Shares in FTSE 100 car insurer Admiral (ADM) gained 1.7% to £23.46, inching towards their pre-coronavirus highs, despite the firm bowing to pressure from the regulator to postpone its special dividend payment.
In an update on its progress during the crisis, the company said that in line with guidance from the Prudential Regulatory Authority (PRA) that insurers act with ‘restraint’ on payout, the board had decided to approve the normal dividend of 56.3p due on 1 June but to suspend the special dividend of 20.7p.
It said it would review its position on the special dividend when it releases its half-year results in August, adding that it still intends to pay it ‘unless there is a significant deterioration in the company’s financial position, trading or outlook.’
FINANCIALLY SOLID
Admiral was keen to point out that the decision to hold back the special dividend - considered by most investors as part and parcel of the normal dividend payout - was purely down to the regulator’s call for prudence rather than liquidity or solvency issues.
On the contrary, the firm announced last week it would issue premium rebates of £25 per vehicle to all its customers, worth a total of £110m, in recognition of fewer people driving during lockdown and fewer accidents as a result.
The move was widely applauded by consumer groups and led to calls for rival insurers to make similar rebates.
It also committed itself to reducing prices by £80m and supporting customers struggling with monthly insurance or personal loan payments. Meanwhile, all Admiral staff are being retained on full salaries and the firm hasn’t made use of the government’s furlough scheme or financial support.
