Admiral seals reinsurance deals for its new Elephant car insurance in USA

Jan 18th, 2010 | By Hot News Reporter | Category: Insurance Today

(Proactiveinvestors) – FTSE100 insurance group Admiral (LSE: ADM) has signed re-insurance contracts for its new car insurance operation in the United States, Elephant Insurance. German based re-insurance specialists Munich Re and Hannover Re will jointly take 60% of the risk through a quota share reinsurance agreement. Admiral also extended a number of European reinsurance contracts with Munich Re.

“This is a very good day for Admiral Group. These deals will help us perpetuate our model that minimises risk and consistently produces a high return on capital”, Admiral chief executive Henry Engelhardt said, “It is an exciting time to be part of the Admiral Group given our growth and geographical expansion and we are very pleased to be working with Munich Re and Hannover Re to build growing, profitable, sustainable businesses in Europe and the USA.”

For the new American venture, Munich Re and Hannover Re will each take one third of the insured risk and Admiral will retain one third. These are long term contracts with Hannover Re lasting for 10 years whilst the Munich Re deal has a 15 year duration.

Elsewhere in Europe, Admiral has extended some of its existing reinsurance deals with Munich Re, most significantly in its Spanish and Italian operations with extensions totalling 15 years. According to the FTSE100 constituent, the new deals have a stronger alignment of long term interests and higher profit commissions for Admiral if results are very positive.

The British operation extended its Munich Re contract by a further 2 years, taking it to 2016. For the additional years Munich Re will retain 40% of Admiral’s UK risks.

The new contracts are effective from the 1st January 2010 and according to Admiral the partnership arrangements build on the successful risk and profit sharing model which has been at the heart of the success of its established UK business.


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