- First-half insurance sales top £2 billion
- Record number of cars on cover
- Interim dividend raised by 39%
UK motor insurer Admiral Group (ADM) posted surprisingly strong first-half results and raised its dividend almost 40% by including a special pay-out.
The shares jumped as much as 260p or 9% to £30.71 marking a breakout from their 2024 trading range and their best level for over a year.
STRONG OPERATIONAL PERFORMANCE
Insurance revenue for the six months to June jumped 38% to £2.1 billion as significant rate increases in 2022 and 2023 flowed through and the firm increased its customer base by 12% to 10.5 million, with a record 5.5 million vehicles on its books.
Operating profit climbed 35% to £324 million, led by a 55% increase in net insurance and investment gains to £281 million, while net interest income from financial services grew a more modest 14% to £36 million.
Equally impressive was a drop in the group’s combined ratio to just 80.4% of premium income from 89.8% in the same period last year – a combined ratio below 100% means the company is profitable, so the lower the number the better.
Operating expenses dropped to 23.1% against 26.3% last year, while the loss ratio came down to 57.3% from 63.5% as the frequency and cost of claims fell.
Earnings per share for the six months were 77.5p against 57.6p previously, a rise of 35%, allowing the firm to pay an interim dividend of 71p which included a special dividend of 19.7p.
‘We have delivered a strong set of results in the first half, growing profits, revenues and customer numbers, demonstrating our resilience and agility in changing market dynamics,’ commented chief executive Milena Mondini de Focatiis.
EXPERT VIEW
‘Insurer Admiral is reaping the rewards today of having steered its ship successfully through choppy waters when the inflationary storm was at its height,’ observed AJ Bell head of financial analysis Danni Hewson.
‘Unlike its competitors, Admiral hiked premiums as it passed on extra costs to customers. While this lost it business at the time, it now means the company is better positioned to be competitive, assisted by an easing in claims cost inflation which is helping it to attract more customers.
‘This is the very essence of taking painful decisions in the short term for the long-term benefit of the company and shareholders are applauding today’s better-than-expected results, buoyed by a bumper increase in the first-half dividend.’
Disclaimer: Financial services firm AJ Bell referenced in this article owns Shares. The author (Ian Conway) and editor (Tom Sieber) own shares in AJ Bell.
LEARN MORE ABOUT ADMIRAL GROUP
