Henry Engelhardt, the ebullient boss of Admiral (ADM), described the motor insurer's first half as "pretty up", referring to increases in customers, earnings per share and profits excluding minority interests. The question is what, apart from hot air, is keeping this balloon in the clouds, given the growing challenges facing motor insurance in a rising claims environment.
Despite whiplash claims coming back with a vengeance and cheap petrol increasing miles driven and therefore the likelihood of accidents, the combined ratio of claims to premiums in the motor segment was reduced from 80.2 per cent to 75.6 per cent. This was largely due to a reserve release of £50m (2014 first half: £35.4m). As claims inevitably rise, management is looking to mitigate the effect by focusing on older drivers, who register fewer claims, and passing over higher-claim areas.
Confused.com continued to struggle in a tough market, with losses of £4.8m compared with £9.1m in the comparative period - though management is excited about the potential of its latest comparison site, Carfused.com. At least losses were reduced in Admiral's international car insurance business, mainly because its Italian operation delivered an accounting profit in the half.
Analysts at Peel Hunt expect pre-tax profits for the full year of £331m, giving EPS of 94p, compared to £351m and 102p in 2014.
| ADMIRAL GROUP (ADM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,525p | MARKET VALUE: | £4.3bn | |
| TOUCH: | 1,525-1,527p | 12-MONTH HIGH: | 1,612p | LOW: 1,156p |
| DIVIDEND YIELD: | 6.6%* | PE RATIO: | 14 | |
| NET ASSET VALUE: | 212p | COMBINED RATIO: | 82.7% | |
| Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 232 | 183 | 6.7 | 49.4 |
| 2015 | 229 | 182 | 9.6 | 51.0 |
| % change | -1 | -1 | +43 | +3 |
Ex-div:10 Sep Payment:09 Oct | ||||
