Telegraph stock tip2 Nov 2023 16:39
From telegraph:
Update: Admiral
If this column had a pound for every complaint heard from friends this year about increases in the cost of car insurance, it would not need an investment portfolio. At least higher premiums help to support our thesis for Admiral, whose shares now trade at an 18-month high, to suggest that we may be on the right track with the provider of car, travel and pet insurance following our tip in April.
Admiral has said little since its first-half results in August, but Sabre Insurance offered encouragement with its latest update in the middle of last month. The FTSE 250 company reported a 20pc increase in total gross written premiums for the first nine months of 2023, when a 34pc rise in car-related business more than offset slower markets for taxis and motorcycles.
Sabre had already indicated a focus on price rather than volume and this read positively for others in the industry, especially as the company raised its guidance for growth in gross premiums written for 2023, made no change for its expectations to its combined ratio (a key measure of profitability) and showed a clear improvement in its solvency ratio.
Claims inflation in the double digits is still a challenge for the industry and autumn’s rotten wet weather is another potential test, but price increases should help to ameliorate the impact. Further signs of improvement in Britain’s motor insurance market, as well as ongoing reductions in start-up losses in America and Europe, could in turn boost Admiral.
Best known for its Admiral, Diamond and Elephant brands, the FTSE 100 company is now expected by analysts to report a modest increase in pre-tax profits in 2023 and then healthier gains, and a return to dividend growth, in 2024.
Forecasts of a 124p-a-share dividend for next year would equate to a yield of 5pc, so patient investors can expect to be paid while they wait for a potential earnings recovery, which could also fuel further share price appreciation.
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