Admiral's positive results were similar to those from Britain's biggest car insurer Direct Line, which last week beat half-year profit forecasts and hiked its interim dividend due to a drastic drop in claims.
"Lockdown restrictions ... resulted in significantly lower motor insurance claims frequency as customers stayed at home and fewer miles were driven," Admiral said in a statement, adding that its customer numbers had risen 6% to 7.2 million.
Shares in the British insurance group were up by 7% at 0728 GMT, topping the FTSE 100 leaderboard.
"Overall a strong first half," JP Morgan analysts wrote after Admiral said declared an interim dividend of 70.5 pence, made up of a normal dividend of 55.0 pence per share and a special dividend of 15.5 pence per share.
The company said a deferred special dividend from the full year 2019 results of 20.7 pence per share will be paid alongside the 2020 interim dividend on October 2.
Admiral, which in April suspended its special dividend due to the coronavirus crisis, said its statutory pretax profit rose to 286.1 million pounds ($373 million), beating a 233.2 million pounds consensus estimate in a poll of analyst forecasts.
It said its combined ratio, the main gauge of an insurer's profitability, strengthened to 83% from 92.3% a year earlier. A ratio below 100% indicates that premiums earned exceeded claims.
(Reporting by Muvija M in Bengaluru and Carolyn Cohn in London; Editing by Ramakrishnan M. and Alexander Smith)
By Muvija M