Admiral Share Discussion Threads

[simon cawkwell] 20/4/2008 19:42

saintloup,

OK. But just what "insurance services" and "services complementing the motor policy" are these?

And to what extent are these sales separately delineated from insurance sales? After all, half the profit is thus derived. It must have a distinct commercial nature.

Simon Cawkwell

[saintloup] 10/4/2008 10:43

Re ancillary income, tyr reading the annual report. Here's what it says on page 17 of the 2007 one:

Ancillary profit & instalment income
This is primarily made up of commissions and fees earned on sales of insurance products and
services complementing the motor policy, but which are underwritten by external parties. It
continues to be a major component of Group profit.

Clear enough?

[simon cawkwell] 09/4/2008 20:10

Gentlemen,

Despite quite a bounce in FTSE, ADM resolutely trends down.

I contacted Merrill for an explanation of this ancillary income. No reply was forthcoming.

So, for the bulls, I fear the worst. However, for me, I welcome the best.

Simon Cawkwell

[sat69] 20/3/2008 18:40

Closed at 782p. I'll be looking to buy in next week if we stay at these levels.

[stromboli1] 16/3/2008 19:43

Simon Cawkwell,

I wonder if you managed to speak to Merrill on the ancillary issue?

[bugs22] 14/3/2008 15:35

See that Evil considers this his star major short for 2008 with a target of below 500p. Seems he has issues with the nature and maintainability of the ancillary income. No position personally but will watch with interest.

[sat69] 13/3/2008 19:36

Good luck Groats - You should be in profit tomorrow :-)

[groats118] 13/3/2008 19:34

Sat,

Good luck.

I've entered at 815p, may be a bit premature, 800p could be tested again in this topsy turvy market, but time will tell. Looking for a strong finish today on the Dow and a nice rise to the late 800's tomorrow and then hopefully back to some make sense levels!

Fingers xxx

[sat69] 13/3/2008 18:19

At 820p, now entering into a good 'buy' area for me. Still watching though.

[m.t.glass] 09/3/2008 17:49

UK - well established
Spain - operational since Nov 2006
Germany - recently operational
Italy - coming on stream this year
France - expected 2009
USA - expected 2010

(I have no ongoing position - I spreadbet upwards and downwards hour by hour)

[nicksoj] 09/3/2008 16:05

Ancillary income. Earned when the sale of "additional products" are made to coincide with a new or renewing car insurance policy. Two good examples of ancillaries sold alongside car insurance are:

1.Personal accident cover. to provide financial protection to passengers from injury etc...

2.Legal protection. to provide a free service of litigation in the event of a disputed car accident so as to defend one's case and/or recover monies for injury or damage via successful legal action.

there are others....

In both these examples ADM will earn a fee or comission for the provision of these additional "ancillary" services. The ancillary products themselves being underwritten by external "third party" carriers who will maintain the services and provide ADM with a "cutback" income for providing an effective distribution channel.

You will see that ADM has been very succesful in maintaining solid ancillary profit growth over the years. We can also see that comments from last weeks results suggest Spain is a very promising market for the sale of ancillary products. IMO - I for one am looking forward to seeing even more agressive growth in profits from this area as well as excellent underwriting profit growth. This is one hell of a company and has not traded at such low PE since its IPO launch!! DYOR

[sat69] 08/3/2008 22:42

Graham

I'm sure you're glad to be out now - even though you missed out on a bit of upside!

[simon cawkwell] 08/3/2008 20:39

brando69,

Don't get clever. Just launch into FRR at up to 200p before you even think of getting cautious.

Simon Cawkwell

[brando69] 08/3/2008 20:19

Evil
If I might divert you to another of the stocks you follow: FRR. Can you see any reason why these are still trading at the equiv of £1.15 in Berlin, while closing at 126.5p in the UK (and up to the equiv of £1.47 in the US at Friday's close)?.

Is it possible to buy in Berlin and sell in the UK?

TIA, Brando

[simon cawkwell] 08/3/2008 19:20

Aughton,

As you correctly remark, it is hard to borrow Rightmove. I think it is a sell on long term fundamentals but I can also see that short term problems may well impact. I stay short.

Simon Cawkwell

[aughton 3] 08/3/2008 12:13

evil, on crazy valuations,as a follower any chance of an update on your thoughts on right move, how on gods earth will this hold up in the current climate, 10% of estate agents forecast to close in the next year, globrix (backed by news international) offering exactly the same if not better service for free and the board are still aggresively buying the shares back, i am told hedge funds are having problems shorting it, that aside surely this is sat awaiting an almighty fall

[simon cawkwell] 08/3/2008 12:08

stromboli,

How very interesting. Everybody I ask is unable to answer the question. Next week I shall worm my way into Merrill and find what they think it is.

Simon Cawkwell

[stromboli1] 08/3/2008 11:05

? partly referral fees on selling personal injury claims of their policy holders to claimant personal injury solicitors - referral fees can be in the region of £750 per claim - This is maybe an element of "ancillary income".

[simon cawkwell] 08/3/2008 02:09

Gentlemen,

Just what is this "ancillary" income? (It's only half the total profits.)

Simon Cawkwell

[billy liar] 07/3/2008 08:17

Uncle Evil is short. Me too.

[nicksoj] 05/3/2008 21:24

not much movement today - considering the ftse change. looks like adm will be waking up in the mid caps next Wednesday.

[spob] 05/3/2008 14:25

From The Times

March 5, 2008

Confused picture must keep Admiral on holdNick Hasell: Tempus
As special dividends go, the payout declared by Admiral alongside yesterday's full-year results was distinctly ordinary. Not in size – the FTSE 100 motor insurer is paying out a respectable 11.6p a share, the same as its normal dividend, giving a 23.2p final – but in frequency. The company's policy of returning surplus capital to shareholders means it has now notched up seven "special" dividends – one every six months – since joining the stock market less than four years ago.

But followers of Admiral should have been less concerned with income yesterday than with capital. The shares slid nearly 16 per cent as the company cautioned that motor insurance premium rates were rising only slowly and that tougher competition would constrain profit growth this year at Confused.com, its price comparison website.

That sell-off might appear too severe. First, Admiral's success is based on a formula of low costs, canny underwriting and pricing, and vigorous marketing that has given it a combined operating ratio of 85 per cent, against its sector's 107 per cent. That strong profitability means that should the expected pickup in motor rates not materialise until 2009 – they rose 4 per cent last year – Admiral will suffer less than its peers. Second, Confused, which grew 19 per cent in the second half of 2007, accounts for only one fifth of pretax profits.

More important, Admiral's ancillary income – fees from selling cover for legal expenses, breakdown and car hire, which account for half the company's pretax profits – was unchanged on a per-policy basis at £69, suggesting a comforting level of resilience given that it is the component of the company's bottom line most vulnerable to a consumer slowdown. If there was a concern in yesterday's numbers, it was that the better than expected 24 per cent rise in pretax profits was helped by a £30 million release of prior-year reserves, which might be difficult to repeat in 2008.

That is not to say that the broader momentum behind Admiral's growth – a double-digit rise in policy numbers, now usefully supplemented by overseas expansion – shows any sign of slackening. However, at 845p, or 16 times current-year earnings, the shares are up with events, even once the allure of a prospective dividend yield of 5.5 per cent is taken into account. Given its still-steep premium to the insurance sector, Admiral can be no more than a hold.