Steering the good ship Cymru to prosperity?

(Pic : BBC Wales)

In the 1990's, American businessman and one of the founders of Churchill Insurance, Henry Engelhardt and several others wanted to strike out on their own in the car insurance business. The choice of location came down to Brighton or Wales. The Welsh Development Agency offered a £1million grant, swaying the decision and so began one of modern Wales's great private sector success stories.


Today, Admiral Group posted record pre-tax profits of £226million for 2010, with turnover breaching £1.5billion. The only other company in Wales that even approaches or exceeds this level (as far as I know) is the supermarket chain Iceland.


Admiral Insurance employs around 4000 people in Cardiff, Swansea and Newport. Admiral has since expanded abroad, into Spain, Germany, France and the United States. Admiral has also created several sub-brands as part of their group including Elephant (exclusively online insurer), Diamond (women drivers), Gladiator (commercial vehicles), Bell (multiple, including home insurance) and Confused.com (price comparison).


The impact Admiral has had on the wider Welsh economy shouldn't be underestimated either. For example the successful price comparison company started by a former Admiral Group employee Hayley Parsons, Gocompare.com (turnover £75million in 2010). The tenor may be annoying, but here is an example of another Welsh brand, a spin-off on one of our better known ones, making an impact on rest of the UK. In addition other unrelated price comparison website, moneysupermarket.com (based in Ewloe, Flintshire) recently posted record turnover of £149million, an increase of 9% on last year. It certainly looks on the surface that Wales is developing an important niche industry as people try to look for bargains in straightened financial times.


There is however a shyness amongst Welsh companies with regard listing on the London Stock Exchange. Admiral Group is currently Wales's only listing on the FTSE-100, floating in 2004, while a handful of other Welsh "brave souls" are listed on the wider FTSE-250 or Alternative Investment Market. Why is this?


Could it be that because Wales is constantly put down in terms of business success, because we don't really sing the praises of our entrepreneurial success stories enough, because Wales is always having to play catch up to completely impossible targets, that our business brains, or potential business brains, are put off from taking that bold first step.

It's yet unclear just how the recent European Court of Justice ruling on the discrepancy (or discrimination depending on how you look at it) between male and female insurance premiums will impact the car insurance industry, or Admiral itself (seeing as Diamond is one of their brands). But these kind of rulings tend to push prices up rather than towards an equilibrium.


It won't stop Admiral though, having unveiled plans for a new HQ in Cardiff, a stones throw from the £675million redevelopment and expansion of the St Davids Centre.


Did we just get lucky?


Are there also historic warnings for Admiral?


Hyder was once Wales's largest private company, in a position similar to Admiral today. It was destroyed by a combination of (UK) government interference (a windfall tax on utilities companies, the rights and wrongs of which are open for debate) and their own decisions (taking on heavy debts to expand, including the purchase of SWALEC).


Is there a shot across the bow in this also, a warning, to future Economy and Transport ministers in Cardiff that successes and failures don't confine themselves to specific sectors of the economy.


I'm completely confident that Admiral, a well-run, successful, expanding company with a well-motivated (and most importantly by all accounts a well looked after) workforce will be a permanent fixture of the Welsh economy, one of the main flag bearers for Welsh enterprise, for the long haul.


Where the next Admiral is going to come from though remains a mystery.


I will add this though. I think it's a damned shame that an American has put a lot more faith in Cardiff and Wales than some Welshmen (and Welshwomen) do.


You know who I mean.