Admiral lifts payout as injury claims costs put brake on profits
Admiral's profits for the first six months of the year were hit by the rising cost of personal injury claims after the government changed the payment calculation, though the insurer surprised some analysts by hiking its half-year pay-dividend.
However, in its UK car arm the insurer's combined ratio worsened significantly, rising from 75.0% in the comparable year ago period to 82.9%, although it was down from 90.8% at year-end 2016.
Furthermore, interim profits were hit by the rising cost of personal injury claims after the government changed the payment calculation, the so-called Ogden rate, which weighed on 2016 profits and continued into 2017.
"Most of the adverse impact from the increase in the costs of large injury claims was in our 2016 second half result," said chief executive David Stevens in a statement.
"However, some extra costs carry into 2017. In these circumstances, we are happy to report a marginal increase in profitability and to deliver a more material increase in the underlying dividend," he said.
For the six months to 30 June, the motor insurer posted an 8% jump in net revenues to £550m and 15% in group turnover to £1.45bn, which drove a 2% rise in statutory profits before tax to £193m (Numis: £189m).
In turn, the group's earnings per share were up 3% to 57.3p.
Turnover was lifted as the number of UK insurance customers increased 11% to 4.34m, alongside a 27% jump in international car insurance clients to 961,200.
Stevens also highlighted the multiple operational milestones achieved by the group over the period, which included the launch of its new dedicated lending system, the sale of the first cars on Confused.com and the first direct underwriting of vans in the UK and Spain.
Post dividend, the motor insurer's solvency ratio stood at 214%, up from 180% for the comparable year-ago period.
Meanwhile, the interim dividend, which included a special payout component of 18.1p, was raised by 10% to 56.0p.
As of 1120 BST the company's stock was 5.28% lower to 2,063p, having bounced off technical support towards 2,000p. On 16 August 2016 the shares hit their highest level on record at 2,254p.