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Admiral continues to gain market share

And that's helping to offset softer premiums
August 15, 2018

Admiral (ADM) more than made up for a softening in motor insurance premiums by grabbing a larger chunk of the UK market, with vehicles insured at the June half year up 11 per cent from a year earlier at 4.26m.

IC TIP: Hold at 2078p

Total premiums written for motor insurance rose from £979m to £1.1bn, but a small rise in net insurance claims and expenses meant that underwriting profits were a little lower. However, profit commission generated from sharing profits on reinsurance agreements and other revenue, including interest payments on instalments and other policies such as breakdown cover underwritten by Admiral, saw profits from underwriting and commission up over 12 per cent at £249.5m from a year earlier. This helped to improve the combined ratio (of claims as a percentage of premium income) to 78.2 per cent from 83.1 per cent.

UK household insurance saw a strong increase in total premiums written, with the number of homes insured rising by over 40 per cent to 778,100. Overall premium levels were up 40 per cent, although a rise in claims relating to the bad weather resulted in an underwriting loss of £2.9m, pushing the combined ratio out from 105.5 per cent to 119.7 per cent. However, adjusting for normal weather conditions would have led to a profit of £5.6m.

On the international side, customer numbers grew by 17 per cent to surpass the 1m mark, with higher net insurance premium revenue helping to cut losses from £10.1m a year earlier to just £600,000.

Analysts at Peel Hunt expect adjusted pre-tax profit of £428m for the year to December 2018, giving EPS of 121p (from £404m and 113p in 2017). 

ADMIRAL (ADM)   
ORD PRICE:2,078pMARKET VALUE:£5.98bn
TOUCH:2,076-2,078p12-MONTH HIGH:2,140pLOW: 1,749p
DIVIDEND YIELD:5.8%PE RATIO:19
NET ASSET VALUE:236p*COMBINED RATIO:87.4%
Half-year to 30 JunNet premiums (£m)Pre-tax profit (£m)Investment income (£m)Dividend per share (p)
201730119323.356
201832421117.260**
% change+7+9-26+7
Ex-div:6 Sep   
Payment:5 Oct   

*Includes intangible assets of £163m, or 57p a share

**Includes special dividend of 19.2p a share