CAR insurance giant Admiral is planning to expand into the household insurance market for the first time next year, it has been confirmed.
Cardiff-headquartered Admiral – the only Welsh company listed on the FTSE 100 – is to begin underwriting household insurance products in its first foray outside of the motor insurance market.
Admiral, which insures around 6% of the cars on Britain’s roads, confirmed a report that had previously appeared in industry publication Post Magazine.
Up to this point, the insurer has been distributing household insurance through the intermediary BDML but this will be the first time that it will underwrite products itself and profits from it directly.
Admiral insures around 6% of the cars on Britain’s roads and also owns price comparison site Confused.com, online-only insurer Elephant.co.uk and women-only motor insurer Diamond.
Analyst James Shuck at stockbroker Jefferies said that Admiral’s established brand and ability to offer household insurance policies through its price comparison sites should mean it can capture a share of the market and avoid expensive marketing campaigns.
He said: “The next leg up in the Admiral story is diversifying into new product areas. There are pockets of household insurance that are overpriced.
“If Admiral can identify those, it should do well.”
For the financial year to the end of December, 2009, the group posted an 18% rise in turnover on 2008 to £1.07bn.
The company, which also now operates in both mainland Europe and the US, also reported its best pre-tax profit, up 7% to £215.8m
Household insurance generated premium income of £8.8bn in 2008, making it Britain’s second-biggest retail insurance market after motor with £10bn, according to the Association of British Insurers.
However, while underwriting household insurance is seen as more profitable, it is also susceptible to bad weather and profitability can be hit by freak weather such as flooding.
Admiral has seen its stock rise by 19% since the beginning of the year, partly due to the perception that it is “recession proof,” due to car insurance being compulsory.
The FTSE 100 company has already recruited 490 more staff so far this year. And a decision is expected shortly on a HQ locations in Cardiff.
Following a wide-ranging property assessment it has identified two sites for a 184,000sq ft development, scheduled to be complete in three years’ time.
One is a car park site owned by Land Securities on the junction with Churchill Way.
The HQ, on the one-acre site, would extend to 12 floors. It would be developed by Midlands-based property development company Stoford in a joint venture with Land Securities
The other shortlisted option is on Bridge Street on a parcel of land owned by MA Rapport Group which has entered into a joint venture with Cardiff-based development company Rightacres under a name of Marcol Court.
The site, also about one acre, would provide a building on a similar scale in height and square footage to the Stoford Land Securities proposals.
It is understood that both developers are looking to strike a 20-year lease with Admiral, with an initial rent-free period.
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