- Profit before tax up 4% to £233.9m
- Group turnover up 21% to £2.24bn
- Customers up 4% to 9.41m
- Interim dividend down 15% to 51.0p, 38.0p normal + 13.0p special
Admiral’s Price Hikes
It’s a tough time to be a UK motor insurer as claims cost inflation continues to run hot. To its credit though, Admiral Group plc (LON:ADM) is managing the challenging backdrop well with some pretty serious price hikes now starting to feed through to improved performance. The bad news for consumers is that car insurance is now another inflated cost to try and manage as part of the ever-increasing pressures on income.
Some customers have had enough, and Admiral saw a 7% dip in customer numbers over the quarter. But for Admiral, that’s a loss worth taking as maintaining profitable insurance contracts is key, even if it means losing a few customers along the way.
Conditions are likely to remain tough over the rest of the year, but Admiral should be able to continue its string of outperformance versus peers with selective underwriting and strong pricing power. The group’s also been very prudent with reserves in recent years, now sitting on a good chunk of excess which should be unwound into profits over the next few years.
Article by Matt Britzman, equity analyst at Hargreaves Lansdown
