Admiral reported a 7% rise in pre-tax profits to £171.8 million (from £160.6 million a year earlier). Group vehicle count increased 11% to 3.50 million from 3.15 million at 30 June 2011. Combined losses within the group’s overseas operations more than doubled to £8.9 million. The Board is recommending an interim dividend payment of 45.1 pence per share, an increase of 15%.
Half year results: Admiral hikes dividend as profits advance. Admiral Group Plc declared it is on track to meet its full-year targets after the insurer posted first-half profits that exceeded analyst expectations and increased its interim dividend 15% to 45.1p. Profit before tax at £171.8 million was an increase of 7% when compared to the first half of 2011. Turnover rose 6% to £1.17 billion. Admiral revealed an improving picture in the UK, with profits at that division up 9% at £183.3 million as premium revenues grew faster than claims and costs while the insurers price comparison businesses generated pre-tax profits of £8.1 million. Elsewhere, the group's international car insurance business continues to lose money with losses widening to £8.9 million from £3.2 million in 2011, reflecting investment in further growth in Italy and a significant increase in premium and vehicles in the US.
Admiral was set up in 1993 as a direct writer of UK personal motor insurance. It has four brands (Admiral, Diamond, Bell and Elephant) and is now the third largest in the market with a leading position for business introduced on the internet. The group has also developed the market leading internet aggregator in the motor insurance space (Confused.com). Admiral floated on the London Stock Exchange on 23rd September 2004 and is a constituent of the FTSE 100 index.
Key Group Highlights Admiral continued to grow in the first half of 2012 - increasing turnover compared with H1 2011 by 6% to £1.17 billion and adding over 140,000 vehicles since the end of 2011. Year-on-year growth of 350,000 (11%) vehicles meant the Group closed 30 June 2012 with over 3.5 million vehicles. After favourable conditions during 2010 and the first half of 2011 in the Group's core UK Car Insurance market, there has been a marked change in 2012, with premium rates falling and competitors seeking to add market share. In this environment it was appropriate to moderate the rate of growth in the UK, leading to a year-on-year increase in vehicles of 7% to just over three million. Admiral continues to grow its International Insurance businesses, delivering a combined increase in premiums of around 50% (to £74 million) and insuring over 60% more vehicles at 30 June 2012 compared with a year earlier. The Group's four International Insurance businesses now account for 7% of total turnover and 11% of vehicles. Group pre-tax profit increased by 7% to £171.8 million (from £160.6 million). The UK Car Insurance business result was £183.3 million - 9% higher than H1 2011 (£168.2 million), driven by higher net premium revenue and an improved combined ratio. The combined loss of the Group's International Car Insurance businesses increased to £8.9 million (H1 2011: £3.2 million), reflecting investment in further growth in Italy and a significant increase in premium and vehicles in the US. This loss represented 5% of the Group result for the period. Admiral's Price Comparison businesses generated pre-tax profit of £8.1 million - significantly ahead of the £5.0 million result in H1 2011 - reflecting positive development in the Group's international price comparison businesses. Confused.com had a solid first half with a profit of £8.4 million (H1 2011: £8.2 million). Admiral's capital efficient and highly profitable business model led to return on capital of 61% (H1 2011: 63%). A key part of the business model is the extensive use of co- and reinsurance across the Group. During the first half of 2012 Admiral announced extensions to its UK reinsurance arrangements until at least the end of 2014, while its UK co-insurance agreement runs to at least the end of 2016. Earnings per share increased by 9% to 47.3 pence (H1 2011: 43.3 pence) and an interim dividend of 45.1 pence per share has been declared (15% higher than the interim 2011 payment of 39.1 pence) - a payout ratio of 95% (H1 2011: 90%).
Comment from Henry Engelhardt, Chief Executive Officer "Admiral has delivered a further increase in both turnover and profit in the first half of 2012, and a record dividend for our shareholders. In the UK, following the very significant growth in 2010 and 2011, we continue to slow our rate of growth to a more modest level, which we believe is a sensible response to the increased competition in the market. "I am particularly proud that Admiral was placed first in the recent Great Place to Work list for the UK and fourth in Europe, which is gratifying as the awards are based on what our employees themselves think about working for Admiral. Everyone here works incredibly hard to provide excellent customer service and make Admiral the success it is, and I'd like to thank all of the team in the UK, Spain, Italy, USA, France, Canada and India for what they have achieved. "All in all, I am pleased with our performance in the first half of 2012 and we are on track to meet our 2012 expectations." Comment from Alastair Lyons, Chairman "With a further advance in first half profits we are delighted once again to be able to declare an increase in our interim dividend, now at 45.1 pence per ordinary share. This represents 95% of after-tax earnings for the first six months of 2012, testament to the strength of Admiral's capital-efficient, cash-generative business model." Interim dividend The interim dividend of 45.1 pence per share will be paid on 12 October 2012. The ex-dividend date is 12 September 2012 and the record date is 14 September 2012. The dividend consists of a normal dividend of 21.3 pence per share and a special dividend of 23.8 pence per share.
Admiral Group plc Results for the Six Months En... 30 August 2012 Admiral announces another record half-year profit and continued growth. Profit before tax at £171.8 million was 7% ahead of H1 2011, while turnover rose 6% to £1.17 billion. The Board is declaring a record interim dividend payment of 45.1 pence per share. H1 2012 Highlights Group profit before tax up 7% at £171.8 million (H1 2011: £160.6 million) Earnings per share up 9% at 47.3 pence (H1 2011: 43.3 pence) Interim dividend up 15% at 45.1 pence per share (2011 interim: 39.1 pence) Group turnover* up 6% at £1.17 billion (H1 2011: £1.10 billion) Group vehicle count up 11% to 3.50 million from 3.15 million at 30 June 2011 6,500 employees receive £1,500 of shares each in the Employee Share Scheme based on the H1 2012 result
Nomura has reiterated its 'buy' rating and 1,300p target price for car insurance group Admiral highlighting the firm's strong first-half results and continued claims 'stability'.
"We are encouraged by the underlying results coming ahead of expectations, and although UK policy count is somewhat slower than our estimate, it is to be expected given more competitive market conditions in the UK," Nomura said.
Motor insurer Admiral Group (ADM) may have faced the odd bump in the fundamental road over the 5-year history of the financial crisis, but overall the group has been a sector outperformer, and unlike many other players has not been affected by the EU crisis. Added to this, in March Admiral announced it would to pay a special dividend as pre-tax profits rose 13% to £299m in 2011 beating the consensus forecast of £291m. Since then the group reported in April that UK policy growth was below expectations, but that overall 2012 had begun in line with forecasts. What the interim results will underline is whether or not this group has finally started to feel the same pressure than many rivals have been reporting for the past few years.
Shore Capital kept its "sell" rating for Admiral Group (ADM) following the Office of Fair Trading's slating of the motor insurance industry - calling it "dysfunctional" and "inefficient" - and decision to refer it to the Competition Commission. The broker believes that this could lead to Admiral taking a substantial hit to its ancillary income, which accounts for 63% of its pre-tax profits, as it may be revealed that this includes revenues from morally questionable sources. The broker also noted that personal injury referral fees, worth 7 pounds per vehicle, are likely to be banned from April 2013, denting profits further. The shares advanced by 24p to 1,179p.
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