UK premium rates fell 10 per cent in 2012 and that tough backdrop is making itself felt at Admiral (ADM). The company's combined ratio (of claims to premiums) deteriorated by 0.9 percentage points in 2012 to 96.6 per cent - still meaning underwriting profits, but not nearly as profitable as 2010’s 89.3 per cent ratio, for instance.
In response to competitive conditions, Admiral cut its own UK new business and renewal premium rates by 6 per cent and UK customer numbers rose just 2 per cent to 3.02m. Earning personal injury referral fees - from which Admiral got approximately £6 per vehicle last year (£18.6m in total) - will be banned from April. It also earned around £5 a vehicle from credit hire referral fees, which may also be banned as a result of the Competition Commission’s current review of the UK motor market.
Admiral’s small overseas unit remains heavily loss-making with a 177 per cent combined ratio last year, while the price comparison business - which includes confused.com - increased operating profit by 71 per cent to £18m. The investment book remains focused on cash and money market funds - safe, but a strategy that delivered a slender return of under 1 per cent.
Prior to these figures, Investec Securities was forecasting 2013 EPS of 77p (from 95.1p in 2012).
ADMIRAL (ADM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,320p | MARKET VALUE: | £3.61bn | |
| TOUCH: | 1,319-1,321p | 12-MONTH HIGH: | 1,350p | LOW: 970p |
| DIVIDEND YIELD: | 6.9% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 167p* | COMBINED RATIO: | 96.6% | |
| Year to 31 Dec | Net premiums (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 170 | 203 | 24.4 | 52.5 |
| 2009 | 212 | 216 | 8.80 | 57.5 |
| 2010 | 288 | 266 | 9.50 | 68.1 |
| 2011 | 446 | 299 | 13.7 | 75.6 |
| 2012 | 499 | 345 | 15.9 | 90.6 |
| % change | +12 | +15 | +16 | +20 |
Ex-div: 1 May Payment: 24 May *Includes intangible assets of £92.5m, or 34p a share | ||||
