2007 Full Year Results March 2008
Summary Wow! 2007 - Great Year! Profits Policyholders Dividends Combined ratio Confused.com German launch FTSE 100 Financial Times Best Companies to Work For Sunday Times 100 Best Companies to Work For Great momentum going forward for 2008 2
Admiral goes international The obvious targets: GWP No of vehicles UK £13bn 32m a Spain £8bn 20m a Germany £15bn 45m a Italy £14bn 34m France £12bn 31m USA £110bn 236m 3
Germany � Launched 16 October 2007 � Almost 9,000 policyholders on 1 January 2008 � First claim 2 January, 5.30am, customer hit a boar � Won’t be much more to add at the half year 4
Italy � Launch later in 2008 � Talking with Munich Re � No concentration of 1 January renewals 5
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Spanish Market Market GWP Evolution Direct Players in 2007 12.5m 12.2m 11.5m 11.2m Market 10.6m Direct Players GWP (m€) Growth Share 8.9m 9.8m Línea Directa 644 3,1% 5,13% 8.0m Direct Seguros 210 7,8% 1,67% Génesis 201 4,8% 1,60% Fénix Directo 56 12,8% 0,45% Balumba 21 2000% 0,17% Clickseguros 2 new 0,01% TOTAL 1.133 6,9% 9,0% Mutua Madrileña 1.216,4 5,2% 9,69% 2000 2001 2002 2003 2004 2005 2006 2007 GWP €m Source: ICEA 7
Balumba Balumba’s results Quotes index per month - Seasonality � £0.7m Loss � 47,000 Customers (2006: 2,200) � £16.6m Spanish turnover � 141% Loss ratio � 91% Expense ratio � 232% Combined ratio Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- 07 07 07 07 07 07 07 07 07 07 07 07 � £45 Ancillary contribution per policy Quotes index 8
Financials
Investments Monthly investment return 32% 6.5 6.0 68% 5.5 % return net of fees Money Market Funds Cash 5.0 £11.3m 4.5 Money Market Funds 4.0 SWIP (Lloyds) Global Liquidity £5.8m 3.5 Insight (HBOS) Liquidity Fund HSBC Sterling Liquidity Fund 3.0 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 � AAA Rated Insight Liquidity Fund HSBC Liquidity Fund SWIP Global Liquidity Fund 7-day LIBID Rolling 1 Month Average � 7-day LIBID benchmark � Maximum 60 day maturity 10
Expense Ratio Split of UK expense ratio Split of Group expense ratio 17.7% 16.7% 15.6% 15.8% 15.7% 15.6% 15.1% 15.0% 15.1% 15.0% 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Acquisition Non-acquisition Levies UK International 11
UK expense ratio 2008 � Increasing premium retention increases the expense ratio � A mathematical impact due to: � Timing difference between premium and expense recognition � Recognise 50% of premium but 75% of expenses in 2008 � Impact should be around +0.8% � Same effect would be true in a year of high premium growth 12
Underwriting Flexibility Admiral option on UK premium retention 50% 55% 45% 40% 40% 5% 7.5% 10% 35% 30% 7.5% 22.5% 10% 15% 27.5% 25% 25% 25% 25% 2008 2009 2010 2011 2012 Admiral minimum Admiral optional Swiss Re Partner Re Munich Re � Spain and Germany premium - split 35% Admiral; 65% Munich Re 13
Solvency Capital Insurers’ balance sheets Historical debt spreads (1) (1) Equity Debt 450 Aviva 58% 42% 400 350 Allianz 79% 21% 300 Axa 62% 38% Spread to Gilts (bps) 250 Generali 50% 50% 200 Mapfre 70% 30% 150 RSA 67% 33% 100 50 Average 64% 36% 0 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Aviva LT2 Prudential LT2 AXA LT2 Old Mutual LT2 Amlin LT2 AXA T1 Admiral current 100% 0% (1) Source: Deutsche Bank (1) 14
Dividends £m CAGR: +33% CAGR: +33% Total equity 238 43.8p Goodwill (62) 36.1p Solvency capital (84) 91 24.6p 40% Buffer (25) International Expansion (5) Dividend 61 2005 2006 2007 Normal dividend Special dividend Lloyd's H2 2007 – 23.2p per share Ex-dividend - 9 April 2008 Record date - 11 April 2008 Payment date - 7 May 2008 15
Confused.com
Confused.com Profit (1) Quotes £36.7m 13.0m 9.0m £23.1m 4.1m £8.8m 0.6m 1.4m £0.3m£2.0m 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Other Motor (1) Confused profit includes revenue from Group brands. 17
Confused.com Income 25,000 20,000 15,000 Income £000 10,000 5,000 0 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 MOTOR INCOME OTHER INCOME 18
Confused.com Quotes 4,000 3,500 3,000 2,500 Quotes (000s) 2,000 1,500 1,000 500 0 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 MOTOR QUOTES HOME QUOTES OTHER QUOTES 19
Confused.com Revenue per quote £6.25 £5.20 £4.92 £5.46 £3.96 £4.81 £4.54 £3.59 H1 2006 H2 2006 H1 2007 H2 2007 Other Motor 20
The Market
Loss Ratio – AGL Presentation September ‘07 (4) Market 84% 78% 78% 82% Drawbacks 75% 77% 76% Excludes market releases 67% Admiral 62% Includes Admiral 54% 51% releases 54% 2001 2002 2003 2004 2005 2006 Total Market (Pure year results before reserve releases) Admiral (Ultimate Best Estimate at June 07) 22
Loss Ratio – Sustained Outperformance v. Market (4) (4) 85% Private Motor market (Reported at 80% 80% Dec '06 - Reserve Releases Allocated Back) Market 75% Private Motor Market - Citigroup's 76% view of ultimate ultimate (Sep 76% '07) 71% 72% 73% 69% 70% 67% 70% 68% 62% Admiral (Best Estimate of Ultimate 65% at Jun '07 - Reserve Releases Allocated Back 60% Admiral - Citigroup's view of Admiral ultimate ultimate (Sep '07) 54% 54% 51% 2001 2002 2003 2004 2005 2006 Source:Citigroup Analysis (Sep ’07)
Loss Ratio – Sustained Outperformance v. Market (4) (4) Private Motor Market - 80% Citigroup's view of ultimate ultimate (Sep '07) Market 72% 76% 73% 70% 70% 68% Admiral - Citigroup's view of ultimate ultimate (Sep '07) 65% 60% Admiral 54% 54% 51% 2001 2002 2003 2004 2005 2006 Source:Citigroup Analysis (Sep ’07)
Loss Ratio Updated – Continued Positive Development 85% (4) (4) 80% 80% 75% 77% (-2) 74% 76% 71% 72% Market 69% 73% 70% 70% 65% 68% 60% 64% (-3) 59% Movement in 54% 54% six months to Admiral (-3) 51% December ’07 52% 50% (-2) (-1) 2001 2002 2003 2004 2005 2006 2007 Private Motor Market (Reported at Dec '06 - Reserve Releases Allocated Back) Private Motor Market - Citigroup's view of ultimate ultimate (Sep '07) Admiral (Best Estimate of Ultimate at Dec '07) Admiral - Citigroup's view of ultimate ultimate (Sep '07)
Combined Ratio 109% 100% Market 97% 104% 100% 95% Market = Expense ratio plus 79% Citigroup (Sep '07) ultimate ultimate 86% 72% loss ratio projections 68% Admiral 74% Admiral = Expense ratio plus lower 66% of Citigroup (Sep '07) ultimate ultimate loss ratio projection and Admiral's Dec '07 best estimate of ultimate 2001 2002 2003 2004 2005 2006 26
Loss Ratio – AGL Presentation September ‘07 (4) Market 84% 78% 78% 82% Drawbacks 75% 77% 76% Excludes market releases 67% Admiral 62% Includes Admiral 54% 51% releases 54% 2001 2002 2003 2004 2005 2006 Total Market (Pure year results before reserve releases) Admiral (Ultimate Best Estimate at June 07) 27
Combined Ratio 109% 100% Market 97% 104% 100% 95% Market = Expense ratio plus 79% Citigroup (Sep '07) ultimate ultimate 86% 72% loss ratio projections 68% Admiral 74% Admiral = Expense ratio plus lower 66% of Citigroup (Sep '07) ultimate ultimate loss ratio projection and Admiral's Dec '07 best estimate of ultimate 2001 2002 2003 2004 2005 2006 28
Distribution Trends – Shift To Internet Aug/Sept ’06 Aug/Sept ’07 (% NB Sales, Market) (% NB Sales, Market) Other Internet Other Internet 37 43 57 63 29
Distribution Trends – Shift to Price Comparison Aug/Sept ’06 Aug/Sept ’07 (%NB Sales) (%NB Sales) Price Price Comparison Off-line Comparison Sites Off-line Marketing* Sites Marketing* Driven 23 Driven 35 37 43 13 On-line Marketing 9 21 19 On-line Marketing * Included on-line categories largely driven by off-line, notably brand search terms. 30
Pricing Activity 2007 Q4 Q1 Q2 Q3 Full Year 5.5 Market * 4 3.9 AA Shoparound* 2.2 2.1 1.6 Deloittes Best Price 0.6 -0.1 -0.3 -0.5 4.4 Admiral * 2.3 1.8 0.5 -0.1 * AA Shoparound, new business comprehensive cover only. Deloittes new business all cover. Admiral, new business, all cover. 31
Lower Marketing Efficiency, Not Lower Spends TV and Press Spend (£m) – “Traditional” Advertisers * Nov ’06-Jan ’07 Nov ‘07-Jan ‘08 Aug/Sept ’06 Aug/Sept ’07 25.0 19.8 14.9 8.8 - 41% + 26% * Car insurance advertisers, excluding price comparison sites. Source Nielsen. 32
Prospects for 2008 – Market As A Whole Price Comparison Sites Re-Writing The Rules market concentration customer “loyalty” marketing efficiency role of brand Key Drivers of 2008 Pricing Current profitability Frequency Reserve releases Appetite Sharebuilders’ ambitions Laggards’ stamina 33
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