A curse and a pox on yon scurvy recession, sputtered salt-encrusted motor insurer Admiral this week. If it weren’t for a flood of claims shipped amidst the roiling of the current economic storm, the Admiral wouldn’t have had to hoist premium rates five and one half percentage points to make an honest living.

Unfurling its latest results for the first half of the year, the old sea dog revealed a 5% rise in profits swelled by rising car insurance premiums – which, in the wake of this year’s 5.5% rise, are now 8% higher than a year ago. Time to break out the grog, then.

Scanning the seas ahead, the Admiral spied a further 6% rates increase over the coming half year. The increased costs of sailing with the Admiral don’t seem to be harming recruitment though. Without any recourse to press-ganging, an additional 17% have come aboard, boosting turnover to £540m.

A report from consulting firm Watson Wyatt, meanwhile, suggests the UK private motor insurance industry’s underwriting loss in 2008 was more than double that reported to the FSA.

UK insurance companies reported an underwriting loss of only £493m last year. WW reckon actual losses were far worse but were disguised using past years’ reserves.

Senior consultant Ryan Warren said: “These insurers have tried to bolster their results by releasing money from their reserves, therefore disguising the actual underlying performance of the business. By removing these reserves and allocating them to the year they actually come from, we were able to identify and better understand the true underlying profitability of the market.”

WW conclude that the 2008 result was slightly better than the underwriting loss of over £1.1bn in 2007 and represented a break in a continuous trend of losses since 2004 – the only profitable year in the past decade, when the market made a profit of £77m.

RW said slightly improved results last year were due to a reduction in the number of claims, a slight increase in rates, and the restructuring of reinsurance programmes leading to savings in reinsurance spend. However many still struggled to break even last year.”

The firm predicted a return to profitability next year, with projected underwriting losses falling from the current 15% of earned premiums to 6%, with a 2% per annum return on capital after allowing for investment returns.

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