Half-year profit growth slipped into single-digit percentage territory at motor insurer Admiral after years of robust double-digit growth. The group's combined ratio (of claims to premiums) deteriorated a percentage point on the year to 95.2 per cent and broker Numis Securities only expects full-year pre-tax profits to rise a modest 5 per cent to £316m, giving EPS of 87p (82p in 2011). So despite a healthy 7 per cent yield, the shares are going nowhere.
Motor premium rates have also stalled - down 8 year cent year on year as competitors sacrificed price for market share and further slippage is expected. That's in sharp contrast to hefty rate hikes of recent years - rates rose 15 per cent in the year to end-December, for example. Moreover, UK customer growth is sliding - vehicle numbers insured rose just 1.7 per cent in the half, compared with 4.9 per cent growth in the previous six months. While other revenue per vehicle slipped to £82 per car, from £84 and, from April, a further £7 a vehicle will go - reflecting the ban on personal injury referral fees. Meanwhile, the small international unit's loss soared to £8.9m from last year's £3.2m loss, even though vehicles insured there rose 63 per cent.
ADMIRAL (ADM) | ||||
---|---|---|---|---|
ORD PRICE: | 1,163p | MARKET VALUE: | £3.16bn | |
TOUCH: | 1,161-1,164p | 12-MONTH HIGH: | 1,358p | LOW: 773p |
DIVIDEND YIELD: | 7.0% | PE RATIO: | 14 | |
NET ASSET VALUE: | 160p* | COMBINED RATIO: | 95.2% |
Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
---|---|---|---|---|
2011 | 202 | 161 | 5.10 | 39.1 |
2012 | 247 | 172 | 6.90 | 45.1 |
% change | +22 | +7 | +35 | +15 |
Ex-div:12 Sep Payment:12 Oct *Includes intangible assets of £88.9m, or 33p a share |