best estimate liabilities
7
38
2
14
17
21
37
63
113
172
173
657
Risk adjustment
(undiscounted)
81
Effect of discounting
(81)
Gross claims liabilities
657
Ancillary claims and
expense liabilities
33
International
Insurance Gross
liabilities for incurred
claims
690
Claims development net of XoL reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
510
646
675
520
661
825
951
1,220
At end of year two
682
783
1,053
1,123
1,033
949
1,292
1,550
1,776
At end of year three
667
743
917
1,053
986
927
1,257
1,517
At end of year four
637
692
883
1,024
969
892
1,240
At end of year five
607
677
860
974
950
886
At end of year six
599
663
840
978
925
At end of year seven
586
640
820
946
At end of year eight
579
635
825
At end of year nine
577
644
Ten years later
580
Net of XoL best
estimates of
undiscounted claims
3,773
580
644
825
946
925
886
1,240
1,517
1,776
1,220
14,332
Cumulative
claims paid
(3,666)
(568)
(618)
(782)
(906)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,789)
Net of XoL
undiscounted best
estimate liabilities
107
12
26
43
40
103
153
316
413
671
659
2,543
Risk adjustment
(undiscounted)
428
Effect of discounting
(543)
Net of XoL
claims liabilities
2,428
Ancillary claims and
expense liabilities
107
UK Motor Net of XoL
liabilities for incurred
claims
2,535
UK Non-motor (core)
At end of year one
26
29
56
54
50
57
116
127
152
At end of year two
34
50
78
102
96
91
126
220
229
At end of year three
35
47
75
101
94
90
124
221
At end of year four
34
47
75
101
93
90
127
At end of year five
33
47
76
101
93
93
At end of year six
33
47
75
100
96
At end of year seven
33
47
75
102
At end of year eight
33
48
77
At end of year nine
33
48
Ten years later
33
Net of XoL best
estimates of
undiscounted claims
24
33
48
77
102
96
93
127
221
229
152
1,202
Cumulative
claims paid
(24)
(33)
(48)
(77)
(101)
(95)
(91)
(120)
(200)
(178)
(69)
(1,036)
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Net of XoL
undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
2
7
21
51
83
166
Risk adjustment
(undiscounted)
22
Effect of discounting
(6)
Net of XoL
claims liabilities
182
Ancillary claims and
expense liabilities
5
UK Non-motor Net of
XoL liabilities for
incurred claims
187
International
Insurance
At end of year one
177
236
204
270
313
335
299
At end of year two
259
356
382
368
496
559
569
At end of year three
237
304
349
388
364
477
561
At end of year four
181
253
300
350
384
355
472
At end of year five
211
251
300
350
360
353
At end of year six
211
251
300
337
358
At end of year seven
211
251
290
337
At end of year eight
212
248
290
At end of year nine
210
248
Ten years later
204
Net of XoL best
estimates of
undiscounted claims
537
204
248
290
337
358
353
472
561
569
299
4,228
Cumulative
claims paid
(533)
(188)
(245)
(280)
(321)
(341)
(324)
(431)
(486)
(406)
(128)
(3,683)
Net of XoL
undiscounted best
estimate liabilities
4
16
3
10
16
17
29
41
75
163
171
545
Risk adjustment
(undiscounted)
73
Effect of discounting
(36)
Net of XoL
claims liabilities
582
Ancillary claims and
expense liabilities
32
International
Insurance Net of XoL
liabilities for incurred
claims
614
Claims development net of reinsurance
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK Motor (core)
At end of year one
378
427
493
625
626
520
657
762
939
1,220
At end of year two
682
783
1,016
1,086
1,033
949
1,259
1,442
1,776
At end of year three
667
743
886
1,018
986
927
1,239
1,470
At end of year four
637
692
853
990
969
892
1,236
At end of year five
607
677
830
957
950
886
At end of year six
599
663
811
944
925
At end of year seven
586
640
793
913
At end of year eight
579
635
798
At end of year nine
577
644
Ten years later
580
Net best estimates of
undiscounted claims
3,773
580
644
798
913
925
886
1,236
1,470
1,776
1,220
14,221
Cumulative net
claims paid
(3,666)
(568)
(618)
(755)
(874)
(822)
(733)
(924)
(1,104)
(1,105)
(561)
(11,730)
Net undiscounted best
estimate liabilities
107
12
26
43
39
103
153
312
366
671
659
2,491
Risk adjustment
(undiscounted)
419
Effect of discounting
(528)
Net claims liabilities
2,382
Ancillary claims and
expense liabilities
72
UK Motor Net
liabilities for
incurred claims
2,454
UK Non-motor (core)
At end of year one
7
6
20
18
16
16
43
68
78
At end of year two
10
14
22
34
25
12
41
94
108
At end of year three
10
12
24
33
31
19
36
88
At end of year four
9
12
22
37
30
18
40
At end of year five
9
12
24
37
29
21
At end of year six
8
12
24
36
33
At end of year seven
9
12
24
39
At end of year eight
9
13
25
At end of year nine
9
13
Ten years later
9
Net best estimates of
undiscounted claims
8
9
13
25
39
33
21
40
88
108
78
462
Cumulative net
claims paid
(8)
(9)
(13)
(25)
(38)
(32)
(20)
(36)
(86)
(106)
(59)
(432)
Net undiscounted best
estimate liabilities
\u2013
\u2013
\u2013
\u2013
1
1
1
4
2
2
19
30
Risk adjustment
(undiscounted)
10
Financial year ended 31 December 2024
Underwriting year
2014 &
prior
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Effect of discounting
(2)
Net claims liabilities
38
Ancillary claims and
expense liabilities
3
UK Non-motor Net
liabilities for
incurred claims
41
International
Insurance
At end of year one
61
79
83
100
114
140
145
At end of year two
85
120
129
145
185
218
224
At end of year three
115
97
117
129
144
187
211
At end of year four
92
132
96
119
130
144
192
At end of year five
82
131
101
119
123
149
At end of year six
83
86
101
115
128
At end of year seven
70
86
99
118
At end of year eight
70
85
103
At end of year nine
83
87
Ten years later
80
Net best estimates of
undiscounted claims
207
80
87
103
118
128
149
192
211
224
145
1,644
Cumulative net
claims paid
(205)
(65)
(86)
(99)
(112)
(121)
(138)
(175)
(180)
(195)
(88)
(1,464)
Net undiscounted best
estimate liabilities
2
15
1
4
6
7
11
17
31
29
57
180
Risk adjustment
(undiscounted)
27
Effect of discounting
(20)
Net claims liabilities
187
Ancillary claims and
expense liabilities
21
International
Insurance Net
liabilities\u00a0
incurred claims
208
", "dimensions": { "concept": "ifrs-full:DisclosureOfClaimsAndBenefitsPaidExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-470": { "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:
1. The Group\u2019s business model for managing the financial assets, and
2. 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\u00a0not 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\u00a0customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised
in\u00a0interest\u00a0income.
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\u00a0the 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. These represent open
ended private debt securities held in investment funds.
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, closed ended private debt funds\u00a0
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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, 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\u00a0derivatives 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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
6b. Investment return
31 December 2024
\u00a3m
31 December 2023
\u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
67.1
67.1
\u2013
43.3
43.3
On assets classified as FVOCI1, 3
100.4
5.2
105.6
77.0
(3.6)
73.4
On assets classified as amortised cost1
5.9
\u2013
5.9
4.1
\u2013
4.1
Net unrealised losses
Unrealised (loss) / gain on forward contracts
\u2013
(0.2)
(0.2)
\u2013
(0.2)
(0.2)
Share of associate profit/ loss
\u2013
(1.0)
(1.0)
\u2013
(1.3)
(1.3)
Interest income on cash and cash equivalents1
\u2013
5.5
5.5
\u2013
5.4
5.4
Investment fees
\u2013
(2.0)
(2.0)
\u2013
(1.8)
(1.8)
Total investment and interest income2
106.3
74.6
180.9
81.1
41.8
122.9
1Interest received during the year was \u00a390.6 million (2023: \u00a376.8 million).
2Total investment return excludes \u00a37.9 million of intra-group interest (2023: \u00a33.2 million).
3Realised losses on sales of debt securities classified as FVOCI are \u00a34.5 million (2023: \u00a30.9 million).
Investment return, which is comprised of distributions as well as net realised and unrealised gains on financial assets classified
as\u00a0FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets
classified as amortised cost, is impacted by the interest rates on cash and financial investments.
Finance expense (note 5e), which reflects the unwind of discounting applied using a discount rate locked in at the date the claim
is\u00a0recognised over the expected payment period, is also impacted by interest rates derived from the EIOPA yield curve at the time
of claim. Both these items are impacted by risk free interest rates, albeit with differences driven by timing of making investments
versus the timing of claims recognition and payment. All other factors being equal, higher risk-free rates should result in an increase
in both investment return and finance expense being recognised in the Income Statement.
Admiral primarily invests to match its liabilities hence the OCI impacts on assets within the fair value reserve should correlate
to\u00a0those on the insurance contract liabilities within the insurance finance reserve. However, Admiral invests in a diverse range
of\u00a0assets including corporate and government bonds hence the investment fair value reserve is driven by factors beyond the
interest rates used in discounting the liabilities. These include market credit spreads as well as fair value movements on surplus
assets not held to match the insurance liabilities and can move in the opposite direction to interest rates.
6c. Finance costs
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest expense on subordinated loan notes and other credit facilities1, 2
24.5
18.5
Interest expense on lease liabilities
2.6
2.0
Interest recoverable from co-insurers
(0.6)
(0.4)
Total finance costs3
26.5
20.1
1Interest paid during the year was \u00a327.0 million (2023: \u00a320.5 million).
2See note 7e for details of credit facilities.
3No interest has been capitalised in the period
Finance costs represent interest payable on the \u00a3250.0 million (2023: \u00a3305.1 million) subordinated notes and other financial liabilities.
Interest expense on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16.
6d. Expected credit losses
Note
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Expected credit (gains)/losses on financial investments
6f
6.3
(2.5)
Expected credit losses on loans and advances to customers1
7b
28.3
33.5
Total expense for expected credit losses
34.6
31.0
1 Includes \u00a326.1 million (2023: \u00a315.0 million) of write-offs, with total movement in the expected credit loss provision being \u00a328.3 million (2023: \u00a333.5 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
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security
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 (2023: none).
The table below shows how the financial assets and liabilities held at fair value have been measured using the fair value hierarchy:
31 December 2024
31 December 2023
FVTPL
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
FVOCI
\u00a3m
Level one (quoted prices in active markets)
1,221.2
3,183.1
888.8
2,560.1
Level two (use of observable inputs)
(2.4)
\u2013
17.6
\u2013
Level three (use of significant unobservable inputs)
202.2
152.3
12.4
265.8
Total
1,421.0
3,335.4
918.8
2,825.9
Fair value measurement using observable inputs (level two)
Level two investments represent derivatives used for interest rate and FX hedging purposes, these are valued using market interest
rates and in the case of FX derivatives a combination of interest rates and spot FX rates.
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
Gains/(losses) recognised in the Income Statement are recognised within investment returns and gains/(losses) recognised in Other
Comprehensive Income is recognised within movements in fair value reserve.
6g. Cash and cash equivalents
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Cash at bank and in hand1
313.6
353.1
Total cash and cash equivalents
313.6
353.1
1Cash at bank and in hand includes \u00a345.2 million (2023: \u00a338.9 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, the fair value approximates to the book value due to their short maturity.
6h. Other receivables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Prepayments and accrued income
63.7
62.2
Total other receivables
225.2
409.9
Insurance related receivables
Insurance related receivables, which are measured at historic cost, reflect amounts relating to the Group\u2019s intermediary activities.
Given the short-term duration of these assets no material bad debt provision has been recognised.
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 irrespective of the credit risk. In this case,
the\u00a0provision is based on a combination of
1) Aged debtor analysis
2) Historic experience of write-offs for each receivable
3) Any specific indicators of credit deterioration observed, and
4) 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
2024
\u00a3m
31 December
2023
\u00a3m
Receivables
16.7
14.9
Contract assets
14.8
17.0
The contract asset relates to work undertaken in the law companies on behalf of clients which is ongoing and where the Company's
right to consideration remains dependent on the Company's continued successful performance under the contract. The contract
asset is transferred to trade receivables once only the passage of time is required before payment of the consideration is due,
which is typically at the point of the fee being billed.
Significant changes in the contract asset balance during the period are as follows:
Contract asset balance
31 December
2024
\u00a3m
At 1 January 2023
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write-offs
(0.6)
At 31 December 2023
17.0
Revenue recognised
16.7
Transferred to trade receivables
(18.5)
Write-offs
(0.4)
At 31 December 2024
14.8
The amount of revenue recognised in 2024 from performance obligations satisfied (or partially satisfied) in previous periods
in\u00a0relation to the above contract balances is \u00a3nil ( 2023: \u00a3nil).
6i. Financial liabilities
31 December 2024
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
315.2
759.6
55.0
81.2
1,211.0
Interest expense per Income Statement
23.0
47.9
2.1
2.6
75.6
Cashflows relating to interest1
(24.2)
(47.9)
(2.1)
(2.4)
(76.6)
Cashflows relating to principal - payments
(55.1)
(194.1)
(115.0)
(12.7)
(376.9)
Cashflows relating to principal - receipts
\u2013
372.2
177.7
\u2013
549.9
Other foreign exchange and non-cash movements
\u2013
\u2013
7.9
10.9
18.8
Financial liability at the end of the period
258.9
937.7
125.6
79.6
1,401.8
31 December 2023
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest expense per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows relating to interest1
(7.0)
(40.6)
(5.4)
(1.9)
(54.9)
Cashflows relating to principal - payments
(147.2)
(246.8)
(145.0)
(8.8)
(547.8)
Cashflows relating to principal - receipts
248.4
291.7
180.0
\u2013
720.1
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
1Cashflows relating to interest are shown within finance costs paid, including expense paid on funding for loans
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026 and a \u20ac100.0 million
facility which expires in August 2025. As at 31\u00a0December 2024, \u00a3117.4 million was drawn under these facilities (2023: \u00a355.0 million),
which is shown within other borrowings in the table above. This is made up of \u00a3105.0 million from the sterling facility expiring April
2026 (2023: \u00a335.0 million) and \u00a312.4 million from the euro facility expiring August 2025 (2023: nil).
The carrying value is a reasonable approximation of fair value.
The Group's revolving credit facility agreement includes a covenant requiring that a percentage of the Group's Debt does
not\u00a0exceed an adjusted net assets valuation as well as confirmation of no default. The Group monitors compliance and there
are\u00a0no\u00a0indicators that the covenants will be breached in the foreseeable future.
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\u00a0note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3937.7 million (2023: \u00a3759.6 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\u00a0asset 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\u00a0payments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-471": { "value": "
6a. Accounting policies
i) Financial assets
Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:
1. The Group\u2019s business model for managing the financial assets, and
2. 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\u00a0not 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\u00a0customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised
in\u00a0interest\u00a0income.
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\u00a0the 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. These represent open
ended private debt securities held in investment funds.
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, closed ended private debt funds\u00a0
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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, 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\u00a0derivatives 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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-472": { "value": "
6a. Accounting policies
i) Financial assets
Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:
1. The Group\u2019s business model for managing the financial assets, and
2. 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\u00a0not 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\u00a0customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised
in\u00a0interest\u00a0income.
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\u00a0the 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. These represent open
ended private debt securities held in investment funds.
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, closed ended private debt funds\u00a0
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:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-473": { "value": "
i) Financial assets
Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:
1. The Group\u2019s business model for managing the financial assets, and
2. 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\u00a0not 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\u00a0customers and cash and cash equivalents relating to the loans business, where the interest receivable is recognised
in\u00a0interest\u00a0income.
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\u00a0the 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. These represent open
ended private debt securities held in investment funds.
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, closed ended private debt funds\u00a0
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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, 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.
7a. Accounting policies
Loans and advances to customers consist of unsecured personal loans and car finance products.\u00a0\u00a0
Classification\u00a0
Loans and advances to customers are measured at amortised cost. This is because assets are held\u00a0in order to\u00a0collect 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.\u00a0\u00a0
Interest income and expense\u00a0
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.
Interest expense is calculated\u00a0using the effective interest rate appropriate to each source of funding.\u00a0
Finance leases\u00a0
Included within\u00a0loans and advances to customers are\u00a0personal contract purchase\u00a0(PCP)\u00a0and hire purchase\u00a0(HP)\u00a0arrangements
which are classified as finance leases under IFRS 16.\u00a0A receivable equal to the net investment in the lease has been
recognised.\u00a0The\u00a0net investment is equal to the gross investment in the lease discounted at the rate implicit in the lease.\u00a0\u00a0
Lease\u00a0interest\u00a0income is recognised within\u00a0interest income\u00a0in the income statement over the term of the lease using the\u00a0effective
interest rate\u00a0method.\u00a0\u00a0
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\u00a0provide protection against deterioration in that value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-474": { "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, closed ended private debt funds\u00a0
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-476": { "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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, 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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-475": { "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\u00a0loans and advances to customers (see note 7), as well as financial investments measured at FVOCI.
For financial investments measured at FVOCI, the 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 by two or more credit ratings in 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\u00a0assets in\u00a0stage 2, the lifetime expected credit loss is based on the lifetime default rate which factors in the number of years
from maturity
\u2022 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\u00a0external 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
considered low risk under IFRS 9 (2024 stage 1 assets: 99% of total investments). 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\u00a0December 2024 is \u00a312.9 million (\u00a36.9 million at 31\u00a0December 2023).
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are\u00a0recognised 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\u00a0immaterial, no further disclosure has been made.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-477": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-479": { "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\u00a0derivatives 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-478": { "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\u00a0derivatives 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-482": { "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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
Interest income and expense\u00a0
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.
Interest expense is calculated\u00a0using the effective interest rate appropriate to each source of funding.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-481": { "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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-480": { "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, 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.
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-483": { "value": "
iv) Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment property is measured at fair value in accordance with IAS 40. Fair
value is determined based on valuations performed by independent professionally qualified valuers. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and
no\u00a0future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated
as\u00a0the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period
in which the property is derecognised.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-484": { "value": "
6b. Investment return
31 December 2024
\u00a3m
31 December 2023
\u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
67.1
67.1
\u2013
43.3
43.3
On assets classified as FVOCI1, 3
100.4
5.2
105.6
77.0
(3.6)
73.4
On assets classified as amortised cost1
5.9
\u2013
5.9
4.1
\u2013
4.1
Net unrealised losses
Unrealised (loss) / gain on forward contracts
\u2013
(0.2)
(0.2)
\u2013
(0.2)
(0.2)
Share of associate profit/ loss
\u2013
(1.0)
(1.0)
\u2013
(1.3)
(1.3)
Interest income on cash and cash equivalents1
\u2013
5.5
5.5
\u2013
5.4
5.4
Investment fees
\u2013
(2.0)
(2.0)
\u2013
(1.8)
(1.8)
Total investment and interest income2
106.3
74.6
180.9
81.1
41.8
122.9
1Interest received during the year was \u00a390.6 million (2023: \u00a376.8 million).
2Total investment return excludes \u00a37.9 million of intra-group interest (2023: \u00a33.2 million).
3Realised losses on sales of debt securities classified as FVOCI are \u00a34.5 million (2023: \u00a30.9 million).
Investment return, which is comprised of distributions as well as net realised and unrealised gains on financial assets classified
as\u00a0FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets
classified as amortised cost, is impacted by the interest rates on cash and financial investments.
Finance expense (note 5e), which reflects the unwind of discounting applied using a discount rate locked in at the date the claim
is\u00a0recognised over the expected payment period, is also impacted by interest rates derived from the EIOPA yield curve at the time
of claim. Both these items are impacted by risk free interest rates, albeit with differences driven by timing of making investments
versus the timing of claims recognition and payment. All other factors being equal, higher risk-free rates should result in an increase
in both investment return and finance expense being recognised in the Income Statement.
Admiral primarily invests to match its liabilities hence the OCI impacts on assets within the fair value reserve should correlate
to\u00a0those on the insurance contract liabilities within the insurance finance reserve. However, Admiral invests in a diverse range
of\u00a0assets including corporate and government bonds hence the investment fair value reserve is driven by factors beyond the
interest rates used in discounting the liabilities. These include market credit spreads as well as fair value movements on surplus
assets not held to match the insurance liabilities and can move in the opposite direction to interest rates.
7d. Interest income
31 December
2024
\u00a3m
31 December
2023
\u00a3m
From loans and advances to customers
107.9
90.2
From finance leases
1.2
2.0
From bank interest
4.4
2.7
113.5
94.9
Interest income receivable is recognised in the income statement using the effective interest method, which calculates
the\u00a0amortised 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-485": { "value": "
6b. Investment return
31 December 2024
\u00a3m
31 December 2023
\u00a3m
At EIR
Other
Total
At EIR
Other
Total
Investment return
On assets classified as FVTPL
\u2013
67.1
67.1
\u2013
43.3
43.3
On assets classified as FVOCI1, 3
100.4
5.2
105.6
77.0
(3.6)
73.4
On assets classified as amortised cost1
5.9
\u2013
5.9
4.1
\u2013
4.1
Net unrealised losses
Unrealised (loss) / gain on forward contracts
\u2013
(0.2)
(0.2)
\u2013
(0.2)
(0.2)
Share of associate profit/ loss
\u2013
(1.0)
(1.0)
\u2013
(1.3)
(1.3)
Interest income on cash and cash equivalents1
\u2013
5.5
5.5
\u2013
5.4
5.4
Investment fees
\u2013
(2.0)
(2.0)
\u2013
(1.8)
(1.8)
Total investment and interest income2
106.3
74.6
180.9
81.1
41.8
122.9
1Interest received during the year was \u00a390.6 million (2023: \u00a376.8 million).
2Total investment return excludes \u00a37.9 million of intra-group interest (2023: \u00a33.2 million).
3Realised losses on sales of debt securities classified as FVOCI are \u00a34.5 million (2023: \u00a30.9 million).
Investment return, which is comprised of distributions as well as net realised and unrealised gains on financial assets classified
as\u00a0FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income from financial assets
classified as amortised cost, is impacted by the interest rates on cash and financial investments.
Finance expense (note 5e), which reflects the unwind of discounting applied using a discount rate locked in at the date the claim
is\u00a0recognised over the expected payment period, is also impacted by interest rates derived from the EIOPA yield curve at the time
of claim. Both these items are impacted by risk free interest rates, albeit with differences driven by timing of making investments
versus the timing of claims recognition and payment. All other factors being equal, higher risk-free rates should result in an increase
in both investment return and finance expense being recognised in the Income Statement.
Admiral primarily invests to match its liabilities hence the OCI impacts on assets within the fair value reserve should correlate
to\u00a0those on the insurance contract liabilities within the insurance finance reserve. However, Admiral invests in a diverse range
of\u00a0assets including corporate and government bonds hence the investment fair value reserve is driven by factors beyond the
interest rates used in discounting the liabilities. These include market credit spreads as well as fair value movements on surplus
assets not held to match the insurance liabilities and can move in the opposite direction to interest rates.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-487": { "value": "
6c. Finance costs
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest expense on subordinated loan notes and other credit facilities1, 2
24.5
18.5
Interest expense on lease liabilities
2.6
2.0
Interest recoverable from co-insurers
(0.6)
(0.4)
Total finance costs3
26.5
20.1
1Interest paid during the year was \u00a327.0 million (2023: \u00a320.5 million).
2See note 7e for details of credit facilities.
3No interest has been capitalised in the period
Finance costs represent interest payable on the \u00a3250.0 million (2023: \u00a3305.1 million) subordinated notes and other financial liabilities.
Interest expense on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16.
7e. Interest expense
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest payable on loan backed securities
32.0
23.4
Interest payable on other credit facilities
5.2
3.4
Total interest expense1
37.2
26.8
1Interest paid in total net of swaps during the year was \u00a342.7 million (2023: \u00a325.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-486": { "value": "
6c. Finance costs
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest expense on subordinated loan notes and other credit facilities1, 2
24.5
18.5
Interest expense on lease liabilities
2.6
2.0
Interest recoverable from co-insurers
(0.6)
(0.4)
Total finance costs3
26.5
20.1
1Interest paid during the year was \u00a327.0 million (2023: \u00a320.5 million).
2See note 7e for details of credit facilities.
3No interest has been capitalised in the period
Finance costs represent interest payable on the \u00a3250.0 million (2023: \u00a3305.1 million) subordinated notes and other financial liabilities.
Interest expense on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-488": { "value": "
6d. Expected credit losses
Note
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Expected credit (gains)/losses on financial investments
6f
6.3
(2.5)
Expected credit losses on loans and advances to customers1
7b
28.3
33.5
Total expense for expected credit losses
34.6
31.0
1 Includes \u00a326.1 million (2023: \u00a315.0 million) of write-offs, with total movement in the expected credit loss provision being \u00a328.3 million (2023: \u00a333.5 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\u00a0Probability of\u00a0Default (PD),\u00a0Exposure at\u00a0Default (EAD) and\u00a0Loss\u00a0Given\u00a0Default (LGD)
defined as follows:\u00a0\u00a0
\u2022 Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic\u00a0customer behaviour.
Where customers have already met the definition of default this is 100%. For customers that are\u00a0not 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: 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.\u00a0For up-to-date loans the EAD is calculated as the expected balance 3 months prior
to\u00a0each period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears.\u00a0\u00a0
\u2022 Loss Given Default (LGD): The amount of the asset not recovered following a borrower\u2019s default, determined through analysis
of\u00a0historic recovery performance.\u00a0
The PD is applied to the EAD to calculate the expected loss\u00a0excluding 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.\u00a0
Loan assets are segmented into three stages of credit impairment:\u00a0
\u2022 Stage 1 \u2013 no significant increase in credit risk of the financial asset since inception;\u00a0
\u2022 Stage 2 \u2013 significant increase in credit risk of the financial asset since inception;\u00a0
\u2022 Stage 3 \u2013 financial asset is credit impaired.\u00a0
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\u00a0each asset.\u00a0The 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\u00a0end.
2024
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total\u00a0
Gross carrying amount as at 1 January 2024
779.6
126.0
55.6
961.2
Transfers\u00a0
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02\u00a0
(50.1)
50.1
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03\u00a0
(20.7)
\u2013
20.7
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01\u00a0
45.4
(45.4)
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a03\u00a0
\u2013
(17.5)
17.5
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01\u00a0
0.3
\u2013
(0.3)
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a02\u00a0
\u2013
1.2
(1.2)
\u2013
Principal\u00a0redemption payments\u00a0
(355.9)
(49.9)
(7.0)
(412.8)
Write offs\u00a0
\u2013
\u2013
(25.4)
(25.4)
EIR adjustment
1.1
(0.2)
\u2013
0.9
New financial assets originated or purchased\u00a0
629.6
34.0
5.1
668.7
Gross carrying amount as at 31 December 2024
1,029.3
98.3
65.0
1,192.6
Of the amounts written off during the year, \u00a313.6 million related to loans which were still subject to enforcement activity (2023: \u00a38.3
million). The loss allowance in place in relation to these loans at the time of writing off totalled \u00a313.6 million (2023: \u00a37.9 million).
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.
2023
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
Gross carrying amount as at 1 January 2023
728.3
125.3
34.0
887.6
Transfers
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(60.2)
60.2
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(19.4)
\u2013
19.4
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
51.7
(51.7)
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a03
\u2013
(10.8)
10.8
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
0.3
\u2013
(0.3)
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a02
\u2013
0.8
(0.8)
\u2013
Principal\u00a0redemption 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
2024
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
\u00a3m
Expected credit loss allowance as at 1 January 2024
12.7
29.3
39.3
81.3
Movements with a profit and loss impact
Transfers
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(1.5)
3.0
\u2013
1.5
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(0.7)
\u2013
1.5
0.8
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
4.6
(8.2)
\u2013
(3.6)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 2 to stage 3
\u2013
(6.4)
6.4
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
0.1
\u2013
(0.2)
(0.1)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
Changes in PDs/LGDs/EADs
(8.4)
(5.0)
24.4
11.0
New financial assets originated or purchased
10.2
7.1
3.7
21.0
Total profit and loss charge in the period
4.3
(9.2)
35.5
30.6
Write-offs
\u2013
\u2013
(26.1)
(26.1)
Expected credit loss allowance as at 31 December 2024
17.0
20.1
48.7
85.8
2023
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
\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
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(1.9)
5.0
\u2013
3.1
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(0.7)
\u2013
1.9
1.2
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
3.4
(7.4)
\u2013
(4.0)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 2 to stage 3
\u2013
(3.2)
3.2
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
\u2013
\u2013
(0.1)
(0.1)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
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 profit and loss charge in the period
(0.7)
5.8
28.1
33.2
Write-offs
\u2013
\u2013
(15.0)
(15.0)
Expected credit loss allowance as at 31 December 2023
12.7
29.3
39.3
81.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-496": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security
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 (2023: none).
The table below shows how the financial assets and liabilities held at fair value have been measured using the fair value hierarchy:
31 December 2024
31 December 2023
FVTPL
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
FVOCI
\u00a3m
Level one (quoted prices in active markets)
1,221.2
3,183.1
888.8
2,560.1
Level two (use of observable inputs)
(2.4)
\u2013
17.6
\u2013
Level three (use of significant unobservable inputs)
202.2
152.3
12.4
265.8
Total
1,421.0
3,335.4
918.8
2,825.9
Fair value measurement using observable inputs (level two)
Level two investments represent derivatives used for interest rate and FX hedging purposes, these are valued using market interest
rates and in the case of FX derivatives a combination of interest rates and spot FX rates.
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
Gains/(losses) recognised in the Income Statement are recognised within investment returns and gains/(losses) recognised in Other
Comprehensive Income is recognised within movements in fair value reserve.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-495": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security
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 (2023: none).
The table below shows how the financial assets and liabilities held at fair value have been measured using the fair value hierarchy:
31 December 2024
31 December 2023
FVTPL
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
FVOCI
\u00a3m
Level one (quoted prices in active markets)
1,221.2
3,183.1
888.8
2,560.1
Level two (use of observable inputs)
(2.4)
\u2013
17.6
\u2013
Level three (use of significant unobservable inputs)
202.2
152.3
12.4
265.8
Total
1,421.0
3,335.4
918.8
2,825.9
Fair value measurement using observable inputs (level two)
Level two investments represent derivatives used for interest rate and FX hedging purposes, these are valued using market interest
rates and in the case of FX derivatives a combination of interest rates and spot FX rates.
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-494": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-493": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-492": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-491": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security
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 (2023: none).
The table below shows how the financial assets and liabilities held at fair value have been measured using the fair value hierarchy:
31 December 2024
31 December 2023
FVTPL
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
FVOCI
\u00a3m
Level one (quoted prices in active markets)
1,221.2
3,183.1
888.8
2,560.1
Level two (use of observable inputs)
(2.4)
\u2013
17.6
\u2013
Level three (use of significant unobservable inputs)
202.2
152.3
12.4
265.8
Total
1,421.0
3,335.4
918.8
2,825.9
Fair value measurement using observable inputs (level two)
Level two investments represent derivatives used for interest rate and FX hedging purposes, these are valued using market interest
rates and in the case of FX derivatives a combination of interest rates and spot FX rates.
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
Gains/(losses) recognised in the Income Statement are recognised within investment returns and gains/(losses) recognised in Other
Comprehensive Income is recognised within movements in fair value reserve.
6i. Financial liabilities
31 December 2024
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
315.2
759.6
55.0
81.2
1,211.0
Interest expense per Income Statement
23.0
47.9
2.1
2.6
75.6
Cashflows relating to interest1
(24.2)
(47.9)
(2.1)
(2.4)
(76.6)
Cashflows relating to principal - payments
(55.1)
(194.1)
(115.0)
(12.7)
(376.9)
Cashflows relating to principal - receipts
\u2013
372.2
177.7
\u2013
549.9
Other foreign exchange and non-cash movements
\u2013
\u2013
7.9
10.9
18.8
Financial liability at the end of the period
258.9
937.7
125.6
79.6
1,401.8
31 December 2023
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest expense per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows relating to interest1
(7.0)
(40.6)
(5.4)
(1.9)
(54.9)
Cashflows relating to principal - payments
(147.2)
(246.8)
(145.0)
(8.8)
(547.8)
Cashflows relating to principal - receipts
248.4
291.7
180.0
\u2013
720.1
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
1Cashflows relating to interest are shown within finance costs paid, including expense paid on funding for loans
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026 and a \u20ac100.0 million
facility which expires in August 2025. As at 31\u00a0December 2024, \u00a3117.4 million was drawn under these facilities (2023: \u00a355.0 million),
which is shown within other borrowings in the table above. This is made up of \u00a3105.0 million from the sterling facility expiring April
2026 (2023: \u00a335.0 million) and \u00a312.4 million from the euro facility expiring August 2025 (2023: nil).
The carrying value is a reasonable approximation of fair value.
The Group's revolving credit facility agreement includes a covenant requiring that a percentage of the Group's Debt does
not\u00a0exceed an adjusted net assets valuation as well as confirmation of no default. The Group monitors compliance and there
are\u00a0no\u00a0indicators that the covenants will be breached in the foreseeable future.
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\u00a0note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3937.7 million (2023: \u00a3759.6 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\u00a0asset 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\u00a0payments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-490": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-489": { "value": "
6e. Financial assets and liabilities
The Group\u2019s financial assets and liabilities can be analysed as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Financial investments measured at FVTPL
Money market funds
902.6
587.5
Other funds1
473.9
301.3
Derivative financial instruments
5.8
17.6
Equity investments (designated FVTPL)
46.9
12.4
1,429.2
918.8
Financial investments classified as FVOCI
Corporate debt securities
2,410.9
2,040.6
Government debt securities2
772.2
519.6
Private debt securities
152.3
242.7
3,335.4
2,802.9
Equity investments (designated FVOCI)
\u2013
23.0
3,335.4
2,825.9
Financial assets measured at amortised cost
Deposits with credit institutions
91.7
116.7
Other
Investment in Associate
\u2013
1.0
Investment Property
6.9
\u2013
Total financial investments
4,863.2
3,862.4
Other financial assets (measured at amortised cost)
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Insurance related and other receivables
161.5
347.7
Loans and advances to customers (note 7)
1,106.9
879.4
Cash and cash equivalents
313.6
353.1
Total financial assets
6,445.2
5,442.6
Financial liabilities
Subordinated notes
258.9
315.2
Loan backed securities
937.7
759.6
Other borrowings
117.4
55.0
Derivative financial instruments
8.2
\u2013
Subordinated and other financial liabilities
1,322.2
1,129.8
Trade and other payables3
175.3
305.8
Lease liabilities
79.6
81.2
Total financial liabilities
1,577.1
1,516.8
1Other funds include funds which primarily invest in fixed income securities are recognised as fair value through profit and loss
2Government debt securities include \u00a30.6 million of short term UK government bonds held for collateral against foreign exchange hedging derivatives
3Trade and other payables include deferred income, accruals and other tax and social security
6i. Financial liabilities
31 December 2024
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
315.2
759.6
55.0
81.2
1,211.0
Interest expense per Income Statement
23.0
47.9
2.1
2.6
75.6
Cashflows relating to interest1
(24.2)
(47.9)
(2.1)
(2.4)
(76.6)
Cashflows relating to principal - payments
(55.1)
(194.1)
(115.0)
(12.7)
(376.9)
Cashflows relating to principal - receipts
\u2013
372.2
177.7
\u2013
549.9
Other foreign exchange and non-cash movements
\u2013
\u2013
7.9
10.9
18.8
Financial liability at the end of the period
258.9
937.7
125.6
79.6
1,401.8
31 December 2023
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest expense per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows relating to interest1
(7.0)
(40.6)
(5.4)
(1.9)
(54.9)
Cashflows relating to principal - payments
(147.2)
(246.8)
(145.0)
(8.8)
(547.8)
Cashflows relating to principal - receipts
248.4
291.7
180.0
\u2013
720.1
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
1Cashflows relating to interest are shown within finance costs paid, including expense paid on funding for loans
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026 and a \u20ac100.0 million
facility which expires in August 2025. As at 31\u00a0December 2024, \u00a3117.4 million was drawn under these facilities (2023: \u00a355.0 million),
which is shown within other borrowings in the table above. This is made up of \u00a3105.0 million from the sterling facility expiring April
2026 (2023: \u00a335.0 million) and \u00a312.4 million from the euro facility expiring August 2025 (2023: nil).
The carrying value is a reasonable approximation of fair value.
The Group's revolving credit facility agreement includes a covenant requiring that a percentage of the Group's Debt does
not\u00a0exceed an adjusted net assets valuation as well as confirmation of no default. The Group monitors compliance and there
are\u00a0no\u00a0indicators that the covenants will be breached in the foreseeable future.
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\u00a0note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3937.7 million (2023: \u00a3759.6 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\u00a0asset 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\u00a0payments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-497": { "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 (2023: none).
The table below shows how the financial assets and liabilities held at fair value have been measured using the fair value hierarchy:
31 December 2024
31 December 2023
FVTPL
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
FVOCI
\u00a3m
Level one (quoted prices in active markets)
1,221.2
3,183.1
888.8
2,560.1
Level two (use of observable inputs)
(2.4)
\u2013
17.6
\u2013
Level three (use of significant unobservable inputs)
202.2
152.3
12.4
265.8
Total
1,421.0
3,335.4
918.8
2,825.9
Fair value measurement using observable inputs (level two)
Level two investments represent derivatives used for interest rate and FX hedging purposes, these are valued using market interest
rates and in the case of FX derivatives a combination of interest rates and spot FX rates.
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
Gains/(losses) recognised in the Income Statement are recognised within investment returns and gains/(losses) recognised in Other
Comprehensive Income is recognised within movements in fair value reserve.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-498": { "value": "
Fair value measurement\u00a0using significant unobservable inputs (level three)
Level three investments consist of debt investments and equity investments.
Debt investments are comprised primarily of investments in funds which invest in debt securities, these are valued at the proportion
of the Group\u2019s holding of\u00a0the Net Asset Value (NAV) reported by the investment vehicle. These include funds that invest in corporate
direct lending, residential and commercial mortgages, infrastructure debt 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\u00a0deterioration of the credit performance or expected future performance will result in higher discount rates and
lower values.
As these debt investments are held within investment funds where appropriate the Group elects to treat these investments
as\u00a0equity through OCI. Debt investments in which the funds are closed ended are classified as FVTPL within Other funds (2024:
\u00a3154.8 million).
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. These are held at FVTPL, with realised and unrealised gains/losses flowing
through the P&L.
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 2024
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2024
35.5
242.7
278.2
Gains/(losses) recognised in the Income Statement
(4.5)
9.6
5.1
Gains/(losses) recognised in Other Comprehensive Income
\u2014
(2.8)
(2.8)
Purchases
16.1
94.9
111.0
Disposals
(0.2)
(36.8)
(37.0)
Balance as at 31 December 2024
46.9
307.6
354.5
31 December 2023
\u00a3m
Level Three Investments
Equity
Investments
Debt
Investments
Total
Balance as at 1 January 2023
31.6
166.6
198.2
Gains/(losses) recognised in the Income Statement
(0.1)
10.0
9.9
Gains/(losses) recognised in Other Comprehensive Income
(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
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantUnobservableInputsUsedInFairValueMeasurementOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-500": { "value": "
6g. Cash and cash equivalents
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Cash at bank and in hand1
313.6
353.1
Total cash and cash equivalents
313.6
353.1
1Cash at bank and in hand includes \u00a345.2 million (2023: \u00a338.9 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, the fair value approximates to the book value due to their short maturity.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-499": { "value": "
6g. Cash and cash equivalents
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Cash at bank and in hand1
313.6
353.1
Total cash and cash equivalents
313.6
353.1
1Cash at bank and in hand includes \u00a345.2 million (2023: \u00a338.9 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, the fair value approximates to the book value due to their short maturity.", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-503": { "value": "
6h. Other receivables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Prepayments and accrued income
63.7
62.2
Total other receivables
225.2
409.9
Insurance related receivables
Insurance related receivables, which are measured at historic cost, reflect amounts relating to the Group\u2019s intermediary activities.
Given the short-term duration of these assets no material bad debt provision has been recognised.
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 irrespective of the credit risk. In this case,
the\u00a0provision is based on a combination of
1) Aged debtor analysis
2) Historic experience of write-offs for each receivable
3) Any specific indicators of credit deterioration observed, and
4) 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
2024
\u00a3m
31 December
2023
\u00a3m
Receivables
16.7
14.9
Contract assets
14.8
17.0
The contract asset relates to work undertaken in the law companies on behalf of clients which is ongoing and where the Company's
right to consideration remains dependent on the Company's continued successful performance under the contract. The contract
asset is transferred to trade receivables once only the passage of time is required before payment of the consideration is due,
which is typically at the point of the fee being billed.
Significant changes in the contract asset balance during the period are as follows:
Contract asset balance
31 December
2024
\u00a3m
At 1 January 2023
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write-offs
(0.6)
At 31 December 2023
17.0
Revenue recognised
16.7
Transferred to trade receivables
(18.5)
Write-offs
(0.4)
At 31 December 2024
14.8
The amount of revenue recognised in 2024 from performance obligations satisfied (or partially satisfied) in previous periods
in\u00a0relation to the above contract balances is \u00a3nil ( 2023: \u00a3nil).
10. Taxation
10a. Accounting policies
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\u00a0substantively 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\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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
2024
\u00a3m
31 December
2023
\u00a3m
Current tax
Corporation tax on profits for the year
139.3
91.6
Under provision relating to prior periods
1.8
21.3
Pillar Two income taxes
15.4
\u2013
Current tax charge
156.5
112.9
Deferred tax
Current period deferred taxation movement
16.4
0.7
Under/(over) provision relating to prior periods
3.4
(8.0)
Total tax charge per Consolidated Income Statement
176.3
105.6
Factors affecting the total tax charge are:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit before tax
839.2
442.8
Corporation tax thereon at effective UK corporation tax rate of 25% (2023: 23.5%)
209.8
104.1
Expenses and provisions not deductible for tax purposes
4.1
3.0
Non-taxable income
(21.3)
(13.4)
Impact of change in UK tax rate on deferred tax balances
\u2013
(0.4)
Adjustments relating to prior periods
5.2
13.5
Impact of Pillar Two income taxes
15.4
\u2013
Impact of different overseas tax rates
(45.5)
(8.9)
Unrecognised deferred tax
8.6
7.7
Total tax charge for the period as above
176.3
105.6
Corporation tax assets as at 31\u00a0December 2024\u00a0 totaled \u00a318.1 million, with corporation tax liabilities of \u00a335.0 million (2023: \u00a320.4
million asset and \u00a34.9 million liabilities). Corporation tax liabilities includes \u00a315.4 million (2023: \u00a3nil) relating to Pillar Two income
taxes.
The UK corporation tax rate for 2024 is 25% (2023: 23.5%).
The Group are within the scope of the OECD Pillar Two model rules which aims to ensure that large, multinational corporations pay
their fair share of tax in the countries in which they operate by introducing a new global minimum corporate income tax rate of 15%.
Under the new rules, top-up taxes can be payable either by the UK ultimate parent company or by an overseas entity if a jurisdiction
has\u00a0an effective tax rate of less than 15%, as calculated under the rules. Legislation has been enacted in various countries (including
the United Kingdom), with the rules first coming into effect for the Group from 1 January 2024.
A current tax expense of \u00a315.4 million has been included in the total tax charge for the year ended 31\u00a0December 2024, which
relates to estimated top-up taxes payable by a subsidiary undertaking in Gibraltar, where the statutory corporate tax rate applicable
for the year ended 31 December 2024 is 13.8% (due to a change in the rate from 12.5% to 15% from 1 July 2024). No top-up taxes
for the year ended 31 December 2024 are expected to arise in relation to operations in other countries. The Pillar Two rules are
complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact.
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets
and\u00a0liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
10c. Deferred income tax asset / (liability)
Analysis of deferred tax asset / (liability)
Tax
treatment
of share
schemes
\u00a3m
Capital
allowances
\u00a3m
Carried
forward
losses
\u00a3m
Fair value
reserve
\u00a3m
Hedging
reserve
\u00a3m
Insurance
finance
reserve
\u00a3m
IFRS
recognition
difference
\u00a3m1
Other
differences
\u00a3m
Total
\u00a3m
Balance brought forward
at 1 January 2023
3.4
7.1
37.6
6.9
(7.0)
(19.8)
\u2013
0.2
28.4
Tax treatment of share
scheme charges through
income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share
scheme charges through
reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value
reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
\u2013
(5.7)
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
\u2013
9.7
Other differences
\u2013
\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)
\u2013
0.7
46.1
Reallocation of brought
forward deferred tax
\u2013
\u2013
(15.1)
\u2013
\u2013
\u2013
15.1
\u2013
\u2013
Tax treatment of share
scheme charges through
income or expense
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
Tax treatment of share
scheme charges through
reserves
3.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
3.2
Capital allowances -
deferred tax acquired in
business combination (see
note 13)
\u2013
(9.1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(9.1)
Capital allowances
\u2013
4.8
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
4.8
Carried forward losses
\u2013
\u2013
(38.4)
\u2013
\u2013
\u2013
\u2013
\u2013
(38.4)
Movement in fair value
reserve
\u2013
\u2013
\u2013
2.4
\u2013
\u2013
\u2013
\u2013
2.4
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
1.0
\u2013
\u2013
\u2013
1.0
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(3.8)
\u2013
\u2013
(3.8)
Movement in IFRS
recognition differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
Other differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2024
9.5
(8.2)
\u2013
3.6
(1.5)
(13.9)
29.1
1.2
19.8
1Deferred tax on IFRS recognition differences is now separately disclosed with a \u00a315.1 million reallocation of the brought forward deferred tax asset at 1 January 2024 included above.
The majority of deferred tax on IFRS recognition differences relates to timing differences in the recognition of intragroup profit commission across subsidiaries in different tax
jurisdictions.\u00a0
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has decreased during the year, mainly relating to the utilisation of carried forward tax losses in the UK and
Gibraltar. Remaining deferred tax assets are recognised as it is considered probable that there are sufficient future taxable profits
available against which the assets can be utilised.
At 31\u00a0December 2024, the Group had unused tax losses amounting to \u00a3249.3 million (2023: \u00a3233.0 million) and other deductible
timing differences of \u00a357.5 million (2023: \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 2031, with no expiry for the losses
in Spain.
11. Other Assets and Other Liabilities
11a. Accounting policies
(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 on acquisitions of trade
and assets representing a business and/or acquisition of subsidiaries and represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
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 every six months for evidence of impairment and tested annually for impairment.
The goodwill held on the balance sheet at 31\u00a0December 2024 includes goodwill from acquisition of EUI Limited which has been
allocated to the UK insurance segment, and goodwill arising from the acquisition of Home and Pet renewal rights from RSA
Insurance Group Limited which has been allocated to the UK Pet and Household CGUs.
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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the license 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 (generally between 3 and 4 years) 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.
(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\u00a0non-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
\u00a3m
Improvements
to short
leasehold
buildings\u00a0
Computer
equipment\u00a0
Office
equipment\u00a0
Furniture and
fittings\u00a0
ROU Asset -
Leasehold
buildings
Total\u00a0
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions\u00a0
3.5
4.9
0.2
0.7
3.3
12.6
Impairment\u00a0
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals\u00a0
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements\u00a0
(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\u00a0
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
Cost
At 1 January 2024
29.7
57.3
18.3
9.6
99.9
214.8
Additions
2.6
5.4
0.5
0.2
17.4
26.1
Impairment
(0.6)
(3.2)
(0.6)
\u2013
\u2013
(4.4)
Disposals
(15.5)
(16.4)
(8.2)
(2.5)
(8.5)
(51.1)
Foreign exchange and other
movements
(0.3)
(0.3)
(0.1)
(0.2)
(0.8)
(1.7)
At 31 December 2024
15.9
42.8
9.9
7.1
108.0
183.7
Depreciation
At 1 January 2024
21.6
45.8
17.2
8.4
31.7
124.7
Charge for the year
2.8
6.3
0.5
0.4
8.8
18.8
Impairment
(0.5)
(2.8)
(0.4)
\u2013
\u2013
(3.7)
Disposals
(15.5)
(16.4)
(8.1)
(2.5)
(0.2)
(42.7)
Foreign exchange and other
movements
(0.2)
(0.2)
(0.1)
(0.1)
(0.6)
(1.2)
At 31 December 2024
8.2
32.7
9.1
6.2
39.7
95.9
Net book amount
At 31 December 2024
7.7
10.1
0.8
0.9
68.3
87.8
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
Customer contracts, relationships and brand includes Home and Pet renewal rights which has a net carrying value of \u00a334.5 million
as at 31 December 2024 and an amortisation period of 9 years for Home renewal rights and 14 years for Pet renewal rights. See
note 13 for further information. Internally generated software includes a new claims system implemented within the UK business
in\u00a0the year which has a carrying amount of \u00a333.2 million as at 31 December 2024 and a remaining amortisation period of 2.8 years.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999,
and on the purchase of the direct Home and Pet renewal rights from the RSA Insurance Group Limited (\u2018RSA\u2019) in April 2024. The
carrying amount of goodwill as at 31 December 2024 is \u00a3112.1 million (2023: \u00a362.3 million).
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the CGU to which
it\u00a0is\u00a0allocated. Annual impairment reviews have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill from EUI acquisition. Given the short time period
used to support the recoverable amount, no terminal growth rate or discounting is applied.
With regards to the goodwill arising from RSA acquisition, the recoverable amount of the CGU has been determined based on
a\u00a0value in use calculation using discounted cash flow projections based on financial budgets approved by the board of directors
covering a five-year period and a pre-tax discount rate of 15%. Cash flows beyond the five year period are extrapolated into
perpetuity as the fifth year represents a reasonable estimate of a steady state of business. No long term growth rate has been
applied to the perpetuity calculations.
The key assumptions on which the cash flow projections are based on forecast growth in premiums written, related expenses
and\u00a0claims costs. The forecasts are based on past experience adjusted for market trends and strategic decisions made in respect
of the Pet and Household lines of business.
Refer to the accounting policy for goodwill for further information.
11d. Trade and other payables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Trade payables
52.4
42.3
Other tax and social security
12.5
11.9
Amounts owed to co-insurers
\u2014
156.9
Other payables
34.0
42.5
Accruals and deferred income
76.4
52.2
Total trade and other payables
175.3
305.8
Analysis of accruals and deferred income
Accruals
48.2
28.3
Deferred income
28.2
23.9
Total accruals and deferred income as above
76.4
52.2
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
2024
\u00a3m
31 December
2023
\u00a3m
Lease liabilities
Current
8.6
13.7
Non-Current
71.0
67.5
Total
79.6
81.2
See note 11b for right of use assets depreciation and the carrying amount of right of use asset 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.\u00a0The 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 \u20ac24 million .
No material provisions have been made in these financial statements in relation to the matters noted above.\u00a0
The Group notes the ongoing Court of Appeal ruling relating to non-disclosure of commission to dealers in relation to motor finance.
Prior to the Group's re-launch of motor finance lending, all lending was through price comparison websites. The Group had no
lending through dealers and no discretionary commission structures in place. Accordingly the Group does not have an ongoing
exposure to commission arrangements of this nature and therefore has not recognised any contingent liability in relation to the
case.
The Group continues to monitor regulatory developments, including the Supreme Court decision which is expected later in 2025,
ensuring the customer acquisition practices remain fully aligned with legal and regulatory requirements and industry best practices.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations
or\u00a0similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisors
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-502": { "value": "
6h. Other receivables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Prepayments and accrued income
63.7
62.2
Total other receivables
225.2
409.9
Insurance related receivables
Insurance related receivables, which are measured at historic cost, reflect amounts relating to the Group\u2019s intermediary activities.
Given the short-term duration of these assets no material bad debt provision has been recognised.
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 irrespective of the credit risk. In this case,
the\u00a0provision is based on a combination of
1) Aged debtor analysis
2) Historic experience of write-offs for each receivable
3) Any specific indicators of credit deterioration observed, and
4) 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
2024
\u00a3m
31 December
2023
\u00a3m
Receivables
16.7
14.9
Contract assets
14.8
17.0
The contract asset relates to work undertaken in the law companies on behalf of clients which is ongoing and where the Company's
right to consideration remains dependent on the Company's continued successful performance under the contract. The contract
asset is transferred to trade receivables once only the passage of time is required before payment of the consideration is due,
which is typically at the point of the fee being billed.
Significant changes in the contract asset balance during the period are as follows:
Contract asset balance
31 December
2024
\u00a3m
At 1 January 2023
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write-offs
(0.6)
At 31 December 2023
17.0
Revenue recognised
16.7
Transferred to trade receivables
(18.5)
Write-offs
(0.4)
At 31 December 2024
14.8
The amount of revenue recognised in 2024 from performance obligations satisfied (or partially satisfied) in previous periods
in\u00a0relation to the above contract balances is \u00a3nil ( 2023: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-501": { "value": "
6h. Other receivables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Insurance related receivables
51.1
272.7
Trade and other receivables
110.4
75.0
Prepayments and accrued income
63.7
62.2
Total other receivables
225.2
409.9
Insurance related receivables
Insurance related receivables, which are measured at historic cost, reflect amounts relating to the Group\u2019s intermediary activities.
Given the short-term duration of these assets no material bad debt provision has been recognised.
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 irrespective of the credit risk. In this case,
the\u00a0provision is based on a combination of
1) Aged debtor analysis
2) Historic experience of write-offs for each receivable
3) Any specific indicators of credit deterioration observed, and
4) 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
2024
\u00a3m
31 December
2023
\u00a3m
Receivables
16.7
14.9
Contract assets
14.8
17.0
The contract asset relates to work undertaken in the law companies on behalf of clients which is ongoing and where the Company's
right to consideration remains dependent on the Company's continued successful performance under the contract. The contract
asset is transferred to trade receivables once only the passage of time is required before payment of the consideration is due,
which is typically at the point of the fee being billed.
Significant changes in the contract asset balance during the period are as follows:
Contract asset balance
31 December
2024
\u00a3m
At 1 January 2023
19.3
Revenue recognised
18.9
Transferred to trade receivables
(20.6)
Write-offs
(0.6)
At 31 December 2023
17.0
Revenue recognised
16.7
Transferred to trade receivables
(18.5)
Write-offs
(0.4)
At 31 December 2024
14.8
The amount of revenue recognised in 2024 from performance obligations satisfied (or partially satisfied) in previous periods
in\u00a0relation to the above contract balances is \u00a3nil ( 2023: \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
2024
\u00a3m
31 December
2023
\u00a3m
Gross investment in\u00a0finance\u00a0leases,\u00a0receivable\u00a0
Less than 1 year\u00a0
7.8
7.0
Between 1 to 5 years\u00a0\u00a0
13.4
14.3
More than 5 years\u00a0
\u2013
\u2013
21.2
21.3
Unearned finance income\u00a0
(2.8)
(2.2)
Net investment in lease receivables\u00a0\u00a0
18.4
19.1
Less impairment\u00a0allowance\u00a0
(0.3)
(0.3)
18.1
18.8
\u00a0
Net investment in finance leases, receivable\u00a0
Less than 1 year\u00a0
6.4
5.7
Between 1 to 5 years\u00a0\u00a0
12.0
13.4
More than 5 years\u00a0
\u2013
\u2013
18.4
19.1
The net investment in finance leases shown above includes an unguaranteed residual value of \u00a30.2 million (2023: The net
investment in finance leases shown above is net of the unguaranteed residual value of \u00a30.2 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-504": { "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 irrespective of the credit risk. In this case,
the\u00a0provision is based on a combination of
1) Aged debtor analysis
2) Historic experience of write-offs for each receivable
3) Any specific indicators of credit deterioration observed, and
4) 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-505": { "value": "
6i. Financial liabilities
31 December 2024
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
315.2
759.6
55.0
81.2
1,211.0
Interest expense per Income Statement
23.0
47.9
2.1
2.6
75.6
Cashflows relating to interest1
(24.2)
(47.9)
(2.1)
(2.4)
(76.6)
Cashflows relating to principal - payments
(55.1)
(194.1)
(115.0)
(12.7)
(376.9)
Cashflows relating to principal - receipts
\u2013
372.2
177.7
\u2013
549.9
Other foreign exchange and non-cash movements
\u2013
\u2013
7.9
10.9
18.8
Financial liability at the end of the period
258.9
937.7
125.6
79.6
1,401.8
31 December 2023
Subordinated
loans
\u00a3m
Loan backed
securities
\u00a3m
Other
borrowings and
derivatives
\u00a3m
Lease liabilities
\u00a3m
Total
\u00a3m
Financial liability at the start of the period
204.4
714.7
20.0
88.5
1,027.6
Interest expense per Income Statement
17.5
40.6
5.4
2.0
65.5
Cashflows relating to interest1
(7.0)
(40.6)
(5.4)
(1.9)
(54.9)
Cashflows relating to principal - payments
(147.2)
(246.8)
(145.0)
(8.8)
(547.8)
Cashflows relating to principal - receipts
248.4
291.7
180.0
\u2013
720.1
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
1Cashflows relating to interest are shown within finance costs paid, including expense paid on funding for loans
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026 and a \u20ac100.0 million
facility which expires in August 2025. As at 31\u00a0December 2024, \u00a3117.4 million was drawn under these facilities (2023: \u00a355.0 million),
which is shown within other borrowings in the table above. This is made up of \u00a3105.0 million from the sterling facility expiring April
2026 (2023: \u00a335.0 million) and \u00a312.4 million from the euro facility expiring August 2025 (2023: nil).
The carrying value is a reasonable approximation of fair value.
The Group's revolving credit facility agreement includes a covenant requiring that a percentage of the Group's Debt does
not\u00a0exceed an adjusted net assets valuation as well as confirmation of no default. The Group monitors compliance and there
are\u00a0no\u00a0indicators that the covenants will be breached in the foreseeable future.
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\u00a0note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3937.7 million (2023: \u00a3759.6 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\u00a0asset 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\u00a0payments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-507": { "value": "
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
Other borrowings
The Group holds various revolving credit facilities including a \u00a3300.0 million facility which expires in April 2026 and a \u20ac100.0 million
facility which expires in August 2025. As at 31\u00a0December 2024, \u00a3117.4 million was drawn under these facilities (2023: \u00a355.0 million),
which is shown within other borrowings in the table above. This is made up of \u00a3105.0 million from the sterling facility expiring April
2026 (2023: \u00a335.0 million) and \u00a312.4 million from the euro facility expiring August 2025 (2023: nil).
The carrying value is a reasonable approximation of fair value.
The Group's revolving credit facility agreement includes a covenant requiring that a percentage of the Group's Debt does
not\u00a0exceed an adjusted net assets valuation as well as confirmation of no default. The Group monitors compliance and there
are\u00a0no\u00a0indicators that the covenants will be breached in the foreseeable future.
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\u00a0note 2 for details of the accounting treatment of SPEs). As at the year end, \u00a3937.7 million (2023: \u00a3759.6 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-506": { "value": "
Subordinated notes
Financial liabilities are inclusive of \u00a3250.0 million subordinated notes issued on 6 July 2023 at a fixed rate of 8.5% per annum with
a\u00a0redemption date of 6 January 2034.
On 24 July 2024, the remaining 27.55% (\u00a355.1 million) of subordinated loan notes issued on 25 July 2014 were repaid on maturity.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In\u00a0the 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\u00a0December 2024
is\u00a0\u00a3276.4\u00a0million (2023: \u00a3329.8 million).
The Group\u2019s subordinated loan notes deed requires confirmation there is non-existence of the event of default or potential event
of\u00a0default. The Group monitors compliance and there are no indicators that the default covenants will be breached in the
foreseeable future.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-508": { "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\u00a0asset 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\u00a0payments.
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
2024
\u00a3m
31 December
2023
\u00a3m
Lease liabilities
Current
8.6
13.7
Non-Current
71.0
67.5
Total
79.6
81.2
See note 11b for right of use assets depreciation and the carrying amount of right of use asset 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-509": { "value": "
7. Loans and Advances to Customers
7a. Accounting policies
Loans and advances to customers consist of unsecured personal loans and car finance products.\u00a0\u00a0
Classification\u00a0
Loans and advances to customers are measured at amortised cost. This is because assets are held\u00a0in order to\u00a0collect 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.\u00a0\u00a0
Interest income and expense\u00a0
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.
Interest expense is calculated\u00a0using the effective interest rate appropriate to each source of funding.\u00a0
Finance leases\u00a0
Included within\u00a0loans and advances to customers are\u00a0personal contract purchase\u00a0(PCP)\u00a0and hire purchase\u00a0(HP)\u00a0arrangements
which are classified as finance leases under IFRS 16.\u00a0A receivable equal to the net investment in the lease has been
recognised.\u00a0The\u00a0net investment is equal to the gross investment in the lease discounted at the rate implicit in the lease.\u00a0\u00a0
Lease\u00a0interest\u00a0income is recognised within\u00a0interest income\u00a0in the income statement over the term of the lease using the\u00a0effective
interest rate\u00a0method.\u00a0\u00a0
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\u00a0provide protection against deterioration in that value.
7b. Loans and advances to customers
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Loans and advances to customers \u2013 gross carrying amount
1,174.0
956.8
Loans and advances to customers \u2013 provision
(84.3)
(81.7)
Total loans and advances to customers \u2013 Admiral Money
1,089.7
875.1
Total loans and advances to customers \u2013 Other
17.2
4.3
Total loans and advances to customers
1,106.9
879.4
Loans and advances to customers are comprised of the following:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Unsecured personal loans
1,155.6
937.7
Finance leases
18.4
19.1
Other
18.6
4.4
Total loans and advances to customers, gross
1,192.6
961.2
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\u00a0Probability of\u00a0Default (PD),\u00a0Exposure at\u00a0Default (EAD) and\u00a0Loss\u00a0Given\u00a0Default (LGD)
defined as follows:\u00a0\u00a0
\u2022 Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic\u00a0customer behaviour.
Where customers have already met the definition of default this is 100%. For customers that are\u00a0not 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: 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.\u00a0For up-to-date loans the EAD is calculated as the expected balance 3 months prior
to\u00a0each period, plus 3 months of interest arrears to account for the time it takes to default following falling into arrears.\u00a0\u00a0
\u2022 Loss Given Default (LGD): The amount of the asset not recovered following a borrower\u2019s default, determined through analysis
of\u00a0historic recovery performance.\u00a0
The PD is applied to the EAD to calculate the expected loss\u00a0excluding 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.\u00a0
Loan assets are segmented into three stages of credit impairment:\u00a0
\u2022 Stage 1 \u2013 no significant increase in credit risk of the financial asset since inception;\u00a0
\u2022 Stage 2 \u2013 significant increase in credit risk of the financial asset since inception;\u00a0
\u2022 Stage 3 \u2013 financial asset is credit impaired.\u00a0
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\u00a0each asset.\u00a0The 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\u00a0ECL\u00a0allowing 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\u00a0rebuttable 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 at reporting date has moved outside a specified threshold from the origination PD
\u2022 The customer is identified as being one or more payments in arrears on a credit product with a third party and reported to the
credit reference agency.
\u2022 The customer has hit a watchlist of high-risk statuses.
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 correlation are monitored
to\u00a0ensure the SICR criteria is effective.
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 An external repayment plan is in place, or
\u2022 A customer is deceased.
As at 31\u00a0December 2024, there were 8,400 loans totalling \u00a348.5 million that were subject to forbearance (2023: 7,300 loans
totalling \u00a340.1 million). Of these, 7,800 loans totalling \u00a347.4 million are included within Stage 3 (2023: 7,300 loans totalling
\u00a340.1\u00a0million). Significant categories of forbearance arrangements include Bankruptcy, Debt Management Plans and Individual
Voluntary\u00a0Arrangements.
Judgements required \u2013 Post Model Adjustments (\u2018PMA\u2019s)
As at 31\u00a0December 2024, the expected credit loss allowance included PMAs totalling \u00a34.6 million (2023: \u00a39.2 million).
Post Model Adjustments
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Model performance
1.5
2.0
Cost of Living
1.3
6.5
Economic scenarios
1.8
0.7
4.6
9.2
PMAs are calculated using management judgement and analysis. The key categories of PMAs are as follows:
Model performance
The LGD model considers long run recoveries over a period of up to five years post default. A potential shortfall has been identified
for customers that roll straight through the arrears buckets up the point of write off. Although this shortfall is immaterial, an
adjustment has been made to ensure it is accounted for in our expected credit loss.
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 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
A new econometric model has been implemented to derive our forward-looking view of ECL\u2019s. The model is sensitive to the timing
of forecasted peaks in, for example, unemployment rates. Given increased uncertainty driven by geo-political events, management
has made an adjustment equivalent to a six-month advancement in the peak point of each scenario.
Write off policy
Loans are written off where there is no reasonable expectation of recovery. The Group considers there to be no reasonable
expectation of recovery where an extensive set of collections processes has been completed, the debt is statute barred, the debtor
cannot be traced or is deceased, or in situations involving significant financial hardship. The Group\u2019s policy is to write down
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\u00a0possible 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.
As at December 2024 there are three key economic drivers of credit losses factored into the scenarios, as follows:
\u2022 UK Unsecured DTI
\u2022 UK Employment Hazard Rates
\u2022 Annual UK GDP % Change
The variables are combined using a statistical model which will estimate the relative change in the PD of an account for each
scenario over the life of the loan. The Group has moved from a single variable model as at December 2023 (Unemployment)
to\u00a0model containing three drivers in recognition of the fact that there are multiple macroeconomic drivers which can influence
the\u00a0direction of default rates.
The scenario weighting assumptions used are detailed below, along with the annual peak for each economic driver assumed
in\u00a0each scenario at\u00a031\u00a0December 2024.
At 31 December 2024
For the Forecast Year Ended
2025
2026
2027
2028
2029
%
%
%
%
%
Base - 50%
Gross domestic product
1.6
1.6
1.6
1.7
1.7
Unemployment rate
4.4
4.3
4.1
4.1
4.1
UK Household Unsecured Debt to Income
13.2
13.7
14.1
14.4
14.5
Upside - 10%
Gross domestic product
2.7
3.0
1.8
1.6
1.8
Unemployment rate
4.2
3.8
3.8
3.8
3.8
UK Household Unsecured Debt to Income
12.6
12.3
11.9
12.2
12.3
Downside - 30%
Gross domestic product
0.9
0.1
3.0
3.0
2.7
Unemployment rate
5.6
6.0
5.6
4.9
4.6
UK Household Unsecured Debt to Income
13.4
14.5
15.0
15.1
15.1
Severe - 10%
Gross domestic product
0.8
(1.1)
2.6
3.4
3.1
Unemployment rate
6.6
8.0
7.9
6.8
6.1
UK Household Unsecured Debt to Income
13.6
15.0
15.7
15.9
16.1
Probability-weighted
Gross domestic product
1.4
1.0
2.1
2.3
2.1
Unemployment rate
5.0
5.1
4.9
4.6
4.4
UK Household Unsecured Debt to Income
13.2
13.9
14.3
14.5
14.6
For the Forecast Year Ended
At 31 December 2023
2025
2026
2027
2028
2029
%
%
%
%
%
Base - 50%
Gross domestic product
1.5
1.6
1.6
1.8
1.9
Unemployment rate
4.7
4.2
4.1
4.1
4.1
UK Household Unsecured Debt to Income
13.8
14.2
14.4
14.5
14.5
Upside - 10%
Gross domestic product
2.7
2.4
2.1
1.6
1.4
Unemployment rate
3.6
3.7
3.8
3.9
3.9
UK Household Unsecured Debt to Income
12.5
12.4
12.5
12.5
12.4
Downside - 30%
Gross domestic product
0.1
3.0
3.0
3.0
2.3
Unemployment rate
6.0
5.7
4.9
4.6
4.5
UK Household Unsecured Debt to Income
14.5
14.8
15.0
15.2
15.2
Severe - 10%
Gross domestic product
(1.8)
3.0
3.9
3.9
3.0
Unemployment rate
8.0
8.0
6.7
5.9
5.4
UK Household Unsecured Debt to Income
15.1
15.7
15.9
16.1
16.2
Probability-weighted
Gross domestic product
0.8
2.2
2.3
2.3
2.1
Unemployment rate
5.3
4.9
4.6
4.4
4.3
UK Household Unsecured Debt to Income
14.0
14.4
14.6
14.7
14.7
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 40% attached to recessionary outcomes.\u00a0
Sensitivities to key areas of estimation uncertainty
The key areas of estimation uncertainty identified, as per note 2 to the financial statements, are in the PD and the forward-looking
scenarios.
31 December 2024
Weighting
31 December 2024
Sensitivity
31 December 2023
Weighting
31 December 2023
Sensitivity
Base
50%
(1.7)
50%
(1.1)
Upturn
30%
(3.3)
10%
(5.2)
Downturn
10%
2.9
30%
2.5
Severe
10%
6.3
10%
8.2
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\u00a0December 2024 the implied weighted peak unemployment rate is 5.0%:
the\u00a0table shows that in a downturn scenario with a 5.6% peak unemployment rate the provision would increase by \u00a32.9 million,
whilst the upturn would reduce the provision by \u00a33.3 million, base case reduce by \u00a31.7 million and severe increase the provision
by\u00a0\u00a36.3 million.
Stage 1 assets represent 86.6% of the total loan assets; 0.1% increase in the stage 1 PD, i.e. from 2.3% to 2.4% would result
in\u00a0a\u00a0\u00a30.8 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\u00a0default in for stage 1 assets is 3.3% (2023: 2.2%) reflecting the expectation of defaults within 12 months of the reporting date.
The\u00a0average PD for assets in stage 2 is 29.9% (2023: 36.8%) reflecting expected losses over the remaining life of the assets.
The\u00a0PD for assets in stage 3 is 100% (2023: 100%) as these assets are deemed to have defaulted.
31 December
2024
31 December
2023
Stage 1\u00a0
12 month ECL\u00a0
\u00a3m\u00a0
Stage 2\u00a0
Lifetime ECL\u00a0
\u00a3m
Stage 3\u00a0\u00a0
Lifetime ECL\u00a0
\u00a3m
Total\u00a0
\u00a3m
Total\u00a0
\u00a3m
Credit Grade1
Higher
786.5
67.6
\u2013
854.1
649.3
Medium
171.2
21.3
\u2013
192.5
186.6
Lower
53.9
9.1
\u2013
63.0
65.4
Credit\u00a0impaired
\u2013
\u2013
64.4
64.4
55.5
Gross carrying amount
1,011.6
98.0
64.4
1,174.0
956.8
Expected credit loss allowance
(15.5)
(19.8)
(48.5)
(83.8)
(81.1)
Other loss allowance2
(0.5)
\u2013
\u2013
(0.5)
(0.6)
Carrying amount\u00a0\u2013 Admiral Money
995.6
78.2
15.9
1,089.7
875.1
Carrying amount\u00a0\u2013 Other
16.8
0.3
0.1
17.2
4.3
Carrying amount
1,012.4
78.5
16.0
1,106.9
879.4
1Credit grade is the internal credit banding given to a customer at origination. This is based on external credit rating information.
2Other 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\u00a0end.
2024
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total\u00a0
Gross carrying amount as at 1 January 2024
779.6
126.0
55.6
961.2
Transfers\u00a0
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02\u00a0
(50.1)
50.1
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03\u00a0
(20.7)
\u2013
20.7
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01\u00a0
45.4
(45.4)
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a03\u00a0
\u2013
(17.5)
17.5
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01\u00a0
0.3
\u2013
(0.3)
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a02\u00a0
\u2013
1.2
(1.2)
\u2013
Principal\u00a0redemption payments\u00a0
(355.9)
(49.9)
(7.0)
(412.8)
Write offs\u00a0
\u2013
\u2013
(25.4)
(25.4)
EIR adjustment
1.1
(0.2)
\u2013
0.9
New financial assets originated or purchased\u00a0
629.6
34.0
5.1
668.7
Gross carrying amount as at 31 December 2024
1,029.3
98.3
65.0
1,192.6
Of the amounts written off during the year, \u00a313.6 million related to loans which were still subject to enforcement activity (2023: \u00a38.3
million). The loss allowance in place in relation to these loans at the time of writing off totalled \u00a313.6 million (2023: \u00a37.9 million).
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.
2023
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
Gross carrying amount as at 1 January 2023
728.3
125.3
34.0
887.6
Transfers
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(60.2)
60.2
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(19.4)
\u2013
19.4
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
51.7
(51.7)
\u2013
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a03
\u2013
(10.8)
10.8
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
0.3
\u2013
(0.3)
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a02
\u2013
0.8
(0.8)
\u2013
Principal\u00a0redemption 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
2024
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
\u00a3m
Expected credit loss allowance as at 1 January 2024
12.7
29.3
39.3
81.3
Movements with a profit and loss impact
Transfers
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(1.5)
3.0
\u2013
1.5
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(0.7)
\u2013
1.5
0.8
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
4.6
(8.2)
\u2013
(3.6)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 2 to stage 3
\u2013
(6.4)
6.4
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
0.1
\u2013
(0.2)
(0.1)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
Changes in PDs/LGDs/EADs
(8.4)
(5.0)
24.4
11.0
New financial assets originated or purchased
10.2
7.1
3.7
21.0
Total profit and loss charge in the period
4.3
(9.2)
35.5
30.6
Write-offs
\u2013
\u2013
(26.1)
(26.1)
Expected credit loss allowance as at 31 December 2024
17.0
20.1
48.7
85.8
2023
Stage 1\u00a0
12-Month ECL
\u00a3m
Stage 2
Lifetime ECL
\u00a3m
Stage 3\u00a0
Lifetime ECL
\u00a3m
Total
\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
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a02
(1.9)
5.0
\u2013
3.1
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a01 to\u00a0stage\u00a03
(0.7)
\u2013
1.9
1.2
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a02 to\u00a0stage\u00a01
3.4
(7.4)
\u2013
(4.0)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 2 to stage 3
\u2013
(3.2)
3.2
\u2013
\u00a0\u00a0\u00a0\u00a0 Transfers from\u00a0stage\u00a03 to\u00a0stage\u00a01
\u2013
\u2013
(0.1)
(0.1)
\u00a0\u00a0\u00a0\u00a0 Transfers from stage 3 to stage 2
\u2013
0.3
(0.3)
\u2013
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 profit and loss charge in the period
(0.7)
5.8
28.1
33.2
Write-offs
\u2013
\u2013
(15.0)
(15.0)
Expected credit loss allowance as at 31 December 2023
12.7
29.3
39.3
81.3
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
2024
\u00a3m
31 December
2023
\u00a3m
Gross investment in\u00a0finance\u00a0leases,\u00a0receivable\u00a0
Less than 1 year\u00a0
7.8
7.0
Between 1 to 5 years\u00a0\u00a0
13.4
14.3
More than 5 years\u00a0
\u2013
\u2013
21.2
21.3
Unearned finance income\u00a0
(2.8)
(2.2)
Net investment in lease receivables\u00a0\u00a0
18.4
19.1
Less impairment\u00a0allowance\u00a0
(0.3)
(0.3)
18.1
18.8
\u00a0
Net investment in finance leases, receivable\u00a0
Less than 1 year\u00a0
6.4
5.7
Between 1 to 5 years\u00a0\u00a0
12.0
13.4
More than 5 years\u00a0
\u2013
\u2013
18.4
19.1
The net investment in finance leases shown above includes an unguaranteed residual value of \u00a30.2 million (2023: The net
investment in finance leases shown above is net of the unguaranteed residual value of \u00a30.2 million).
7d. Interest income
31 December
2024
\u00a3m
31 December
2023
\u00a3m
From loans and advances to customers
107.9
90.2
From finance leases
1.2
2.0
From bank interest
4.4
2.7
113.5
94.9
Interest income receivable is recognised in the income statement using the effective interest method, which calculates
the\u00a0amortised cost of the financial asset and allocates the interest income over the expected product life.
7e. Interest expense
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest payable on loan backed securities
32.0
23.4
Interest payable on other credit facilities
5.2
3.4
Total interest expense1
37.2
26.8
1Interest paid in total net of swaps during the year was \u00a342.7 million (2023: \u00a325.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-510": { "value": "
7d. Interest income
31 December
2024
\u00a3m
31 December
2023
\u00a3m
From loans and advances to customers
107.9
90.2
From finance leases
1.2
2.0
From bank interest
4.4
2.7
113.5
94.9
Interest income receivable is recognised in the income statement using the effective interest method, which calculates
the\u00a0amortised cost of the financial asset and allocates the interest income over the expected product life.
7e. Interest expense
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Interest payable on loan backed securities
32.0
23.4
Interest payable on other credit facilities
5.2
3.4
Total interest expense1
37.2
26.8
1Interest paid in total net of swaps during the year was \u00a342.7 million (2023: \u00a325.6 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-512": { "value": "
8. Other revenue and co-insurer profit commission
8a. Accounting policies
(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 note 5).
Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue is 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 note 5) due to the income being separable from the host insurance contract. This instalment income is recognised over time
in\u00a0line with the provision of the service.
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\u00a0subsidiary 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, including
instalment income and
administration fees:
where\u00a0the income
is\u00a0separable from
the\u00a0underlying
insurance\u00a0contract
The performance obligation is the provision of insurance intermediary services, being a successful
sale of ancillary product at which point the performance obligation is met, and in the case
of\u00a0instalment income, the provision of credit. Revenue for intermediary services is therefore
recognised at a point in time, whilst revenue for the provision of credit is recognised over time,
matching the Group\u2019s provision of services. Where the Group has no remaining obligations, the
revenue is recognised immediately. An allowance is made for expected cancellations where the
customer may 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 law firm
The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
on\u00a0behalf 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 closed 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\u00a0performance completed to date and the work performed to date has no alternative use
to\u00a0the\u00a0Group.
A contract asset is recognised equal to the work performed up to the balance sheet date.
Refer\u00a0to\u00a0note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission
from\u00a0co-insurers
Profit commission is generated if an individual year is profitable, based on the premiums written
and expenses and claims costs incurred. Given that the ultimate outcome of the claims cost is
uncertain for a period of time until final settlement, profit commission is therefore variable.\u00a0
The cumulative profit commission recognised at each point in time 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\u00a0the conclusion of each underwriting year and are not subject to judgement, the claims cost
is\u00a0subject 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\u00a0no 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\u00a0note 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 income
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at\u00a0a\u00a0point 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.
Under IFRS 17 a significant proportion of \u201cOther revenue\u201d recognised as insurance revenue given that it is not separable from the
underlying insurance contract.
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 \u00a3189.6 million (2023: \u00a3205.7 million) represents total other revenue and co-insurer profit
commission and is disaggregated into the segments included in note 4.
31 December 2024
UK Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral Money
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Major products/service line
Fee and commission revenue
119.5
0.1
0.2
0.2
120.0
Revenue from law firm
16.3
\u2013
\u2013
\u2013
16.3
Comparison income
\u2013
\u2013
\u2013
\u2013
\u2013
Total other revenue
135.8
0.1
0.2
0.2
136.3
Profit commission from co-insurers
53.3
\u2013
\u2013
\u2013
53.3
Total other revenue and co-insurer profit commission
189.1
0.1
0.2
0.2
189.6
Timing of revenue recognition
Point in time
139.0
0.1
0.2
0.2
139.5
Over time
50.1
\u2013
\u2013
\u2013
50.1
189.1
0.1
0.2
0.2
189.6
31 December 2023
UK Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral Money
\u00a3m
Other
\u00a3m
Total Group
\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
41.6
\u2013
\u2013
\u2013
41.6
202.0
2.0
0.1
1.6
205.7
Profit commission analysis
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Underwriting year
2020 & prior
51.7
76.5
2021
\u2013
\u2013
2022
\u2013
\u2013
2023
\u2013
\u2013
2024
1.6
\u2013
Total UK Motor profit commission
53.3
76.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-511": { "value": "
8. Other revenue and co-insurer profit commission
8a. Accounting policies
(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 note 5).
Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue is 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 note 5) due to the income being separable from the host insurance contract. This instalment income is recognised over time
in\u00a0line with the provision of the service.
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\u00a0subsidiary 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, including
instalment income and
administration fees:
where\u00a0the income
is\u00a0separable from
the\u00a0underlying
insurance\u00a0contract
The performance obligation is the provision of insurance intermediary services, being a successful
sale of ancillary product at which point the performance obligation is met, and in the case
of\u00a0instalment income, the provision of credit. Revenue for intermediary services is therefore
recognised at a point in time, whilst revenue for the provision of credit is recognised over time,
matching the Group\u2019s provision of services. Where the Group has no remaining obligations, the
revenue is recognised immediately. An allowance is made for expected cancellations where the
customer may 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 law firm
The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
on\u00a0behalf 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 closed 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\u00a0performance completed to date and the work performed to date has no alternative use
to\u00a0the\u00a0Group.
A contract asset is recognised equal to the work performed up to the balance sheet date.
Refer\u00a0to\u00a0note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission
from\u00a0co-insurers
Profit commission is generated if an individual year is profitable, based on the premiums written
and expenses and claims costs incurred. Given that the ultimate outcome of the claims cost is
uncertain for a period of time until final settlement, profit commission is therefore variable.\u00a0
The cumulative profit commission recognised at each point in time 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\u00a0the conclusion of each underwriting year and are not subject to judgement, the claims cost
is\u00a0subject 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\u00a0no 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\u00a0note 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 income
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at\u00a0a\u00a0point 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.
Under IFRS 17 a significant proportion of \u201cOther revenue\u201d recognised as insurance revenue given that it is not separable from the
underlying insurance contract.
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 \u00a3189.6 million (2023: \u00a3205.7 million) represents total other revenue and co-insurer profit
commission and is disaggregated into the segments included in note 4.
31 December 2024
UK Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral Money
\u00a3m
Other
\u00a3m
Total Group
\u00a3m
Major products/service line
Fee and commission revenue
119.5
0.1
0.2
0.2
120.0
Revenue from law firm
16.3
\u2013
\u2013
\u2013
16.3
Comparison income
\u2013
\u2013
\u2013
\u2013
\u2013
Total other revenue
135.8
0.1
0.2
0.2
136.3
Profit commission from co-insurers
53.3
\u2013
\u2013
\u2013
53.3
Total other revenue and co-insurer profit commission
189.1
0.1
0.2
0.2
189.6
Timing of revenue recognition
Point in time
139.0
0.1
0.2
0.2
139.5
Over time
50.1
\u2013
\u2013
\u2013
50.1
189.1
0.1
0.2
0.2
189.6
31 December 2023
UK Insurance
\u00a3m
International
Insurance
\u00a3m
Admiral Money
\u00a3m
Other
\u00a3m
Total Group
\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
41.6
\u2013
\u2013
\u2013
41.6
202.0
2.0
0.1
1.6
205.7
Profit commission analysis
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Underwriting year
2020 & prior
51.7
76.5
2021
\u2013
\u2013
2022
\u2013
\u2013
2023
\u2013
\u2013
2024
1.6
\u2013
Total UK Motor profit commission
53.3
76.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-514": { "value": "
8a. Accounting policies
(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 note 5).
Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue is 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 note 5) due to the income being separable from the host insurance contract. This instalment income is recognised over time
in\u00a0line with the provision of the service.
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\u00a0subsidiary 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, including
instalment income and
administration fees:
where\u00a0the income
is\u00a0separable from
the\u00a0underlying
insurance\u00a0contract
The performance obligation is the provision of insurance intermediary services, being a successful
sale of ancillary product at which point the performance obligation is met, and in the case
of\u00a0instalment income, the provision of credit. Revenue for intermediary services is therefore
recognised at a point in time, whilst revenue for the provision of credit is recognised over time,
matching the Group\u2019s provision of services. Where the Group has no remaining obligations, the
revenue is recognised immediately. An allowance is made for expected cancellations where the
customer may 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 law firm
The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
on\u00a0behalf 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 closed 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\u00a0performance completed to date and the work performed to date has no alternative use
to\u00a0the\u00a0Group.
A contract asset is recognised equal to the work performed up to the balance sheet date.
Refer\u00a0to\u00a0note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission
from\u00a0co-insurers
Profit commission is generated if an individual year is profitable, based on the premiums written
and expenses and claims costs incurred. Given that the ultimate outcome of the claims cost is
uncertain for a period of time until final settlement, profit commission is therefore variable.\u00a0
The cumulative profit commission recognised at each point in time 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\u00a0the conclusion of each underwriting year and are not subject to judgement, the claims cost
is\u00a0subject 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\u00a0no 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\u00a0note 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 income
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at\u00a0a\u00a0point 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.
Under IFRS 17 a significant proportion of \u201cOther revenue\u201d recognised as insurance revenue given that it is not separable from the
underlying insurance contract.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-513": { "value": "
8a. Accounting policies
(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 note 5).
Where additional fee and commission revenue is generated from the sale of insurance contracts, but that revenue is 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 note 5) due to the income being separable from the host insurance contract. This instalment income is recognised over time
in\u00a0line with the provision of the service.
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\u00a0subsidiary 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, including
instalment income and
administration fees:
where\u00a0the income
is\u00a0separable from
the\u00a0underlying
insurance\u00a0contract
The performance obligation is the provision of insurance intermediary services, being a successful
sale of ancillary product at which point the performance obligation is met, and in the case
of\u00a0instalment income, the provision of credit. Revenue for intermediary services is therefore
recognised at a point in time, whilst revenue for the provision of credit is recognised over time,
matching the Group\u2019s provision of services. Where the Group has no remaining obligations, the
revenue is recognised immediately. An allowance is made for expected cancellations where the
customer may 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 law firm
The performance obligation is the pursuit of the compensation from the at fault party\u2019s insurer
on\u00a0behalf 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 closed 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\u00a0performance completed to date and the work performed to date has no alternative use
to\u00a0the\u00a0Group.
A contract asset is recognised equal to the work performed up to the balance sheet date.
Refer\u00a0to\u00a0note 6h for further detail of this balance.
Payment is due within 28 days of invoice.
Profit commission
from\u00a0co-insurers
Profit commission is generated if an individual year is profitable, based on the premiums written
and expenses and claims costs incurred. Given that the ultimate outcome of the claims cost is
uncertain for a period of time until final settlement, profit commission is therefore variable.\u00a0
The cumulative profit commission recognised at each point in time 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\u00a0the conclusion of each underwriting year and are not subject to judgement, the claims cost
is\u00a0subject 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\u00a0no 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\u00a0note 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 income
The performance obligation is the provision of insurance intermediary services, at which point the
performance obligation is met. Revenue is therefore recognised at\u00a0a\u00a0point 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.
Under IFRS 17 a significant proportion of \u201cOther revenue\u201d recognised as insurance revenue given that it is not separable from the
underlying insurance contract.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-515": { "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\u00a0incurred 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\u00a0to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result
in\u00a0a\u00a0cash 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 DFSS shares awarded are subject to financial and non-financial performance conditions. The financial performance
conditions are Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment
companies) over a three-year period. The non-financial performance conditions include measures for group net promoter scores,
diversity and inclusion. The other 50% of DFSS shares awarded 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\u00a0shares 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 represents the fair value of the employee services received and to which is measured
by reference to the fair value of the shares granted, is recognised as an expense, with a corresponding increase in equity, as shown
in Consolidated statement of changes in equity (2024: \u00a367.8 million; 2023: \u00a363.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in\u00a0liabilities.
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\u00a0receive 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
3-5 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\u00a0the balance sheet date.
9b. Operating expenses and share scheme charges
31 December 2024
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\u00a3m
Administration and acquisition expenses
1,015.9
121.3
1,137.2
Expenses relating to additional products and fees
\u2013
46.2
46.2
Share scheme expenses
58.6
35.3
93.9
Loan expenses (excluding movement on ECL provision)
\u2013
29.9
29.9
Movement in expected credit loss provision
\u2013
34.6
34.6
Profit on disposal of Insurify share option
\u2013
(12.5)
(12.5)
Other1
\u2013
73.4
73.4
Total
1,074.5
328.2
1,402.7
31 December 2023
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\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
Other1
\u2013
57.1
57.1
Total
892.1
281.8
1,173.9
1Other includes centralised costs primarily for employees and projects (2024: \u00a349.9 million, 2023: \u00a334.5 million), business development costs (2024: \u00a319.9 million, 2023: \u00a315.3 million)
and other costs (2024: \u00a33.6 million, 2023: \u00a37.3 million).
9c. Employee costs and other expenses
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Salaries
470.7
439.4
Social security charges on salaries
49.3
45.5
Pension costs
17.4
16.5
Share scheme charges (see note 9f)
93.9
83.8
Total employee expenses
631.3
585.2
Depreciation charge:
\u2013 Owned assets
10.0
11.2
\u2013 ROU assets
8.8
7.0
Amortisation charge:
\u2013 Software, customer contracts, relationships and brand
61.6
40.3
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.5
0.3
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
2.5
3.0
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.2
1.1
\u00a3141,600 (inclusive of VAT) (2023: \u00a3146,000) 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\u00a0non-audit services. Audit fees are 71% (2023: 74%) of total fees and 29% (2023: 26%) 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
31 December
2024
Number
31 December
2023
Number
Direct customer contact employees
9,754
8,365
Support employees
4,766
4,276
Total
14,520
12,641
9e. Directors' remuneration
(i) Directors\u2019 remuneration
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Directors\u2019 emoluments
1.2
1.2
Amounts receivable under SIP and DFSS share schemes
5.3
2.1
Company contributions to money purchase pension plans\u00a0
0.1
\u2014
Total1
6.6
3.3
1Directors\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
2024
Number
2023
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 2024
SIP charge (i)
\u00a3m
DFSS charge (ii)
\u00a3m
Total charge
\u00a3m
IFRS 2 charge for equity settled share schemes
18.8
49.1
67.9
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
18.8
52.3
71.1
Social security costs on IFRS 2 charge
1.6
8.7
10.3
Discretionary bonus on shares allocated but unvested
\u2013
12.5
12.5
Total share scheme charges
20.4
73.5
93.9
Amounts recovered from co-and reinsurance arrangements
(31.7)
Net share scheme charges
62.2
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
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 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 2024
Analysis of gross cost
2021 & prior
2022
2023
2024
Total cumulative
charge to date
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Year of share scheme - SIP
2020
9.8
5.4
3.1
\u2013
18.3
2021
4.4
5.4
5.3
3.1
18.2
20221
\u2013
3.1
5.3
5.8
14.2
20231
\u2013
\u2013
3.3
6.0
9.3
20241
3.9
3.9
Gross IFRS 2 costs \u2013 SIP
17.0
18.8
Year of share scheme - DFSS
2020
17.7
14.6
10.0
\u2013
42.3
2021
4.9
13.4
19.2
11.9
49.4
20222
\u2013
3.5
14.9
16.2
34.6
20232
\u2013
\u2013
5.4
18.0
23.4
20242
6.2
6.2
Gross IFRS 2 costs - DFSS
49.5
52.3
Total IFRS 2 costs
66.5
71.1
1Awards are made in March and September of each year, and vest over 36 months from award date. On the 2022 schemes, an average of 5 months\u2019 charge remains outstanding,
on the 2023 schemes an average of 17 months\u2019 charge remains outstanding, and on the 2024 schemes an average of 29 months\u2019 charge remains outstanding.
2The 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 2022 main
DFSS, 9 months\u2019 charge remains outstanding; on the 2023 main DFSS 21 months\u2019 charge remains outstanding, and on the 2024 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 2024
schemes is 929,237 (2023 schemes: 1,045,697; 2022 schemes: 872,728).
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 2024 schemes is 3,516,290 (2023 scheme: 3,360,665; 2022 scheme:
3,070,323).
The vesting percentage for most employees for the 2021 DFSS scheme which vested during 2024 was 68.6% (2020 DFSS scheme:
78.25%).
(iii) Number of free share awards committed at 31\u00a0December 2024
Awards outstanding1
SIP 20222
872,728
SIP 20232
1,045,697
SIP 20242
929,237
DFSS 20223
3,070,323
DFSS 20233
3,360,665
DFSS 20243
3,516,290
Total awards committed
12,794,940
1Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions
2Shares are awarded in March and September of each year, and vest three years later
3The 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\u00a0December 2024
During the year ended 31\u00a0December 2024, awards under the SIP H1 2021 and H2 2021 schemes and the DFSS 2021 schemes
vested. The total number of awards vesting for each scheme is as follows.
Original awards
Awards vested
SIP 2021 schemes
688,384
570,961
DFSS 2021 schemes
2,850,114
1,724,677
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 \u00a323.54 (2023: \u00a320.48).
The weighted average market share price at the date of exercise for shares exercised during the year was \u00a327.94 (2023: \u00a323.28).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-516": { "value": "
(i) Directly attributable insurance expenses
Directly attributable expenses are cashflows that are directly attributable to a portfolio of insurance contracts and recognised
as\u00a0incurred 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-517": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-518": { "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\u00a0to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result
in\u00a0a\u00a0cash 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 DFSS shares awarded are subject to financial and non-financial performance conditions. The financial performance
conditions are Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment
companies) over a three-year period. The non-financial performance conditions include measures for group net promoter scores,
diversity and inclusion. The other 50% of DFSS shares awarded 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\u00a0shares 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 represents the fair value of the employee services received and to which is measured
by reference to the fair value of the shares granted, is recognised as an expense, with a corresponding increase in equity, as shown
in Consolidated statement of changes in equity (2024: \u00a367.8 million; 2023: \u00a363.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in\u00a0liabilities.
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\u00a0receive 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
3-5 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\u00a0the balance sheet date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-519": { "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 DFSS shares awarded are subject to financial and non-financial performance conditions. The financial performance
conditions are Earnings per Share growth, Return on Equity and Total Shareholder Return vs. the FTSE 350 (excluding investment
companies) over a three-year period. The non-financial performance conditions include measures for group net promoter scores,
diversity and inclusion. The other 50% of DFSS shares awarded 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\u00a0shares 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 represents the fair value of the employee services received and to which is measured
by reference to the fair value of the shares granted, is recognised as an expense, with a corresponding increase in equity, as shown
in Consolidated statement of changes in equity (2024: \u00a367.8 million; 2023: \u00a363.3 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increase
in\u00a0liabilities.
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\u00a0receive 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
3-5 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-520": { "value": "67800000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:RetainedEarningsMember", "unit": "iso4217:GBP" } }, "f-521": { "value": "63300000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseThroughSharebasedPaymentTransactions", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "ifrs-full:ComponentsOfEquityAxis": "ifrs-full:RetainedEarningsMember", "unit": "iso4217:GBP" } }, "f-523": { "value": "
9b. Operating expenses and share scheme charges
31 December 2024
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\u00a3m
Administration and acquisition expenses
1,015.9
121.3
1,137.2
Expenses relating to additional products and fees
\u2013
46.2
46.2
Share scheme expenses
58.6
35.3
93.9
Loan expenses (excluding movement on ECL provision)
\u2013
29.9
29.9
Movement in expected credit loss provision
\u2013
34.6
34.6
Profit on disposal of Insurify share option
\u2013
(12.5)
(12.5)
Other1
\u2013
73.4
73.4
Total
1,074.5
328.2
1,402.7
31 December 2023
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\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
Other1
\u2013
57.1
57.1
Total
892.1
281.8
1,173.9
1Other includes centralised costs primarily for employees and projects (2024: \u00a349.9 million, 2023: \u00a334.5 million), business development costs (2024: \u00a319.9 million, 2023: \u00a315.3 million)
and other costs (2024: \u00a33.6 million, 2023: \u00a37.3 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-522": { "value": "
9b. Operating expenses and share scheme charges
31 December 2024
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\u00a3m
Administration and acquisition expenses
1,015.9
121.3
1,137.2
Expenses relating to additional products and fees
\u2013
46.2
46.2
Share scheme expenses
58.6
35.3
93.9
Loan expenses (excluding movement on ECL provision)
\u2013
29.9
29.9
Movement in expected credit loss provision
\u2013
34.6
34.6
Profit on disposal of Insurify share option
\u2013
(12.5)
(12.5)
Other1
\u2013
73.4
73.4
Total
1,074.5
328.2
1,402.7
31 December 2023
Directly
attributable
expenses
\u00a3m
Other operating
expenses
\u00a3m
Total expenses
\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
Other1
\u2013
57.1
57.1
Total
892.1
281.8
1,173.9
1Other includes centralised costs primarily for employees and projects (2024: \u00a349.9 million, 2023: \u00a334.5 million), business development costs (2024: \u00a319.9 million, 2023: \u00a315.3 million)
and other costs (2024: \u00a33.6 million, 2023: \u00a37.3 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-525": { "value": "
9c. Employee costs and other expenses
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Salaries
470.7
439.4
Social security charges on salaries
49.3
45.5
Pension costs
17.4
16.5
Share scheme charges (see note 9f)
93.9
83.8
Total employee expenses
631.3
585.2
Depreciation charge:
\u2013 Owned assets
10.0
11.2
\u2013 ROU assets
8.8
7.0
Amortisation charge:
\u2013 Software, customer contracts, relationships and brand
61.6
40.3
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.5
0.3
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
2.5
3.0
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.2
1.1
\u00a3141,600 (inclusive of VAT) (2023: \u00a3146,000) 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\u00a0non-audit services. Audit fees are 71% (2023: 74%) of total fees and 29% (2023: 26%) 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 2024
SIP charge (i)
\u00a3m
DFSS charge (ii)
\u00a3m
Total charge
\u00a3m
IFRS 2 charge for equity settled share schemes
18.8
49.1
67.9
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
18.8
52.3
71.1
Social security costs on IFRS 2 charge
1.6
8.7
10.3
Discretionary bonus on shares allocated but unvested
\u2013
12.5
12.5
Total share scheme charges
20.4
73.5
93.9
Amounts recovered from co-and reinsurance arrangements
(31.7)
Net share scheme charges
62.2
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
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 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 2024
Analysis of gross cost
2021 & prior
2022
2023
2024
Total cumulative
charge to date
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Year of share scheme - SIP
2020
9.8
5.4
3.1
\u2013
18.3
2021
4.4
5.4
5.3
3.1
18.2
20221
\u2013
3.1
5.3
5.8
14.2
20231
\u2013
\u2013
3.3
6.0
9.3
20241
3.9
3.9
Gross IFRS 2 costs \u2013 SIP
17.0
18.8
Year of share scheme - DFSS
2020
17.7
14.6
10.0
\u2013
42.3
2021
4.9
13.4
19.2
11.9
49.4
20222
\u2013
3.5
14.9
16.2
34.6
20232
\u2013
\u2013
5.4
18.0
23.4
20242
6.2
6.2
Gross IFRS 2 costs - DFSS
49.5
52.3
Total IFRS 2 costs
66.5
71.1
1Awards are made in March and September of each year, and vest over 36 months from award date. On the 2022 schemes, an average of 5 months\u2019 charge remains outstanding,
on the 2023 schemes an average of 17 months\u2019 charge remains outstanding, and on the 2024 schemes an average of 29 months\u2019 charge remains outstanding.
2The 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 2022 main
DFSS, 9 months\u2019 charge remains outstanding; on the 2023 main DFSS 21 months\u2019 charge remains outstanding, and on the 2024 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 2024
schemes is 929,237 (2023 schemes: 1,045,697; 2022 schemes: 872,728).
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 2024 schemes is 3,516,290 (2023 scheme: 3,360,665; 2022 scheme:
3,070,323).
The vesting percentage for most employees for the 2021 DFSS scheme which vested during 2024 was 68.6% (2020 DFSS scheme:
78.25%).
(iii) Number of free share awards committed at 31\u00a0December 2024
Awards outstanding1
SIP 20222
872,728
SIP 20232
1,045,697
SIP 20242
929,237
DFSS 20223
3,070,323
DFSS 20233
3,360,665
DFSS 20243
3,516,290
Total awards committed
12,794,940
1Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions
2Shares are awarded in March and September of each year, and vest three years later
3The 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\u00a0December 2024
During the year ended 31\u00a0December 2024, awards under the SIP H1 2021 and H2 2021 schemes and the DFSS 2021 schemes
vested. The total number of awards vesting for each scheme is as follows.
Original awards
Awards vested
SIP 2021 schemes
688,384
570,961
DFSS 2021 schemes
2,850,114
1,724,677
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 \u00a323.54 (2023: \u00a320.48).
The weighted average market share price at the date of exercise for shares exercised during the year was \u00a327.94 (2023: \u00a323.28).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-524": { "value": "
9c. Employee costs and other expenses
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Salaries
470.7
439.4
Social security charges on salaries
49.3
45.5
Pension costs
17.4
16.5
Share scheme charges (see note 9f)
93.9
83.8
Total employee expenses
631.3
585.2
Depreciation charge:
\u2013 Owned assets
10.0
11.2
\u2013 ROU assets
8.8
7.0
Amortisation charge:
\u2013 Software, customer contracts, relationships and brand
61.6
40.3
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.5
0.3
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
2.5
3.0
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.2
1.1
\u00a3141,600 (inclusive of VAT) (2023: \u00a3146,000) 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\u00a0non-audit services. Audit fees are 71% (2023: 74%) of total fees and 29% (2023: 26%) 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
31 December
2024
Number
31 December
2023
Number
Direct customer contact employees
9,754
8,365
Support employees
4,766
4,276
Total
14,520
12,641
9e. Directors' remuneration
(i) Directors\u2019 remuneration
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Directors\u2019 emoluments
1.2
1.2
Amounts receivable under SIP and DFSS share schemes
5.3
2.1
Company contributions to money purchase pension plans\u00a0
0.1
\u2014
Total1
6.6
3.3
1Directors\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
2024
Number
2023
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-527": { "value": "
9c. Employee costs and other expenses
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Salaries
470.7
439.4
Social security charges on salaries
49.3
45.5
Pension costs
17.4
16.5
Share scheme charges (see note 9f)
93.9
83.8
Total employee expenses
631.3
585.2
Depreciation charge:
\u2013 Owned assets
10.0
11.2
\u2013 ROU assets
8.8
7.0
Amortisation charge:
\u2013 Software, customer contracts, relationships and brand
61.6
40.3
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.5
0.3
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
2.5
3.0
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.2
1.1
\u00a3141,600 (inclusive of VAT) (2023: \u00a3146,000) 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\u00a0non-audit services. Audit fees are 71% (2023: 74%) of total fees and 29% (2023: 26%) 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-526": { "value": "
9c. Employee costs and other expenses
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Salaries
470.7
439.4
Social security charges on salaries
49.3
45.5
Pension costs
17.4
16.5
Share scheme charges (see note 9f)
93.9
83.8
Total employee expenses
631.3
585.2
Depreciation charge:
\u2013 Owned assets
10.0
11.2
\u2013 ROU assets
8.8
7.0
Amortisation charge:
\u2013 Software, customer contracts, relationships and brand
61.6
40.3
Auditor\u2019s remuneration (including VAT) (total Group):
\u2013 Fees payable for the audit of the Company\u2019s annual accounts
0.5
0.3
\u2013 Fees payable for the audit of the Company\u2019s subsidiary accounts
2.5
3.0
\u2013 Fees payable for audit related assurance services pursuant to legislation or regulation
1.2
1.1
\u00a3141,600 (inclusive of VAT) (2023: \u00a3146,000) 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\u00a0non-audit services. Audit fees are 71% (2023: 74%) of total fees and 29% (2023: 26%) 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-528": { "value": "
9f. Employee share schemes
Total share scheme costs for the Group are analysed below:
31 December 2024
SIP charge (i)
\u00a3m
DFSS charge (ii)
\u00a3m
Total charge
\u00a3m
IFRS 2 charge for equity settled share schemes
18.8
49.1
67.9
IFRS 2 charge for cash settled share schemes
\u2013
3.2
3.2
Total IFRS 2 charge
18.8
52.3
71.1
Social security costs on IFRS 2 charge
1.6
8.7
10.3
Discretionary bonus on shares allocated but unvested
\u2013
12.5
12.5
Total share scheme charges
20.4
73.5
93.9
Amounts recovered from co-and reinsurance arrangements
(31.7)
Net share scheme charges
62.2
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
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 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 2024
Analysis of gross cost
2021 & prior
2022
2023
2024
Total cumulative
charge to date
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Year of share scheme - SIP
2020
9.8
5.4
3.1
\u2013
18.3
2021
4.4
5.4
5.3
3.1
18.2
20221
\u2013
3.1
5.3
5.8
14.2
20231
\u2013
\u2013
3.3
6.0
9.3
20241
3.9
3.9
Gross IFRS 2 costs \u2013 SIP
17.0
18.8
Year of share scheme - DFSS
2020
17.7
14.6
10.0
\u2013
42.3
2021
4.9
13.4
19.2
11.9
49.4
20222
\u2013
3.5
14.9
16.2
34.6
20232
\u2013
\u2013
5.4
18.0
23.4
20242
6.2
6.2
Gross IFRS 2 costs - DFSS
49.5
52.3
Total IFRS 2 costs
66.5
71.1
1Awards are made in March and September of each year, and vest over 36 months from award date. On the 2022 schemes, an average of 5 months\u2019 charge remains outstanding,
on the 2023 schemes an average of 17 months\u2019 charge remains outstanding, and on the 2024 schemes an average of 29 months\u2019 charge remains outstanding.
2The 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 2022 main
DFSS, 9 months\u2019 charge remains outstanding; on the 2023 main DFSS 21 months\u2019 charge remains outstanding, and on the 2024 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 2024
schemes is 929,237 (2023 schemes: 1,045,697; 2022 schemes: 872,728).
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 2024 schemes is 3,516,290 (2023 scheme: 3,360,665; 2022 scheme:
3,070,323).
The vesting percentage for most employees for the 2021 DFSS scheme which vested during 2024 was 68.6% (2020 DFSS scheme:
78.25%).
(iii) Number of free share awards committed at 31\u00a0December 2024
Awards outstanding1
SIP 20222
872,728
SIP 20232
1,045,697
SIP 20242
929,237
DFSS 20223
3,070,323
DFSS 20233
3,360,665
DFSS 20243
3,516,290
Total awards committed
12,794,940
1Being the maximum number of awards committed before accounting for expected employee attrition and vesting conditions
2Shares are awarded in March and September of each year, and vest three years later
3The 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\u00a0December 2024
During the year ended 31\u00a0December 2024, awards under the SIP H1 2021 and H2 2021 schemes and the DFSS 2021 schemes
vested. The total number of awards vesting for each scheme is as follows.
Original awards
Awards vested
SIP 2021 schemes
688,384
570,961
DFSS 2021 schemes
2,850,114
1,724,677
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 \u00a323.54 (2023: \u00a320.48).
The weighted average market share price at the date of exercise for shares exercised during the year was \u00a327.94 (2023: \u00a323.28).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-530": { "value": "
10. Taxation
10a. Accounting policies
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\u00a0substantively 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\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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
2024
\u00a3m
31 December
2023
\u00a3m
Current tax
Corporation tax on profits for the year
139.3
91.6
Under provision relating to prior periods
1.8
21.3
Pillar Two income taxes
15.4
\u2013
Current tax charge
156.5
112.9
Deferred tax
Current period deferred taxation movement
16.4
0.7
Under/(over) provision relating to prior periods
3.4
(8.0)
Total tax charge per Consolidated Income Statement
176.3
105.6
Factors affecting the total tax charge are:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit before tax
839.2
442.8
Corporation tax thereon at effective UK corporation tax rate of 25% (2023: 23.5%)
209.8
104.1
Expenses and provisions not deductible for tax purposes
4.1
3.0
Non-taxable income
(21.3)
(13.4)
Impact of change in UK tax rate on deferred tax balances
\u2013
(0.4)
Adjustments relating to prior periods
5.2
13.5
Impact of Pillar Two income taxes
15.4
\u2013
Impact of different overseas tax rates
(45.5)
(8.9)
Unrecognised deferred tax
8.6
7.7
Total tax charge for the period as above
176.3
105.6
Corporation tax assets as at 31\u00a0December 2024\u00a0 totaled \u00a318.1 million, with corporation tax liabilities of \u00a335.0 million (2023: \u00a320.4
million asset and \u00a34.9 million liabilities). Corporation tax liabilities includes \u00a315.4 million (2023: \u00a3nil) relating to Pillar Two income
taxes.
The UK corporation tax rate for 2024 is 25% (2023: 23.5%).
The Group are within the scope of the OECD Pillar Two model rules which aims to ensure that large, multinational corporations pay
their fair share of tax in the countries in which they operate by introducing a new global minimum corporate income tax rate of 15%.
Under the new rules, top-up taxes can be payable either by the UK ultimate parent company or by an overseas entity if a jurisdiction
has\u00a0an effective tax rate of less than 15%, as calculated under the rules. Legislation has been enacted in various countries (including
the United Kingdom), with the rules first coming into effect for the Group from 1 January 2024.
A current tax expense of \u00a315.4 million has been included in the total tax charge for the year ended 31\u00a0December 2024, which
relates to estimated top-up taxes payable by a subsidiary undertaking in Gibraltar, where the statutory corporate tax rate applicable
for the year ended 31 December 2024 is 13.8% (due to a change in the rate from 12.5% to 15% from 1 July 2024). No top-up taxes
for the year ended 31 December 2024 are expected to arise in relation to operations in other countries. The Pillar Two rules are
complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact.
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets
and\u00a0liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
10c. Deferred income tax asset / (liability)
Analysis of deferred tax asset / (liability)
Tax
treatment
of share
schemes
\u00a3m
Capital
allowances
\u00a3m
Carried
forward
losses
\u00a3m
Fair value
reserve
\u00a3m
Hedging
reserve
\u00a3m
Insurance
finance
reserve
\u00a3m
IFRS
recognition
difference
\u00a3m1
Other
differences
\u00a3m
Total
\u00a3m
Balance brought forward
at 1 January 2023
3.4
7.1
37.6
6.9
(7.0)
(19.8)
\u2013
0.2
28.4
Tax treatment of share
scheme charges through
income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share
scheme charges through
reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value
reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
\u2013
(5.7)
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
\u2013
9.7
Other differences
\u2013
\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)
\u2013
0.7
46.1
Reallocation of brought
forward deferred tax
\u2013
\u2013
(15.1)
\u2013
\u2013
\u2013
15.1
\u2013
\u2013
Tax treatment of share
scheme charges through
income or expense
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
Tax treatment of share
scheme charges through
reserves
3.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
3.2
Capital allowances -
deferred tax acquired in
business combination (see
note 13)
\u2013
(9.1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(9.1)
Capital allowances
\u2013
4.8
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
4.8
Carried forward losses
\u2013
\u2013
(38.4)
\u2013
\u2013
\u2013
\u2013
\u2013
(38.4)
Movement in fair value
reserve
\u2013
\u2013
\u2013
2.4
\u2013
\u2013
\u2013
\u2013
2.4
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
1.0
\u2013
\u2013
\u2013
1.0
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(3.8)
\u2013
\u2013
(3.8)
Movement in IFRS
recognition differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
Other differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2024
9.5
(8.2)
\u2013
3.6
(1.5)
(13.9)
29.1
1.2
19.8
1Deferred tax on IFRS recognition differences is now separately disclosed with a \u00a315.1 million reallocation of the brought forward deferred tax asset at 1 January 2024 included above.
The majority of deferred tax on IFRS recognition differences relates to timing differences in the recognition of intragroup profit commission across subsidiaries in different tax
jurisdictions.\u00a0
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has decreased during the year, mainly relating to the utilisation of carried forward tax losses in the UK and
Gibraltar. Remaining deferred tax assets are recognised as it is considered probable that there are sufficient future taxable profits
available against which the assets can be utilised.
At 31\u00a0December 2024, the Group had unused tax losses amounting to \u00a3249.3 million (2023: \u00a3233.0 million) and other deductible
timing differences of \u00a357.5 million (2023: \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 2031, with no expiry for the losses
in Spain.", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-529": { "value": "
10. Taxation
10a. Accounting policies
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\u00a0substantively 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\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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
2024
\u00a3m
31 December
2023
\u00a3m
Current tax
Corporation tax on profits for the year
139.3
91.6
Under provision relating to prior periods
1.8
21.3
Pillar Two income taxes
15.4
\u2013
Current tax charge
156.5
112.9
Deferred tax
Current period deferred taxation movement
16.4
0.7
Under/(over) provision relating to prior periods
3.4
(8.0)
Total tax charge per Consolidated Income Statement
176.3
105.6
Factors affecting the total tax charge are:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit before tax
839.2
442.8
Corporation tax thereon at effective UK corporation tax rate of 25% (2023: 23.5%)
209.8
104.1
Expenses and provisions not deductible for tax purposes
4.1
3.0
Non-taxable income
(21.3)
(13.4)
Impact of change in UK tax rate on deferred tax balances
\u2013
(0.4)
Adjustments relating to prior periods
5.2
13.5
Impact of Pillar Two income taxes
15.4
\u2013
Impact of different overseas tax rates
(45.5)
(8.9)
Unrecognised deferred tax
8.6
7.7
Total tax charge for the period as above
176.3
105.6
Corporation tax assets as at 31\u00a0December 2024\u00a0 totaled \u00a318.1 million, with corporation tax liabilities of \u00a335.0 million (2023: \u00a320.4
million asset and \u00a34.9 million liabilities). Corporation tax liabilities includes \u00a315.4 million (2023: \u00a3nil) relating to Pillar Two income
taxes.
The UK corporation tax rate for 2024 is 25% (2023: 23.5%).
The Group are within the scope of the OECD Pillar Two model rules which aims to ensure that large, multinational corporations pay
their fair share of tax in the countries in which they operate by introducing a new global minimum corporate income tax rate of 15%.
Under the new rules, top-up taxes can be payable either by the UK ultimate parent company or by an overseas entity if a jurisdiction
has\u00a0an effective tax rate of less than 15%, as calculated under the rules. Legislation has been enacted in various countries (including
the United Kingdom), with the rules first coming into effect for the Group from 1 January 2024.
A current tax expense of \u00a315.4 million has been included in the total tax charge for the year ended 31\u00a0December 2024, which
relates to estimated top-up taxes payable by a subsidiary undertaking in Gibraltar, where the statutory corporate tax rate applicable
for the year ended 31 December 2024 is 13.8% (due to a change in the rate from 12.5% to 15% from 1 July 2024). No top-up taxes
for the year ended 31 December 2024 are expected to arise in relation to operations in other countries. The Pillar Two rules are
complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact.
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets
and\u00a0liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
10c. Deferred income tax asset / (liability)
Analysis of deferred tax asset / (liability)
Tax
treatment
of share
schemes
\u00a3m
Capital
allowances
\u00a3m
Carried
forward
losses
\u00a3m
Fair value
reserve
\u00a3m
Hedging
reserve
\u00a3m
Insurance
finance
reserve
\u00a3m
IFRS
recognition
difference
\u00a3m1
Other
differences
\u00a3m
Total
\u00a3m
Balance brought forward
at 1 January 2023
3.4
7.1
37.6
6.9
(7.0)
(19.8)
\u2013
0.2
28.4
Tax treatment of share
scheme charges through
income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share
scheme charges through
reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value
reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
\u2013
(5.7)
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
\u2013
9.7
Other differences
\u2013
\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)
\u2013
0.7
46.1
Reallocation of brought
forward deferred tax
\u2013
\u2013
(15.1)
\u2013
\u2013
\u2013
15.1
\u2013
\u2013
Tax treatment of share
scheme charges through
income or expense
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
Tax treatment of share
scheme charges through
reserves
3.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
3.2
Capital allowances -
deferred tax acquired in
business combination (see
note 13)
\u2013
(9.1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(9.1)
Capital allowances
\u2013
4.8
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
4.8
Carried forward losses
\u2013
\u2013
(38.4)
\u2013
\u2013
\u2013
\u2013
\u2013
(38.4)
Movement in fair value
reserve
\u2013
\u2013
\u2013
2.4
\u2013
\u2013
\u2013
\u2013
2.4
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
1.0
\u2013
\u2013
\u2013
1.0
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(3.8)
\u2013
\u2013
(3.8)
Movement in IFRS
recognition differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
Other differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2024
9.5
(8.2)
\u2013
3.6
(1.5)
(13.9)
29.1
1.2
19.8
1Deferred tax on IFRS recognition differences is now separately disclosed with a \u00a315.1 million reallocation of the brought forward deferred tax asset at 1 January 2024 included above.
The majority of deferred tax on IFRS recognition differences relates to timing differences in the recognition of intragroup profit commission across subsidiaries in different tax
jurisdictions.\u00a0
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has decreased during the year, mainly relating to the utilisation of carried forward tax losses in the UK and
Gibraltar. Remaining deferred tax assets are recognised as it is considered probable that there are sufficient future taxable profits
available against which the assets can be utilised.
At 31\u00a0December 2024, the Group had unused tax losses amounting to \u00a3249.3 million (2023: \u00a3233.0 million) and other deductible
timing differences of \u00a357.5 million (2023: \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 2031, with no expiry for the losses
in Spain.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-531": { "value": "
10a. Accounting policies
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\u00a0substantively 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\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-532": { "value": "
(ii) Deferred tax
Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between
the\u00a0carrying 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\u00a0expected 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 generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, other
than in a business combination or for transactions that give rise to equal taxable and deductible temporary differences. In addition,
a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill. For the recognition
of deferred tax assets, 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-533": { "value": "
10b. Taxation
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Current tax
Corporation tax on profits for the year
139.3
91.6
Under provision relating to prior periods
1.8
21.3
Pillar Two income taxes
15.4
\u2013
Current tax charge
156.5
112.9
Deferred tax
Current period deferred taxation movement
16.4
0.7
Under/(over) provision relating to prior periods
3.4
(8.0)
Total tax charge per Consolidated Income Statement
176.3
105.6
Factors affecting the total tax charge are:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit before tax
839.2
442.8
Corporation tax thereon at effective UK corporation tax rate of 25% (2023: 23.5%)
209.8
104.1
Expenses and provisions not deductible for tax purposes
4.1
3.0
Non-taxable income
(21.3)
(13.4)
Impact of change in UK tax rate on deferred tax balances
\u2013
(0.4)
Adjustments relating to prior periods
5.2
13.5
Impact of Pillar Two income taxes
15.4
\u2013
Impact of different overseas tax rates
(45.5)
(8.9)
Unrecognised deferred tax
8.6
7.7
Total tax charge for the period as above
176.3
105.6
Corporation tax assets as at 31\u00a0December 2024\u00a0 totaled \u00a318.1 million, with corporation tax liabilities of \u00a335.0 million (2023: \u00a320.4
million asset and \u00a34.9 million liabilities). Corporation tax liabilities includes \u00a315.4 million (2023: \u00a3nil) relating to Pillar Two income
taxes.
The UK corporation tax rate for 2024 is 25% (2023: 23.5%).
The Group are within the scope of the OECD Pillar Two model rules which aims to ensure that large, multinational corporations pay
their fair share of tax in the countries in which they operate by introducing a new global minimum corporate income tax rate of 15%.
Under the new rules, top-up taxes can be payable either by the UK ultimate parent company or by an overseas entity if a jurisdiction
has\u00a0an effective tax rate of less than 15%, as calculated under the rules. Legislation has been enacted in various countries (including
the United Kingdom), with the rules first coming into effect for the Group from 1 January 2024.
A current tax expense of \u00a315.4 million has been included in the total tax charge for the year ended 31\u00a0December 2024, which
relates to estimated top-up taxes payable by a subsidiary undertaking in Gibraltar, where the statutory corporate tax rate applicable
for the year ended 31 December 2024 is 13.8% (due to a change in the rate from 12.5% to 15% from 1 July 2024). No top-up taxes
for the year ended 31 December 2024 are expected to arise in relation to operations in other countries. The Pillar Two rules are
complex and the Group continues to monitor ongoing developments in legislation and guidance to assess the impact.
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets
and\u00a0liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
10c. Deferred income tax asset / (liability)
Analysis of deferred tax asset / (liability)
Tax
treatment
of share
schemes
\u00a3m
Capital
allowances
\u00a3m
Carried
forward
losses
\u00a3m
Fair value
reserve
\u00a3m
Hedging
reserve
\u00a3m
Insurance
finance
reserve
\u00a3m
IFRS
recognition
difference
\u00a3m1
Other
differences
\u00a3m
Total
\u00a3m
Balance brought forward
at 1 January 2023
3.4
7.1
37.6
6.9
(7.0)
(19.8)
\u2013
0.2
28.4
Tax treatment of share
scheme charges through
income or expense
1.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.7
Tax treatment of share
scheme charges through
reserves
2.1
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
2.1
Capital allowances
\u2013
(11.0)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(11.0)
Carried forward losses
\u2013
\u2013
15.9
\u2013
\u2013
\u2013
\u2013
\u2013
15.9
Movement in fair value
reserve
\u2013
\u2013
\u2013
(5.7)
\u2013
\u2013
\u2013
\u2013
(5.7)
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
4.5
\u2013
\u2013
\u2013
4.5
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
9.7
\u2013
\u2013
9.7
Other differences
\u2013
\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)
\u2013
0.7
46.1
Reallocation of brought
forward deferred tax
\u2013
\u2013
(15.1)
\u2013
\u2013
\u2013
15.1
\u2013
\u2013
Tax treatment of share
scheme charges through
income or expense
(0.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.9)
Tax treatment of share
scheme charges through
reserves
3.2
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
3.2
Capital allowances -
deferred tax acquired in
business combination (see
note 13)
\u2013
(9.1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(9.1)
Capital allowances
\u2013
4.8
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
4.8
Carried forward losses
\u2013
\u2013
(38.4)
\u2013
\u2013
\u2013
\u2013
\u2013
(38.4)
Movement in fair value
reserve
\u2013
\u2013
\u2013
2.4
\u2013
\u2013
\u2013
\u2013
2.4
Movement in hedging
reserve
\u2013
\u2013
\u2013
\u2013
1.0
\u2013
\u2013
\u2013
1.0
Movement in insurance
finance reserve
\u2013
\u2013
\u2013
\u2013
\u2013
(3.8)
\u2013
\u2013
(3.8)
Movement in IFRS
recognition differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
14.0
\u2013
14.0
Other differences
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.5
0.5
Balance carried forward at
31 December 2024
9.5
(8.2)
\u2013
3.6
(1.5)
(13.9)
29.1
1.2
19.8
1Deferred tax on IFRS recognition differences is now separately disclosed with a \u00a315.1 million reallocation of the brought forward deferred tax asset at 1 January 2024 included above.
The majority of deferred tax on IFRS recognition differences relates to timing differences in the recognition of intragroup profit commission across subsidiaries in different tax
jurisdictions.\u00a0
Positive amounts presented above relate to a deferred tax asset position.
The deferred tax asset has decreased during the year, mainly relating to the utilisation of carried forward tax losses in the UK and
Gibraltar. Remaining deferred tax assets are recognised as it is considered probable that there are sufficient future taxable profits
available against which the assets can be utilised.
At 31\u00a0December 2024, the Group had unused tax losses amounting to \u00a3249.3 million (2023: \u00a3233.0 million) and other deductible
timing differences of \u00a357.5 million (2023: \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 2031, with no expiry for the losses
in Spain.", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-534": { "value": "
11. Other Assets and Other Liabilities
11a. Accounting policies
(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 on acquisitions of trade
and assets representing a business and/or acquisition of subsidiaries and represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
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 every six months for evidence of impairment and tested annually for impairment.
The goodwill held on the balance sheet at 31\u00a0December 2024 includes goodwill from acquisition of EUI Limited which has been
allocated to the UK insurance segment, and goodwill arising from the acquisition of Home and Pet renewal rights from RSA
Insurance Group Limited which has been allocated to the UK Pet and Household CGUs.
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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the license 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 (generally between 3 and 4 years) 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.
(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\u00a0non-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
\u00a3m
Improvements
to short
leasehold
buildings\u00a0
Computer
equipment\u00a0
Office
equipment\u00a0
Furniture and
fittings\u00a0
ROU Asset -
Leasehold
buildings
Total\u00a0
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions\u00a0
3.5
4.9
0.2
0.7
3.3
12.6
Impairment\u00a0
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals\u00a0
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements\u00a0
(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\u00a0
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
Cost
At 1 January 2024
29.7
57.3
18.3
9.6
99.9
214.8
Additions
2.6
5.4
0.5
0.2
17.4
26.1
Impairment
(0.6)
(3.2)
(0.6)
\u2013
\u2013
(4.4)
Disposals
(15.5)
(16.4)
(8.2)
(2.5)
(8.5)
(51.1)
Foreign exchange and other
movements
(0.3)
(0.3)
(0.1)
(0.2)
(0.8)
(1.7)
At 31 December 2024
15.9
42.8
9.9
7.1
108.0
183.7
Depreciation
At 1 January 2024
21.6
45.8
17.2
8.4
31.7
124.7
Charge for the year
2.8
6.3
0.5
0.4
8.8
18.8
Impairment
(0.5)
(2.8)
(0.4)
\u2013
\u2013
(3.7)
Disposals
(15.5)
(16.4)
(8.1)
(2.5)
(0.2)
(42.7)
Foreign exchange and other
movements
(0.2)
(0.2)
(0.1)
(0.1)
(0.6)
(1.2)
At 31 December 2024
8.2
32.7
9.1
6.2
39.7
95.9
Net book amount
At 31 December 2024
7.7
10.1
0.8
0.9
68.3
87.8
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
Customer contracts, relationships and brand includes Home and Pet renewal rights which has a net carrying value of \u00a334.5 million
as at 31 December 2024 and an amortisation period of 9 years for Home renewal rights and 14 years for Pet renewal rights. See
note 13 for further information. Internally generated software includes a new claims system implemented within the UK business
in\u00a0the year which has a carrying amount of \u00a333.2 million as at 31 December 2024 and a remaining amortisation period of 2.8 years.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999,
and on the purchase of the direct Home and Pet renewal rights from the RSA Insurance Group Limited (\u2018RSA\u2019) in April 2024. The
carrying amount of goodwill as at 31 December 2024 is \u00a3112.1 million (2023: \u00a362.3 million).
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the CGU to which
it\u00a0is\u00a0allocated. Annual impairment reviews have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill from EUI acquisition. Given the short time period
used to support the recoverable amount, no terminal growth rate or discounting is applied.
With regards to the goodwill arising from RSA acquisition, the recoverable amount of the CGU has been determined based on
a\u00a0value in use calculation using discounted cash flow projections based on financial budgets approved by the board of directors
covering a five-year period and a pre-tax discount rate of 15%. Cash flows beyond the five year period are extrapolated into
perpetuity as the fifth year represents a reasonable estimate of a steady state of business. No long term growth rate has been
applied to the perpetuity calculations.
The key assumptions on which the cash flow projections are based on forecast growth in premiums written, related expenses
and\u00a0claims costs. The forecasts are based on past experience adjusted for market trends and strategic decisions made in respect
of the Pet and Household lines of business.
Refer to the accounting policy for goodwill for further information.
11d. Trade and other payables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Trade payables
52.4
42.3
Other tax and social security
12.5
11.9
Amounts owed to co-insurers
\u2014
156.9
Other payables
34.0
42.5
Accruals and deferred income
76.4
52.2
Total trade and other payables
175.3
305.8
Analysis of accruals and deferred income
Accruals
48.2
28.3
Deferred income
28.2
23.9
Total accruals and deferred income as above
76.4
52.2
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
2024
\u00a3m
31 December
2023
\u00a3m
Lease liabilities
Current
8.6
13.7
Non-Current
71.0
67.5
Total
79.6
81.2
See note 11b for right of use assets depreciation and the carrying amount of right of use asset 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.\u00a0The 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 \u20ac24 million .
No material provisions have been made in these financial statements in relation to the matters noted above.\u00a0
The Group notes the ongoing Court of Appeal ruling relating to non-disclosure of commission to dealers in relation to motor finance.
Prior to the Group's re-launch of motor finance lending, all lending was through price comparison websites. The Group had no
lending through dealers and no discretionary commission structures in place. Accordingly the Group does not have an ongoing
exposure to commission arrangements of this nature and therefore has not recognised any contingent liability in relation to the
case.
The Group continues to monitor regulatory developments, including the Supreme Court decision which is expected later in 2025,
ensuring the customer acquisition practices remain fully aligned with legal and regulatory requirements and industry best practices.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations
or\u00a0similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisors
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-536": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-535": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-537": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-539": { "value": "
(iii) Intangible assets
Goodwill
All business combinations are accounted for using the acquisition method. Goodwill has been recognised on acquisitions of trade
and assets representing a business and/or acquisition of subsidiaries and represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
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 every six months for evidence of impairment and tested annually for impairment.
The goodwill held on the balance sheet at 31\u00a0December 2024 includes goodwill from acquisition of EUI Limited which has been
allocated to the UK insurance segment, and goodwill arising from the acquisition of Home and Pet renewal rights from RSA
Insurance Group Limited which has been allocated to the UK Pet and Household CGUs.
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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the license 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 (generally between 3 and 4 years) 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-538": { "value": "
(iii) Intangible assets
Goodwill
All business combinations are accounted for using the acquisition method. Goodwill has been recognised on acquisitions of trade
and assets representing a business and/or acquisition of subsidiaries and represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
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 every six months for evidence of impairment and tested annually for impairment.
The goodwill held on the balance sheet at 31\u00a0December 2024 includes goodwill from acquisition of EUI Limited which has been
allocated to the UK insurance segment, and goodwill arising from the acquisition of Home and Pet renewal rights from RSA
Insurance Group Limited which has been allocated to the UK Pet and Household CGUs.
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\u00a0up to five years.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes
in\u00a0pricing 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.
Renewal Rights (included within Customer contracts, relationships and brand)
Renewal rights are recognised as an intangible asset and amortised using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six months for evidence of impairment, with the value being written down
if\u00a0any impairment exists. Impairment may be reversed if conditions subsequently improve.
Brand (included within Customer contracts, relationships and brand)
Brand rights are recognised as an intangible asset and amortised using the straight line method over an expected useful life
of\u00a0fifteen years. Brand rights on initial recognition have been recognised at its fair value arising through an acquisition.
The carrying value of brand rights 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-540": { "value": "
Software
Purchased software is recognised as an intangible asset and amortised over its expected useful life (generally the license 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 (generally between 3 and 4 years) 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-542": { "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\u00a0non-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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-541": { "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\u00a0non-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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-544": { "value": "
11b. Property and equipment
\u00a3m
Improvements
to short
leasehold
buildings\u00a0
Computer
equipment\u00a0
Office
equipment\u00a0
Furniture and
fittings\u00a0
ROU Asset -
Leasehold
buildings
Total\u00a0
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions\u00a0
3.5
4.9
0.2
0.7
3.3
12.6
Impairment\u00a0
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals\u00a0
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements\u00a0
(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\u00a0
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
Cost
At 1 January 2024
29.7
57.3
18.3
9.6
99.9
214.8
Additions
2.6
5.4
0.5
0.2
17.4
26.1
Impairment
(0.6)
(3.2)
(0.6)
\u2013
\u2013
(4.4)
Disposals
(15.5)
(16.4)
(8.2)
(2.5)
(8.5)
(51.1)
Foreign exchange and other
movements
(0.3)
(0.3)
(0.1)
(0.2)
(0.8)
(1.7)
At 31 December 2024
15.9
42.8
9.9
7.1
108.0
183.7
Depreciation
At 1 January 2024
21.6
45.8
17.2
8.4
31.7
124.7
Charge for the year
2.8
6.3
0.5
0.4
8.8
18.8
Impairment
(0.5)
(2.8)
(0.4)
\u2013
\u2013
(3.7)
Disposals
(15.5)
(16.4)
(8.1)
(2.5)
(0.2)
(42.7)
Foreign exchange and other
movements
(0.2)
(0.2)
(0.1)
(0.1)
(0.6)
(1.2)
At 31 December 2024
8.2
32.7
9.1
6.2
39.7
95.9
Net book amount
At 31 December 2024
7.7
10.1
0.8
0.9
68.3
87.8
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-543": { "value": "
11b. Property and equipment
\u00a3m
Improvements
to short
leasehold
buildings\u00a0
Computer
equipment\u00a0
Office
equipment\u00a0
Furniture and
fittings\u00a0
ROU Asset -
Leasehold
buildings
Total\u00a0
Cost
At 1 January 2023
37.5
73.9
21.4
10.7
95.0
238.5
Additions\u00a0
3.5
4.9
0.2
0.7
3.3
12.6
Impairment\u00a0
\u2013
\u2013
\u2013
\u2013
6.1
6.1
Disposals\u00a0
(10.9)
(20.8)
(2.8)
(1.9)
(5.6)
(42.0)
Foreign exchange and other
movements\u00a0
(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\u00a0
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
Cost
At 1 January 2024
29.7
57.3
18.3
9.6
99.9
214.8
Additions
2.6
5.4
0.5
0.2
17.4
26.1
Impairment
(0.6)
(3.2)
(0.6)
\u2013
\u2013
(4.4)
Disposals
(15.5)
(16.4)
(8.2)
(2.5)
(8.5)
(51.1)
Foreign exchange and other
movements
(0.3)
(0.3)
(0.1)
(0.2)
(0.8)
(1.7)
At 31 December 2024
15.9
42.8
9.9
7.1
108.0
183.7
Depreciation
At 1 January 2024
21.6
45.8
17.2
8.4
31.7
124.7
Charge for the year
2.8
6.3
0.5
0.4
8.8
18.8
Impairment
(0.5)
(2.8)
(0.4)
\u2013
\u2013
(3.7)
Disposals
(15.5)
(16.4)
(8.1)
(2.5)
(0.2)
(42.7)
Foreign exchange and other
movements
(0.2)
(0.2)
(0.1)
(0.1)
(0.6)
(1.2)
At 31 December 2024
8.2
32.7
9.1
6.2
39.7
95.9
Net book amount
At 31 December 2024
7.7
10.1
0.8
0.9
68.3
87.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-547": { "value": "
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
Customer contracts, relationships and brand includes Home and Pet renewal rights which has a net carrying value of \u00a334.5 million
as at 31 December 2024 and an amortisation period of 9 years for Home renewal rights and 14 years for Pet renewal rights. See
note 13 for further information. Internally generated software includes a new claims system implemented within the UK business
in\u00a0the year which has a carrying amount of \u00a333.2 million as at 31 December 2024 and a remaining amortisation period of 2.8 years.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999,
and on the purchase of the direct Home and Pet renewal rights from the RSA Insurance Group Limited (\u2018RSA\u2019) in April 2024. The
carrying amount of goodwill as at 31 December 2024 is \u00a3112.1 million (2023: \u00a362.3 million).
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the CGU to which
it\u00a0is\u00a0allocated. Annual impairment reviews have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill from EUI acquisition. Given the short time period
used to support the recoverable amount, no terminal growth rate or discounting is applied.
With regards to the goodwill arising from RSA acquisition, the recoverable amount of the CGU has been determined based on
a\u00a0value in use calculation using discounted cash flow projections based on financial budgets approved by the board of directors
covering a five-year period and a pre-tax discount rate of 15%. Cash flows beyond the five year period are extrapolated into
perpetuity as the fifth year represents a reasonable estimate of a steady state of business. No long term growth rate has been
applied to the perpetuity calculations.
The key assumptions on which the cash flow projections are based on forecast growth in premiums written, related expenses
and\u00a0claims costs. The forecasts are based on past experience adjusted for market trends and strategic decisions made in respect
of the Pet and Household lines of business.
Refer to the accounting policy for goodwill for further information.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-546": { "value": "
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
Customer contracts, relationships and brand includes Home and Pet renewal rights which has a net carrying value of \u00a334.5 million
as at 31 December 2024 and an amortisation period of 9 years for Home renewal rights and 14 years for Pet renewal rights. See
note 13 for further information. Internally generated software includes a new claims system implemented within the UK business
in\u00a0the year which has a carrying amount of \u00a333.2 million as at 31 December 2024 and a remaining amortisation period of 2.8 years.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999,
and on the purchase of the direct Home and Pet renewal rights from the RSA Insurance Group Limited (\u2018RSA\u2019) in April 2024. The
carrying amount of goodwill as at 31 December 2024 is \u00a3112.1 million (2023: \u00a362.3 million).
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the CGU to which
it\u00a0is\u00a0allocated. Annual impairment reviews have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill from EUI acquisition. Given the short time period
used to support the recoverable amount, no terminal growth rate or discounting is applied.
With regards to the goodwill arising from RSA acquisition, the recoverable amount of the CGU has been determined based on
a\u00a0value in use calculation using discounted cash flow projections based on financial budgets approved by the board of directors
covering a five-year period and a pre-tax discount rate of 15%. Cash flows beyond the five year period are extrapolated into
perpetuity as the fifth year represents a reasonable estimate of a steady state of business. No long term growth rate has been
applied to the perpetuity calculations.
The key assumptions on which the cash flow projections are based on forecast growth in premiums written, related expenses
and\u00a0claims costs. The forecasts are based on past experience adjusted for market trends and strategic decisions made in respect
of the Pet and Household lines of business.
Refer to the accounting policy for goodwill for further information.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-545": { "value": "
11c. Intangible assets
Goodwill
\u00a3m
Customer
contracts,
relationships
and brand
\u00a3m
Software \u2013
Internally
generated
\u00a3m
Software \u2013 Other
\u00a3m
Total
\u00a3m
At 1 January 2023
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)
Foreign exchange movement & other movements
\u2013
\u2013
(0.4)
(0.4)
(0.8)
At 31 December 2023
62.3
7.9
152.0
20.7
242.9
Additions
49.8
44.5
48.8
3.1
146.2
Amortisation charge
\u2013
(2.8)
(54.5)
(4.3)
(61.6)
Disposals
\u2013
\u2013
(0.3)
(0.4)
(0.7)
Impairment
\u2013
\u2013
(3.5)
(0.9)
(4.4)
Transfers
\u2013
\u2013
6.2
(6.2)
\u2013
Foreign exchange movement & other movements
\u2013
(0.3)
(0.6)
(0.5)
(1.4)
At 31 December 2024
112.1
49.3
148.1
11.5
321.0
Customer contracts, relationships and brand includes Home and Pet renewal rights which has a net carrying value of \u00a334.5 million
as at 31 December 2024 and an amortisation period of 9 years for Home renewal rights and 14 years for Pet renewal rights. See
note 13 for further information. Internally generated software includes a new claims system implemented within the UK business
in\u00a0the year which has a carrying amount of \u00a333.2 million as at 31 December 2024 and a remaining amortisation period of 2.8 years.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November 1999,
and on the purchase of the direct Home and Pet renewal rights from the RSA Insurance Group Limited (\u2018RSA\u2019) in April 2024. The
carrying amount of goodwill as at 31 December 2024 is \u00a3112.1 million (2023: \u00a362.3 million).
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the CGU to which
it\u00a0is\u00a0allocated. Annual impairment reviews have indicated that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill from EUI acquisition. Given the short time period
used to support the recoverable amount, no terminal growth rate or discounting is applied.
With regards to the goodwill arising from RSA acquisition, the recoverable amount of the CGU has been determined based on
a\u00a0value in use calculation using discounted cash flow projections based on financial budgets approved by the board of directors
covering a five-year period and a pre-tax discount rate of 15%. Cash flows beyond the five year period are extrapolated into
perpetuity as the fifth year represents a reasonable estimate of a steady state of business. No long term growth rate has been
applied to the perpetuity calculations.
The key assumptions on which the cash flow projections are based on forecast growth in premiums written, related expenses
and\u00a0claims costs. The forecasts are based on past experience adjusted for market trends and strategic decisions made in respect
of the Pet and Household lines of business.
Refer to the accounting policy for goodwill for further information.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-550": { "value": "
11d. Trade and other payables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Trade payables
52.4
42.3
Other tax and social security
12.5
11.9
Amounts owed to co-insurers
\u2014
156.9
Other payables
34.0
42.5
Accruals and deferred income
76.4
52.2
Total trade and other payables
175.3
305.8
Analysis of accruals and deferred income
Accruals
48.2
28.3
Deferred income
28.2
23.9
Total accruals and deferred income as above
76.4
52.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-549": { "value": "
11d. Trade and other payables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Trade payables
52.4
42.3
Other tax and social security
12.5
11.9
Amounts owed to co-insurers
\u2014
156.9
Other payables
34.0
42.5
Accruals and deferred income
76.4
52.2
Total trade and other payables
175.3
305.8
Analysis of accruals and deferred income
Accruals
48.2
28.3
Deferred income
28.2
23.9
Total accruals and deferred income as above
76.4
52.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-548": { "value": "
11d. Trade and other payables
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Trade payables
52.4
42.3
Other tax and social security
12.5
11.9
Amounts owed to co-insurers
\u2014
156.9
Other payables
34.0
42.5
Accruals and deferred income
76.4
52.2
Total trade and other payables
175.3
305.8
Analysis of accruals and deferred income
Accruals
48.2
28.3
Deferred income
28.2
23.9
Total accruals and deferred income as above
76.4
52.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-551": { "value": "
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:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-553": { "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.\u00a0The 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 \u20ac24 million .
No material provisions have been made in these financial statements in relation to the matters noted above.\u00a0
The Group notes the ongoing Court of Appeal ruling relating to non-disclosure of commission to dealers in relation to motor finance.
Prior to the Group's re-launch of motor finance lending, all lending was through price comparison websites. The Group had no
lending through dealers and no discretionary commission structures in place. Accordingly the Group does not have an ongoing
exposure to commission arrangements of this nature and therefore has not recognised any contingent liability in relation to the
case.
The Group continues to monitor regulatory developments, including the Supreme Court decision which is expected later in 2025,
ensuring the customer acquisition practices remain fully aligned with legal and regulatory requirements and industry best practices.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations
or\u00a0similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisors
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-552": { "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.\u00a0The 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 \u20ac24 million .
No material provisions have been made in these financial statements in relation to the matters noted above.\u00a0
The Group notes the ongoing Court of Appeal ruling relating to non-disclosure of commission to dealers in relation to motor finance.
Prior to the Group's re-launch of motor finance lending, all lending was through price comparison websites. The Group had no
lending through dealers and no discretionary commission structures in place. Accordingly the Group does not have an ongoing
exposure to commission arrangements of this nature and therefore has not recognised any contingent liability in relation to the
case.
The Group continues to monitor regulatory developments, including the Supreme Court decision which is expected later in 2025,
ensuring the customer acquisition practices remain fully aligned with legal and regulatory requirements and industry best practices.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations
or\u00a0similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external advisors
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-554": { "value": "
12. Dividends, Earnings and Related Parties
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 except for impairment gains and losses which are recognised in the income statement.
The accumulated changes in fair value are transferred to profit or loss when the investment is derecognised or reclassified.
(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\u00a0profit 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
2024
\u00a3m
31 December
2023
\u00a3m
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
\u2013
154.9
Declared August 2023 (51.0 pence per share, paid October 2023)
\u2013
152.2
Proposed March 2024 (52.0 pence per share, approved April 2024 and paid May 2024)
156.2
\u2013
Declared August 2024 (71.0 pence per share, paid October 2024)
213.6
\u2013
Total dividends
369.8
307.1
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2022 and 2023 financial
years. The dividends declared in August are interim distributions in respect of 2023 and 2024.
A 2024 final dividend of 121.0 pence per share (approximately \u00a3366.6 million) has been proposed. Refer to the financial narrative
for\u00a0further detail.
12c. Earnings per share
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit for the financial year after taxation attributable to equity shareholders
663.3
338.0
Weighted average number of shares \u2013 basic
306,304,676
303,989,170
Unadjusted earnings per share \u2013 basic
216.6p
111.2p
Weighted average number of shares \u2013 diluted
306,304,676
305,052,941
Unadjusted earnings per share \u2013 diluted
216.6p
110.8p
The difference between the basic and diluted number of shares at the end of 2024 (being nil; 2023: 1,063,771) 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
2024
\u00a3m
31 December
2023
\u00a3m
Authorised
500,000,00 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
0.3
During 2024, nil (2023: 3,466,950) new ordinary shares of 0.1 pence were issued to the two trusts administering the Group\u2019s share
schemes and 817,386 (2023: nil) existing shares were transferred from the Admiral Group Employee Benefit Trust ('EBT\u2019) to the
Admiral Group Share Incentive Plan Trust (\u2018SIP\u2019).
Nil (2023: 806,950) new shares were issued to the SIP for the purposes of this share scheme, resulting in cumulative shares issued
and transferred in to the SIP at 31\u00a0December 2024 of 15,317,635 (2023: 14,500,249). Of the shares issued or transferred, 4,078,403
shares remain in the Trust at 31\u00a0December 2024 (2023: 4,028,579). These shares are entitled to receive dividends.
Nil (2023: 2,660,000) new shares were issued to the EBT for the purposes of the Discretionary Free Share Scheme, resulting in
cumulative shares issued to the EBT net of transfers to the SIP of 32,391,641 (2023: 33,209,027). Of the shares issued, 3,324,258
remain in the Trust at 31\u00a0December 2024 (2023: 5,868,352) to be used for future vesting.
The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed
is\u00a09,357,119 (2023: 8,755,431).
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:
Subsidiary
Class of
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
Able Insurance Services Limited
Ordinary
100
Insurance Intermediary
EUI Limited 2
Ordinary
100
Insurance Intermediary
Admiral Insurance Company Limited
Ordinary
100
Insurance Company
Admiral Syndicate Limited
Ordinary
100
Dormant 1
Admiral Syndicate Management Limited
Ordinary
100
Dormant 1
Admiral Financial Services Limited
Ordinary
100
Financial Services
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23,
Ocean Village Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Insurance Company
Incorporated in France
Registered office: 128 Rue la Bo\u00e9tie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Insurance Intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Financial Services
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Insurance Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A. 3
Ordinary
100
Insurance Intermediary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Elephant Insurance Company
Ordinary
100 (indirect)
Insurance Company
Grove General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Platinum General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Insurance Intermediary
Elephant Holding Company LLC
Ordinary
100
Holding 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
Seren One Limited
n/a
0
Special Purpose Entity
Seren Two Limited
n/a
0
Special Purpose Entity
Associates
Registered office: Capital Tower, Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
22.80
(indirect)
Internet-based
Subscription Platform
1Exempt from audit under S480 of Companies Act 2006
2EUI Limited has branches in India and Canada
3Admiral Intermediary Services S.A. has branches in Italy and France
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\u00a0shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report.
Key management personnel received short term employee benefits in the year of \u00a35,038,734 (2023: \u00a32,900,278), post-employment
benefits of \u00a363,255 (2023: \u00a330,000) and share based payments of \u00a32,868,616 (2023: \u00a31,608,776). 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
During February 2025, the Group entered into an agreement with a third party which resulted in the sale of back book loans with
a\u00a0total carrying value of around \u00a3150 million. This agreement, signed after the reporting date, provides for the transfer of these
loans to the counterparty in accordance with the agreed terms. Accordingly, no adjustment has been made to the financial
statements for the year ended 31 December 2024.
The financial impact of the sale, including any gain arising from the transaction, will be recognised in the Group\u2019s financial
statements for the year ending 31 December 2025.
In early March 2025, Admiral entered into a memorandum of understanding with a counterparty with a view to signing a purchase
agreement to sell Elephant.\u00a0 The agreement, if signed, would be subject to regulatory approval.
No further events have occurred since the reporting date that materially impact these financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-555": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-556": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-557": { "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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-558": { "value": "
12b. Dividends
Dividends were proposed, approved and paid as follows:
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Proposed March 2023 (52.0 pence per share, approved April 2023 and paid June 2023)
\u2013
154.9
Declared August 2023 (51.0 pence per share, paid October 2023)
\u2013
152.2
Proposed March 2024 (52.0 pence per share, approved April 2024 and paid May 2024)
156.2
\u2013
Declared August 2024 (71.0 pence per share, paid October 2024)
213.6
\u2013
Total dividends
369.8
307.1
The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2022 and 2023 financial
years. The dividends declared in August are interim distributions in respect of 2023 and 2024.
A 2024 final dividend of 121.0 pence per share (approximately \u00a3366.6 million) has been proposed. Refer to the financial narrative
for\u00a0further detail.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-559": { "value": "
12c. Earnings per share
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Profit for the financial year after taxation attributable to equity shareholders
663.3
338.0
Weighted average number of shares \u2013 basic
306,304,676
303,989,170
Unadjusted earnings per share \u2013 basic
216.6p
111.2p
Weighted average number of shares \u2013 diluted
306,304,676
305,052,941
Unadjusted earnings per share \u2013 diluted
216.6p
110.8p
The difference between the basic and diluted number of shares at the end of 2024 (being nil; 2023: 1,063,771) 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-560": { "value": "
12d. Share capital
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Authorised
500,000,00 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
0.3
During 2024, nil (2023: 3,466,950) new ordinary shares of 0.1 pence were issued to the two trusts administering the Group\u2019s share
schemes and 817,386 (2023: nil) existing shares were transferred from the Admiral Group Employee Benefit Trust ('EBT\u2019) to the
Admiral Group Share Incentive Plan Trust (\u2018SIP\u2019).
Nil (2023: 806,950) new shares were issued to the SIP for the purposes of this share scheme, resulting in cumulative shares issued
and transferred in to the SIP at 31\u00a0December 2024 of 15,317,635 (2023: 14,500,249). Of the shares issued or transferred, 4,078,403
shares remain in the Trust at 31\u00a0December 2024 (2023: 4,028,579). These shares are entitled to receive dividends.
Nil (2023: 2,660,000) new shares were issued to the EBT for the purposes of the Discretionary Free Share Scheme, resulting in
cumulative shares issued to the EBT net of transfers to the SIP of 32,391,641 (2023: 33,209,027). Of the shares issued, 3,324,258
remain in the Trust at 31\u00a0December 2024 (2023: 5,868,352) to be used for future vesting.
The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed
is\u00a09,357,119 (2023: 8,755,431).
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-564": { "value": "
12e. Group related undertakings
The Parent Company\u2019s subsidiaries are as follows:
Subsidiary
Class of
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
Able Insurance Services Limited
Ordinary
100
Insurance Intermediary
EUI Limited 2
Ordinary
100
Insurance Intermediary
Admiral Insurance Company Limited
Ordinary
100
Insurance Company
Admiral Syndicate Limited
Ordinary
100
Dormant 1
Admiral Syndicate Management Limited
Ordinary
100
Dormant 1
Admiral Financial Services Limited
Ordinary
100
Financial Services
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23,
Ocean Village Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Insurance Company
Incorporated in France
Registered office: 128 Rue la Bo\u00e9tie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Insurance Intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Financial Services
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Insurance Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A. 3
Ordinary
100
Insurance Intermediary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Elephant Insurance Company
Ordinary
100 (indirect)
Insurance Company
Grove General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Platinum General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Insurance Intermediary
Elephant Holding Company LLC
Ordinary
100
Holding 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
Seren One Limited
n/a
0
Special Purpose Entity
Seren Two Limited
n/a
0
Special Purpose Entity
Associates
Registered office: Capital Tower, Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
22.80
(indirect)
Internet-based
Subscription Platform
1Exempt from audit under S480 of Companies Act 2006
2EUI Limited has branches in India and Canada
3Admiral Intermediary Services S.A. has branches in Italy and France
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-563": { "value": "
12e. Group related undertakings
The Parent Company\u2019s subsidiaries are as follows:
Subsidiary
Class of
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
Able Insurance Services Limited
Ordinary
100
Insurance Intermediary
EUI Limited 2
Ordinary
100
Insurance Intermediary
Admiral Insurance Company Limited
Ordinary
100
Insurance Company
Admiral Syndicate Limited
Ordinary
100
Dormant 1
Admiral Syndicate Management Limited
Ordinary
100
Dormant 1
Admiral Financial Services Limited
Ordinary
100
Financial Services
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23,
Ocean Village Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Insurance Company
Incorporated in France
Registered office: 128 Rue la Bo\u00e9tie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Insurance Intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Financial Services
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Insurance Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A. 3
Ordinary
100
Insurance Intermediary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Elephant Insurance Company
Ordinary
100 (indirect)
Insurance Company
Grove General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Platinum General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Insurance Intermediary
Elephant Holding Company LLC
Ordinary
100
Holding 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
Seren One Limited
n/a
0
Special Purpose Entity
Seren Two Limited
n/a
0
Special Purpose Entity
Associates
Registered office: Capital Tower, Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
22.80
(indirect)
Internet-based
Subscription Platform
1Exempt from audit under S480 of Companies Act 2006
2EUI Limited has branches in India and Canada
3Admiral Intermediary Services S.A. has branches in Italy and France
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-562": { "value": "
12e. Group related undertakings
The Parent Company\u2019s subsidiaries are as follows:
Subsidiary
Class of
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
Able Insurance Services Limited
Ordinary
100
Insurance Intermediary
EUI Limited 2
Ordinary
100
Insurance Intermediary
Admiral Insurance Company Limited
Ordinary
100
Insurance Company
Admiral Syndicate Limited
Ordinary
100
Dormant 1
Admiral Syndicate Management Limited
Ordinary
100
Dormant 1
Admiral Financial Services Limited
Ordinary
100
Financial Services
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23,
Ocean Village Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Insurance Company
Incorporated in France
Registered office: 128 Rue la Bo\u00e9tie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Insurance Intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Financial Services
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Insurance Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A. 3
Ordinary
100
Insurance Intermediary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Elephant Insurance Company
Ordinary
100 (indirect)
Insurance Company
Grove General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Platinum General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Insurance Intermediary
Elephant Holding Company LLC
Ordinary
100
Holding 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
Seren One Limited
n/a
0
Special Purpose Entity
Seren Two Limited
n/a
0
Special Purpose Entity
Associates
Registered office: Capital Tower, Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
22.80
(indirect)
Internet-based
Subscription Platform
1Exempt from audit under S480 of Companies Act 2006
2EUI Limited has branches in India and Canada
3Admiral Intermediary Services S.A. has branches in Italy and France
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-561": { "value": "
12e. Group related undertakings
The Parent Company\u2019s subsidiaries are as follows:
Subsidiary
Class of
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
Able Insurance Services Limited
Ordinary
100
Insurance Intermediary
EUI Limited 2
Ordinary
100
Insurance Intermediary
Admiral Insurance Company Limited
Ordinary
100
Insurance Company
Admiral Syndicate Limited
Ordinary
100
Dormant 1
Admiral Syndicate Management Limited
Ordinary
100
Dormant 1
Admiral Financial Services Limited
Ordinary
100
Financial Services
Company
Incorporated in Gibraltar
Registered office: 2Aa 2nd Floor, Leisure Island Business Centre, 23,
Ocean Village Promenade, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Ordinary
100
Insurance Company
Incorporated in France
Registered office: 128 Rue la Bo\u00e9tie, 75008 Paris
Pioneer Intermediary Europe Services
Ordinary
100 (indirect)
Insurance Intermediary
Incorporated in Italy
Registered office: Via Della Bufalotta 374, 00139 Roma
Admiral Financial Services Italia S.P.A.
Ordinary
100
Financial Services
Company
Incorporated in Spain
Registered office: Calle Rodr\u00edguez Mar\u00edn 61 1\u00aa Planta, 28016 Madrid
Admiral Europe Compa\u00f1\u00eda de Seguros, S.A.
Ordinary
100
Insurance Company
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A. 3
Ordinary
100
Insurance Intermediary
Incorporated in the United States of America
Registered office: 8801 Park Central Drive, Suite 500, Richmond, VA 23227
Elephant Insurance Company
Ordinary
100 (indirect)
Insurance Company
Grove General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Platinum General Agency Inc
Ordinary
100 (indirect)
Insurance Intermediary
Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801
Elephant Insurance Services LLC
Ordinary
100 (indirect)
Insurance Intermediary
Elephant Holding Company LLC
Ordinary
100
Holding 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
Seren One Limited
n/a
0
Special Purpose Entity
Seren Two Limited
n/a
0
Special Purpose Entity
Associates
Registered office: Capital Tower, Greyfriars Road, Cardiff, Wales, CF10 3AD
Wagonex Limited
Ordinary
22.80
(indirect)
Internet-based
Subscription Platform
1Exempt from audit under S480 of Companies Act 2006
2EUI Limited has branches in India and Canada
3Admiral Intermediary Services S.A. has branches in Italy and France
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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-565": { "value": "UK, Europe and the US", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-568": { "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\u00a0shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report.
Key management personnel received short term employee benefits in the year of \u00a35,038,734 (2023: \u00a32,900,278), post-employment
benefits of \u00a363,255 (2023: \u00a330,000) and share based payments of \u00a32,868,616 (2023: \u00a31,608,776). 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-567": { "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\u00a0shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report.
Key management personnel received short term employee benefits in the year of \u00a35,038,734 (2023: \u00a32,900,278), post-employment
benefits of \u00a363,255 (2023: \u00a330,000) and share based payments of \u00a32,868,616 (2023: \u00a31,608,776). 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-566": { "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\u00a0shareholdings of key management personnel set out in the Directors\u2019 Remuneration Report.
Key management personnel received short term employee benefits in the year of \u00a35,038,734 (2023: \u00a32,900,278), post-employment
benefits of \u00a363,255 (2023: \u00a330,000) and share based payments of \u00a32,868,616 (2023: \u00a31,608,776). 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": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-569": { "value": "
12g. Post balance sheet events
During February 2025, the Group entered into an agreement with a third party which resulted in the sale of back book loans with
a\u00a0total carrying value of around \u00a3150 million. This agreement, signed after the reporting date, provides for the transfer of these
loans to the counterparty in accordance with the agreed terms. Accordingly, no adjustment has been made to the financial
statements for the year ended 31 December 2024.
The financial impact of the sale, including any gain arising from the transaction, will be recognised in the Group\u2019s financial
statements for the year ending 31 December 2025.
In early March 2025, Admiral entered into a memorandum of understanding with a counterparty with a view to signing a purchase
agreement to sell Elephant.\u00a0 The agreement, if signed, would be subject to regulatory approval.
No further events have occurred since the reporting date that materially impact these financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-570": { "value": "
13. Business combinations
As at 2nd April 2024, Admiral successfully completed the purchase of the direct Home and Pet renewal rights from the RSA
Insurance Group Limited (\u2018RSA\u2019), a general insurer based in the UK. The transaction includes the renewal rights, the \u201cMore Than\u201d
brand and the transfer of more than 280 people but does not include liabilities relating to existing policies which will remain with
RSA. The acquisition is closely aligned to Admiral\u2019s strategy to diversify its product offering and build multi-product customer
relationships in its core markets. It will strengthen Admiral\u2019s home business and accelerate its direct pet proposition launched
in\u00a02022.
The consideration included an initial cash payment of \u00a382.5 million with contingent consideration of \u00a332.5 million. The contingent
consideration has a range of \u00a3nil to a maximum of \u00a332.5 million dependent on the number of policies successfully migrated to
Admiral. The fair value of the contingent consideration has a value of \u00a32.7 million and is based on a probability weighted scenario
including an element of discounting relating to the timing of payments.
The amounts recognised in respect of the identifiable assets acquired at at the acquisition date are as set out in the table below:
\u00a3m
Total consideration
Amount settled in cash
82.5
Fair value of contingent consideration
2.7
Total consideration
85.2
Identifiable assets acquired
Renewal Rights
36.4
Brand
8.1
Total identifiable assets acquired
44.5
Purchase price recognised as Goodwill
40.7
Additional Goodwill recognised on Deferred Tax Liability
9.1
Total Goodwill recognised on acquisition
49.8
A deferred tax liability has been recognised of \u00a39.1 million based upon a tax base cost of \u00a336.4 million representing the fair value
of\u00a0the renewal rights. A corresponding increase in goodwill of \u00a39.1 million is recognised as a result. The goodwill and brand are
not\u00a0considered deductible for tax purposes. The deferred tax liability will unwind in line with the amortisation of the renewal
rights\u00a0acquired.
The recognition of goodwill reflects the synergies arising through the transaction including operational, capital, pricing and risk
synergies, as well as the attributable value to the workforce in place.
The policies in relation to the acquisition started renewing in July 2024. As at 31\u00a0December 2024, transaction costs of \u00a36.5 million
have been recognised within operating expenses, along with integration costs of \u00a311.9 million within insurance expenses.
The\u00a0impact of the acquisition if it had happened as at the start of the reporting period is impractical for disclosure given the nature
of the trade and assets acquired for integration.
The acquisition contributed \u00a342.3 million of total premiums written and \u00a39.9 million of insurance revenue, and \u00a33.8 million
of\u00a0expenses for the period between the date of acquisition and the reporting date. Due to the acquired renewal rights being fully
integrated into the existing business lines, it is impracticable to separately identify the specific profit contributions..
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:213800FGVM7Z9EJB2685", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-571": { "value": "
14. Reconciliation of turnover to reported insurance premium and other revenue as per the financial
statements
The following ta ble 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.
Note
31 December
2024
\u00a3m
31 December
2023
\u00a3m
Insurance revenue related movement in liability for remaining coverage
5b
4,776.2
3,486.1
Less other insurance revenue
(281.7)
(202.8)
Insurance premium revenue
4,494.5
3,283.3
Movement in unearned premium and cancellations
346.7
528.3
Premiums written after coinsurance
4,841.2
3,811.6
Co-insurer share of written premiums
778.4
577.8
Total premiums written
5,619.6
4,389.4
Other insurance revenue
5b
281.7
202.8
Other revenue
8
136.3
127.2
Interest income on loans to customers
109.1
92.1
Turnover as per note 4 of financial statements
6,146.7
4,811.5
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 2024
\u00a3m
Consolidated
Financial
Statement Note
Core product
Ancillary income
Total gross
Total, net of XoL
reinsurance
Insurance premium revenue
4,329.9
164.6
4,494.5
4,329.4
Administration fees, instalment income and
non-separable ancillary commission
\u2013
281.7
281.7
281.7
Insurance revenue (A)
5b/5d
4,329.9
446.3
4,776.2
4,611.1
Insurance expenses (B)
5c
(951.4)
(64.5)
(1,015.9)
(1,015.9)
Claims incurred (C)
5c/5d
(2,976.9)
(61.1)
(3,038.0)
(2,980.7)
Claims releases (D)
5c/5d
556.8
3.2
559.9
425.1
Claims incurred and releases excluding
Ogden1 (E)
(2,661.7)
Quota share reinsurance result2 4
(294.1)
Onerous loss component movement3
1.5
Underwriting result (F)
747.0
Net share scheme costs4
(36.7)
Insurance service result
710.3
Reported loss ratio ((C+D)/A)
55.4%
Reported loss ratio excluding Ogden1 (E/A)
57.7%
Reported expense ratio (B/A)
22.0%
Insurance service margin (F/A)
16.2%
31 December 2023
\u00a3m
Consolidated
Financial
Statement Note
Core product
Ancillary income
Total gross
Total, net of XoL
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 result2 4
(40.4)
Onerous loss component movement3
4.9
Underwriting result (E)
342.6
Net share scheme costs4
(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 Excludes benefit from the Ogden discount rate change
2Quota share reinsurance result excludes quota share reinsurers\u2019 share of share scheme costs and movement in onerous loss-recovery component
3 Onerous loss component movement is shown net of all reinsurance
4Net share scheme costs of \u00a336.7 million (2023: \u00a336.8 million), being gross costs of \u00a358.6 million (2023: \u00a355.3 million, see note 5c) less reinsurers\u2019 share of share scheme costs
of \u00a321.9 million (2023: \u00a318.5 million) are excluded from the underwriting result.
1b. Reconciliation of reported loss and expense ratios: UK Motor
31 December 2024
\u00a3m
Consolidated
Financial
Statement
Note
Core product
Ancillary
income1
Total gross
Total, net of
XoL
reinsurance
Core product,
net of XoL
Total premiums written
4,006.6
151.1
4,157.7
4,033.3
3,882.2
Gross premiums written
3,234.1
151.1
3,385.2
3,284.7
3,133.6
Insurance premium revenue
3,020.7
139.8
3,160.5
3,062.4
2,922.5
Instalment income
\u2014
155.9
155.9
155.9
\u2013
Administration fees & non-separable
ancillary commission
\u2014
53.1
53.1
53.1
\u2013
Insurance revenue (A)
5b/5d
3,020.7
348.8
3,369.5
3,271.4
2,922.5
Insurance expenses (B)
5c
(530.9)
(55.9)
(586.8)
(586.8)
(530.9)
Claims incurred (C)
5c/5d
(2,051.5)
(55.6)
(2,107.2)
(2,078.1)
(2,022.5)
Claims incurred excluding Ogden (D)
(2,078.5)
(55.6)
(2,134.1)
(2,105.1)
(2,049.5)
Claims releases (E)
5c/5d
493.4
2.7
496.1
374.6
371.9
Claims releases excluding Ogden (F)
414.2
2.7
416.9
295.4
292.7
Insurance service result, gross of quota
share reinsurance
931.7
240.0
1,171.7
981.1
741.0
Quota share reinsurance result2
(228.8)
(228.8)
Onerous loss component movement
1.1
1.1
Underwriting result (G)
753.4
513.3
Current period loss ratio (C/A)
63.5%
69.2%
Claims releases (E/A)
(11.4%)
(12.7%)
Reported loss ratio ((C+E)/A)
52.1%
56.5%
Reported expense ratio (B/A)
17.9%
18.2%
Insurance service margin (G/A)
23.0%
17.6%
Current period loss ratio excluding
Ogden (D/A)
64.3%
70.1%
Claims releases excluding Ogden (F/A)
(9.0%)
(10.0%)
Reported loss ratio excluding
Ogden ((D+F)/A)
55.3%
60.1%
31 December 2023
\u00a3m
Consolidated
Financial
Statement
Note
Core product
Ancillary
income1
Total gross
Total, net of
XoL
reinsurance
Core product,
net of XoL
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
Insurance service result, gross of quota
share reinsurance
277.8
172.6
450.4
401.2
228.6
Quota share reinsurance result2
(16.8)
(16.8)
Onerous loss component movement
4.1
4.1
Underwriting result (E)
388.5
215.9
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%
Insurance service margin (E/A)
17.8%
11.1%
1Ancillary 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 \u00a3321.8 million (2023: \u00a3247.3 million).
2 Net share scheme costs of \u00a329.6 million (2023: \u00a332.1 million), being gross costs of \u00a340.7 million (2023: \u00a343.2 million, see note 5c) less reinsurers\u2019 share of share scheme costs
of \u00a311.1 million (2023: \u00a311.1 million) are excluded from the underwriting result.
1c. Reconciliation of reported loss and expense ratios: UK Non-Motor
31 December 2024
\u00a3m
Consolidated
Financial
Statement
Note
UK Household
UK Travel &
Pet
UK Non-Motor
UK Household,
net of XoL
reinsurance
Insurance revenue (A)
5b/5d
399.6
104.3
503.9
376.4
Insurance expenses (B)
5c
(102.9)
(56.0)
(158.9)
(102.9)
Claims incurred in the period (C)
5c/5d
(233.7)
(64.5)
(298.2)
(225.7)
Changes in liabilities for incurred claims (releases) (D)
5c/5d
46.3
5.1
51.4
37.0
Insurance service result, gross of quota share
reinsurance
109.3
(11.1)
98.2
84.8
Quota share reinsurance result1
(61.2)
Onerous loss component movement
\u2013
Underwriting result (E)
23.6
Current period loss ratio (C/A)
60.0%
Claims releases (D/A)
(9.9%)
Reported loss ratio ((C+D)/A)
50.1%
Reported expense ratio (B/A)
27.3%
Insurance service margin (E/A)
6.3%
31 December 2023
\u00a3m
Consolidated
Financial
Statement
Note
UK Household
UK Travel &
Pet
UK Non-Motor
UK Household,
net of XoL
reinsurance
Insurance revenue (A)
5b/5d
292.8
53.8
346.6
275.3
Insurance expenses (B)
5c
(80.9)
(27.4)
(108.3)
(80.9)
Claims incurred in the period (C)
5c/5d
(223.5)
(31.4)
(254.9)
(199.8)
Changes in liabilities for incurred claims (releases) (D)
5c/5d
8.3
0.8
9.1
6.4
Insurance service result, gross of quota share
reinsurance
(3.3)
(4.2)
(7.5)
1.0
Quota share reinsurance result1
(1.4)
Onerous loss component movement
\u2013
Underwriting result (E)
(0.4)
Current period loss ratio (C/A)
72.6%
Claims releases (D/A)
(2.4%)
Reported loss ratio ((C+D)/A)
70.2%
Reported expense ratio (B/A)
29.4%
Insurance service margin (E/A)
(0.1%)
1Net share scheme costs of \u00a31.6 million (2023: \u00a30.7 million), being gross costs of \u00a35.4 million (2023: \u00a32.4 million, see note 5c) less reinsurers\u2019 share of share scheme costs
of \u00a33.8 million (2023: \u00a31.7 million) are excluded from the underwriting result.
1d. Reconciliation of reported loss and expense ratios: International
31 December 2024
\u00a3m
Consolidated
Financial
Statement
Note
Total gross
Total, net of
XoL
reinsurance
Insurance revenue (A)
5b/5d
829.5
794.2
Insurance expenses (B)
5c
(236.5)
(236.5)
Claims incurred in the period less changes in liabilities for incurred claims (C)
5c/5d
(572.6)
(564.5)
Insurance service result, gross of quota share reinsurance
20.4
(6.8)
Quota share reinsurance result1
(4.1)
Onerous loss component movement
0.4
Underwriting result (D)
(10.5)
Reported loss ratio (C/A)
71.1%
Reported expense ratio (B/A)
29.8%
Insurance service margin (D/A)
(1.3%)
31 December 2023
\u00a3m
Consolidated
Financial
Statement
Note
Total gross
Total, net of
XoL
reinsurance
Insurance revenue (A)
5b/5d
842.6
811.8
Insurance expenses (B)
5c
(249.4)
(249.4)
Claims incurred in the period less changes in liabilities for incurred claims (C)
5c/5d
(596.9)
(565.2)
Insurance service result, gross of quota share reinsurance
(3.7)
(2.8)
Quota share reinsurance result1
(22.1)
Onerous loss component movement
0.6
Underwriting result (D)
(24.3)
Reported loss ratio (C/A)
69.6%
Reported expense ratio (B/A)
30.7%
Insurance service margin (D/A)
(3.0%)
1Net share scheme costs of \u00a34.3 million (2023: \u00a33.2 million), being gross costs of \u00a311.1 million (2023: \u00a38.9 million, see note 5c) less reinsurers\u2019 share of share scheme costs of \u00a36.8
million (2023: \u00a35.7 million) are excluded from the underwriting result.
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