Analysis of Performance of Multinational Insurance Company - Desklib

COURSEWORK 2:
ANALYSIS OF THE
PERFORMANCE OF A
MULTINATIONAL
INSURANCE COMPANY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
a)Critical analysis of financial performance of Admiral Group Plc............................................3
b)Strategic position of Admiral Group in industry......................................................................6
c)Current and future challenges for the organisation..................................................................9
d)Recommendations..................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
The report is on analysis of financial performance of a motor company of insurance. Admiral
Group is a car insurance company based in UK and group is listed on London Stock Exchange.
The financial performance of the Admiral Group has been discussed from underwriting and
overall earning perspectives. The strategic position of the group within UK insurance market has
been commented upon as to what makes the UK insurance company a unique player in the
industry. The future and current challenges of the group from perspectives of strategy and
underwriting. The recommendations of potential investor overcoming the future and current
challenges for succeeding in UK non-life insurance market have been discussed.
a)Critical analysis of financial performance of Admiral Group Plc
Operating Income
Seeing the operating income of the organisation, it was clocked at 403.5 million in December
2017, rose to 476.2 million in December 2018 and further gained momentum of rise to 503.1
million in December 2019 and then increase to 606.2 in December 2020. This sees a growth in
operating income and operating margin increase to 57.05% which is a considerable increase
compared to the industry standards (Maichel-Guggemoos, L. and Wagner, J., 2018).
Industry standards of operating margin were 22.53 however, the organisation achieved 38.29%
which is a remarkable achievement depicting that the organisation has controlled the costs to a
great standard and operational efficiency is high.
Total revenue
The total revenue was 1128.9 in December 2017, increased to 1261.6 million in December 2018
which decreased to 1208.8 million in December, 2019 and later increased to 1305.3 in
December, 2020.
Industry standards of revenue and that of organisation have exceeded with Admiral Group
clocking 4.75% and industry standards up to 4.12, observation made of past five years.
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Net income
The net income in December 2017 was 334.2, increased to 395.1 in December 2018 and rose to
432.4 in December 2019 and lastly to 528.8 in Dec,2020. Net profit margin has registered a
percentage increase of 46.41% which is a remarkable increase in net profit.
The net profit margin has been 31.31% of past five years of Admiral Group, compared to 18.52
of the industry standards.
Return on Equity
Return on Equity is measure of annual return of company divided by total value of shareholder’s
equity expressed in percentage. The return on equity was 50% of the organisation and the
industry standards were 27.6, which is much higher than industry standards.
Return on assets
This is a type of return on investment which measure profitability of business in relation to total
assets. This indicates how well organisation has been performing by profit comparison. The
ROA has been 3.96 of industry standards and ROA has been 5.96 of past five years for the
company. This shows the organisation has performed well comparing to the industry standards.
This shows the efficiency of operations of the organisation and also the benefit it makes towards
investors (Maichel-Guggemoos, L. and Wagner, J., 2018).
Turnover
On looking at the turnover, it can be seen that turnover has increased every year although in
pandemic, it has decreased in 2021 to 1.78 billion GBP compared to previous year of 3.55 billion
(Parise, T.V. and Shenai, V., 2018).
Earnings per share
It increased by 21% and came up to 179.5 pence which was in-line with growth of Admiral’s
share in pre-tax profit.
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