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Admiral ups reserve releases

Which allowed the insurer to hit a profit record in 2019
March 6, 2020

A prudent approach to setting reserves meant Admiral (ADM) was able to release a higher-than-expected level of capital set aside for UK motor claims in 2019, boosting pre-tax profits to a record £523m. That was helped by the “unclogging” of some large claims after the Ogden rate - used to calculate compensation to accident victims - was set in July.

IC TIP: Hold at 2,197p

UK insurance operating profit rose 7.4 per cent, helped by growth in household business, which turned an £8m profit compared with a loss the prior year. Price comparison website Confused.com also grew operating profit by 43 per cent, which management attributed to greater focus on cost efficiency and marketing. However, international insurance continued to disappoint as higher US losses offset a healthier European result.  

Policy growth within the core UK motor business was relatively flat as the group attempted to push through rate increases to compensate for continued elevated claims inflation.   

Analysts at Peel Hunt forecast adjusted net tangible assets of 245p a share at the December 2020 year-end, rising to 250p the same time the following year. 

ADMIRAL (ADM)    
ORD PRICE:2,197pMARKET VALUE:£6.45bn
TOUCH:2,196-2,198p12-MONTH HIGH:2,356pLOW: 1,968p
DIVIDEND YIELD:6.4%PE RATIO:15
NET ASSET VALUE:310pCOMBINED RATIO:88.6%
Year to 31 DecNet premiums (£m)Pre-tax profit (£m)Investment income (£m)Dividend per share (p)
201546736932.657.9
201654927853.1103
201761940441.7114
201867247636.0126
201970952335.3140*
% change+6+10-2+11
Ex-div:7 May   
Payment:1 Jun   
*Includes special dividend of 20.7p a share.