2007 Half Year Results September 2007
Admiral Is STILL Different 2004 2005 2006 2007 � Highly Profitable a a a a � Fast Growing a a a a � Low Risk Profits a a a a � a a a a Strongly Cash Generative 2
Highlights � Profit up 26% at £86.3m (H1 2006: £68.7m) � Total interim dividend of 20.6p, up 70% (H1 2006: 12.1p) � Group turnover up 16% at £417.8m (H1 2006: £359.2m) � Profit from ancillary products and services up 15% to £37.7m (H1 2006: £32.9m) � Vehicle count up 16% to 1.4m (H1 2006: 1.2m) � Confused profit of £19.7m (H2 2006: £14.7m) 3
Fast Growing m) (1) (1) Historical Revenue Growth (£ £m) Historical Revenue Growth ( £708m £638m £548m £427m £379m £323m £263m £207m £150m £120m £100m £73m £47m £18m 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 £418m £359m £319m H1 05 H1 06 H1 07 (1) Revenue comprises total premiums written + other revenue + allocated investment income 4
Highly Profitable Profit before tax (£ £m) m) Profit before tax ( £147.3m £86.3m £119.5m 17% £98.1m £68.7m £74.0m 11% 20% £50.3m £55.6m 23% 14% 27% 13% 10% (1) (2) 2002 2003 2004 2005 2006 59% 53% 49% Non-underwriting result Confused Profit commission Underwriting profit H1 05 H1 06 H1 07 (1) £6m Munich Re profit commission re-allocated from 2004 to 2003 result. (2) Figures up to 2004 also adjusted for goodwill amortisation, ESOT transactions and bonuses in lieu of dividends. 5
Low Risk Profits - Growing Ancillary Income – UK Motor m) (1) (1) Ancillary Contribution (£ £m) Ancillary Contribution ( Average active vehicles (000s) 1,256 1,173 1,111 1,058 893 728 £81.5m £72.5m 2003 2004 2005 2006 H106 H107 £59.2m Contribution per average active vehicle £45.3m £44.7m £40.1m £69.30 £69.20 £68.50 £68.40 £66.30 £36.0m £62.40 2003 2004 2005 2006 H1 06 H1 07 2003 2004 2005 2006 H1 H1 H1 05 06 07 (1) Before allocation of overhead expenses 6
Confused.com £23.1m (1) Profit £8.8m £19.7m £2.0m £0.3m 2003 2004 2005 2006 £14.3m £8.7m H1 06 H2 06 H1 07 (1) Confused profit includes revenue from Group brands. 7
Confused.com Quotes Revenue per quote 9.0m 7.1m £5.83 £5.10 5.0m £5.06 4.1m 4.1m £4.81 £4.54 £3.59 1.4m 0.6m 2003 2004 2005 2006 H1 06 H2 06 H1 07 H1 2006 H2 2006 H1 2007 Other Motor Other Home Motor 8
Media Spend Car insurance TV and press spend (£m) 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Non price comparison media spend Price comparison spend Source: AC Nielsen 9
Media Spend Car insurance TV and press spend (£m) 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Confused spend Other price comparison Source: AC Nielsen 10
The Market
Underwriting Performance – Expense Ratio (1) UK Expense Ratio Advantage (1) UK Expense Ratio Advantage (1) 28% 29% 27% Market 28% 27% 27% 18% 16% 16% 15% Admiral 16% 15% 15% 2001 2002 2003 2004 2005 2006 H107 Total Market (Earned Basis) Admiral (Earned Basis) (1) Including claims handling expenses. Market: UK Motor 2001–2004, UK Private Motor 2005-2006. 12
Underwriting Performance – Loss Ratio Loss Ratios – Q2 ‘07 Loss Ratios – End ‘06 (4) (4) 83% 78% 84% 78% Market (1) 78% 83% 78% 75% 76% Market (1) 75% 77% 77% 76% 70% 67% 64% (-3%) 62% (-2%) 54% 51% 54% 54% (+1%) 54% 50% Admiral Admiral 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Total Market (Pure year results before reserve releases) Total Market (Pure year results before reserve releases) Admiral (Ultimate Best Estimate at June 07) Admiral (Best Estimate of Ultimate at Dec 06) (1) Excludes claims handling expenses. Market: Motor 2001-2004, Private Motor Market 2005-2006. 13
Drivers of Market Profitability Combined Ratio Excluding Reserve Releases (%) 2006 v 2005 116 113 Predicted Actual 111 Average Premium + 1.1% - 1.8% Claim Frequency + 1.6% + 6.1% Claim Inflation + 4.5% - 4.7% ’05 ’06 ’06 Actual Predicted Actual Source EMB Analysis of Treasury Returns (2006 excluding CIS) 14
Frequency & Cost – Long-Term Trends Frequency (%) 17.7 - 1.0% p.a. 17.4 16.9 16.8 16.5 Cost per Vehicle Year 15.9 306 303 +2.3% p.a. 289 287 '01 '02 '03 '04 '05 '06 276 275 Average Claim (£1) +3.3% p.a. 1906 1821 1740 1710 1586 1554 '01 '02 '03 '04 '05 '06 '01 '02 '03 '04 '05 '06 Source: EMB Analysis of Treasury Returns. Comprehensive cover only. 15
Private Motor Profitability Long Live The Cycle The Cycle is Dead Combined Ratio After Releases (% Premium) Combined Ratio Before Releases (% Premium) 125 123 123 120 120 119 114 113 113 115 110 110 105 105 104 103 102 104 105 104 103 102 101 100 94 91 8.4 % % 6.5 4.2 4 3.9 3.6 3 2.3 1.3 1.3 0.2 -1.8 -1 '94 '95 '96 '97 '98 '99 '00 ’01 '02 '03 '04 '05 '06 '94 '95 '96 '97 '98 '99 '00 ’01 '02 '03 '04 '05 '06 = Reserve Releases (% Premium) Market: 1994-2004 Motor Market, 2005-2006 Private Motor Market., excludes CIS. 16
When Will Reserve Releases Reduce? Private Motor – Paid / Incurred* First Half Results Announcements 49 48 47 47 H107 Reserve Releases (£m) 46 H107 H106 Aviva 245 140 + 75% RSA 175 67 + 161% '02 '03 '04 '05 '06 * Source: EMB Analysis of Treasury Returns. Comprehensive cover only. 17
Pricing Activity (% Change) 2.2 2.2 2.1 2.0 AA Shoparound Market 0.9 Deloittes Best Price -0.1 -0.3 Q3 06 Q4 06 Q1 07 Q2 07 Jul-07 3.1 -1.4 -1.6 1.9 Admiral 0.7 0.7 -0.5 Conversion* – July 07 Conversion * – July 06 Non-Price Comparison 103 Non-Price Comparison 100 * Average of direct to site conversion and phone conversion (July 06 = 100). 18
The Long View Market Share (units) 1996-2006 - Shrinkers 1996 2001 2006 48.3 8.5 Zurich 34.8 Axa 8.9 5.0 25.2 5.6 13.5 RSA 5.5 7.6 1.8 5.4 17.4 Aviva 16.6 12.5 * Market share of FSA reporting firms pus Admiral. Allocation of companies to their 2006 owners. (e.g. Guardian in 1996 to “Axa”). 19
The Long View Market Shares (units) 1996-2006* - Growers 1996 2001 2006 49.7 5.3 6.4 36.3 2.4 5.2 26.0 Admiral 1.5 4.2 Fortis 38.0 28.7 20.3 RBS * Market share of FSA reporting firms plus Admiral. Allocation of acquired companies to their 2006 owners. (e.g. Churchill in 1996 to “RBS”). 20
Price Comparison – New Growers & Shrinkers ? Market Share (units)* 2001 2004 2006 100 100 100 Other 25.1 28.9 29.9 25.2 24.8 Shrinkers 34.8 49.7 Growers 45.3 36.3 21
Price Comparison – New Rules ’06 v ’04 2001 2004 2006 Unit Growth RBS 38.0 35.2 + 64% Keys to Success 5.1 3.1 28.7 NIG 3.1 * Low expense ratio + 1% 32.9 32.1 Direct 25.6 * Accurate pricing * Maximum add-on revenue 5 5.5 3.9 Zurich + 41% 5.3 4.1 2.4 + 28% Admiral 22
23 Admiral goes international
24
25 Admiral goes international
Italy: a large profitable market Gross Written Premiums (£b) 14.6 14.4 14.4 •Second biggest market in Europe: 15.0 14.0 •Second biggest market in Europe: 13.3 12.3 £14.6 b 15% MOD £14.6 b 13.0 11.4 10.7 11.0 9.7 9.0 •Highest vehicle density: •Highest vehicle density: 7.0 85% MTPL 0.86 per person 0.86 per person 5.0 3.0 1.0 •High average private car premium: •High average private car premium: £ 330 £ 330 1998 1999 2000 2001 2002 2003 2004 2005 2006 Underwriting Results 115.0 120 113.4 109.4 102.7 96.3 93.5 100 94.0 Combined Ratio 92.6 92.6 74.8 80 Loss Ratio 60 40 18.7 20 Expense Ratio 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: ANIA 2006-2007 Exchange £:€ = 1:1.48 26
Italian market evolution 3% 6% Agents Italy is still dominated by tied agents, Direct Others 91% Internet Penetration Online Insurance B2C +28% +20% 60% 300 £ m but online business is growing fast 40% 200 20% 100 0% 0% 2003 2006 2005 2006 Direct Indemnity / reduced litigation costs No tied-agents mandates allowed and new regulations aim at increase Stricter transparency requirements number of switchers and price sensitivity! Customer education initiatives Authorities restructuring Source: Forrester Consumer Technographics, Nov 2005 & Online Insurance Forecast 06-11 (1) Include brokers and all insurance products, but car insurance is the main product. 27
Investments H1 07 £460m H1 06 £408m 4% 23% 27% 40% 9% 68% 29% Gilts Bonds Money Market Funds Other deposits 5.2% Cash Other deposits Cash £11.3m 2.9% Money Market Funds SWIP (Lloyds) Global Liquidity £5.8m Insight (HBOS) Liquidity Fund HSBC Sterling Liquidity Fund � AAA Rated H1 2006 H1 2007 � 7-day LIBID benchmark Investment Income Return on Investment Funds � Maximum 60 day maturity 28
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