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Admiral's Fun Factory Steers Path for Growth ; the City INTERVIEW

May 9, 2007


THERE are more tattoos than ties in Admiral's head office. Forget the stuffed shirts seen at many insurers, Admiral staff are more likely to be donning Mexican Sombreros or stockings and suspenders in preparation for their latest theme party.

Call centre work doesn't have to be boring, says founder and chief executive Henry Engelhardt. He has encouraged a Ministry of Fun ethos at the car insurer, in an effort to drive profits while keeping employees happy at the same time. Even his own office looks like a boy's bedroom, with mini-basketball, toy cars and cartoons stuck to his desk with ageing Blu-Tack and a mass of pictures and posters.

'We really have a simple philosophy; that is if people like what they do, they do it better. So why not go out of our way to make it fun?' asks Engelhardt, a fast-talking American who has lived in Britain for more than 20 years.

He admits such an approach doesn't always enjoy universal appeal.

'There is some resistance. Some people come in and are a bit baffled that they have to do golf putting or pool or egg roulette during the day. It is up to everybody to want to get involved. It can't just be a few people beating each other over the head with fun.' There are many more carrots than sticks.

Department managers line up prizes such as mountain bikes, PlayStations and hair tongs in the office to provide an added impetus to staff to sell motor policies. Their work is still gruelling and relatively poorly paid, but Admiral workers share many perks not seen elsewhere.

The lack of a dress code appeals to the mainly 20-something workforce.

Desks are decorated, birthdays are celebrated with cakes and balloons and silly games are par for the course.

Photographic evidence of the many 'events' is plastered over the walls.

Fruit is free employees chomp their way through Pounds 50,000 worth of bananas, apples and grapes every year. Break times can be spent in the TV room or playing a game of pool.

Engelhardt allocates Pounds 5 per person for 'fun money' every month.

BUT without a doubt the most appealing perk for employees is the free shares. When Admiral floated in September 2004, 1,450 employees shared a cash and shares bonanza with an average payout of Pounds 39,000.

A further Pounds 15m of shares have been handed out to employees since then. A dramatic rise in the share price, now trading at 1005p compared to 275p at the float, has made the biannual awards even more attractive.

For a firm which launched in January 1993 with no customers and just 57 staff, Admiral's progress is nothing short of remarkable. In an industry which had been sorely lacking in innovation and snappy marketing, it struck a chord with customers.

Now it has more than 2,000 employees, 1m customers and a Pounds 2.6bn market value. Turnover has risen sevenfold in the last decade and profits in 2006 were Pounds 147m. Admiral is not its only consumer brand. It also set up Internet insurer Elephant and Diamond for women drivers and

Engelhardt had never expected such good fortune. Until the float, Admiral's-share paper was seen as useful to 'put underneath a wobbly chair', he says. With the end of the first threeyear lockup period approaching, staff are getting excited about cashing in.

'Everybody in this place knows when the share price moves, its amazing,' he says. 'Everybody gets a piece of the business. Everybody is important.' As for Engelhardt, he and his family own a 15.5pc stake worth Pounds 410m. Not bad, for the son of a meat wholesaler who grew up in Chicago.

He initially wanted to be a journalist. But, having failed to get a job after university, he ended up becoming a 'runner' on the floor of the Chicago Mercantile Exchange. He left to complete a management degree at Insead in France before joining a management consultancy in Croydon.

That didn't suit his quirkier tendencies, so he replied to an advert for a financial start-up. 'When I heard it was car insurance, I literally took the phone away from my ear and said: "Oh no, what could be more boring than car insurance",' he says. 'But it was anything other than boring.' This start-up was Churchill, which grew up into one of Admiral's key rivals. But Churchill was 'about company cars and reserved parking places', says Engelhardt, who wanted to go it alone. A Pounds 1m development grant from Cardiff persuaded him to locate his insurance start-up in Wales though his French wife was unimpressed.

'When I said to her there was a possibility of putting the business in Cardiff, she said "What's that?" Now, if I took a job somewhere else in the UK, she would say "see you on Friday night".' Despite their love of Wales, he concedes 'it is a bit wet' . However, he is sticking with the pledge made at the float that he is 'good for ten years'.

Engelhardt hardly needs the money.

Aside from his share stake, his family's dividends alone were Pounds 14.6m last year.

Not that you would know it, if you met him. There is no hint of designerwear and he owns no holiday homes. His watch was bought in 1979.

He says: 'One of the nice things about being in Cardiff is nobody knows who I am. There is no London social scene. A great night for me is dinner with the family and watching the West Wing.' The workforce may be ever-growing at Admiral but the camaraderie is still there and in some cases, friendships have developed into marriage.

'Oh my god, we've had a lot of marriages,' says Engelhardt. 'We are actually onto divorces now.'

(c) 2007 Daily Mail; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.

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