Motoring higher15 Apr 2016 17:24
Diversified insurer Esure (LSE: ESUR) is well placed to enjoy the end of the low-premium era, in my opinion. A backdrop of rising policy costs underpinned a 30% uptick in pre-tax profits last year, to £134m, and further hefty gains would appear to be on the cards.
Gross written premiums advanced 6.3% in 2015, and Esure expects premiums to advance between 10% and 15% in the current period. As well as benefitting from rising prices, Esure is also growing its customer base in the critical Motor segment.
The business was forced to cut the dividend in 2015 to build its capital pile, reducing the payment to 11.5p per share from 16.8p the previous year.
But with market conditions steadily improving, the City has chalked-in dividends of 13.2p for 2016 and 15.5p for next year. These figures create gigantic yields of 4.9% and 5.8%, respectively.