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    ADM   GB00B02J6398

ADMIRAL GROUP PLC

(ADM)
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3018 GBX   +0.27%
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UK still a drag for motor insurer Admiral

03/05/2015 | 04:30am EDT

LONDON (Reuters) - British insurer Admiral Group Plc (>> Admiral Group plc) posted forecast-lagging full-year results, hit by premium and claims pressure in the highly competitive UK motor market.

LONDON (Reuters) - British insurer Admiral Group Plc (>> Admiral Group plc) posted forecast-lagging full-year results, hit by premium and claims pressure in the highly competitive UK motor market.

Feeling the pinch of competition from UK rivals RSA (>> RSA Insurance Group plc), Direct Line (>> Direct Line Insurance Group PLC) and eSure Group (>> Esure Group PLC), as well as price comparison websites, the company said on Thursday turnover in the year through December fell 3 percent to 1.97 billion pounds ($3 billion).

The stock was trading down 2 percent by 0843 GMT in a 0.2 percent stronger FTSE 100 <.FTSE> index.

The group has a heavy reliance on the UK market, which accounts for four-fifths of customers and sales. It is also weighted towards car insurance, which accounts for 81 percent of group sales, and where lower average premiums resulted in sales falling 6 percent.

"2014 was the third successive year of premium reductions in the UK car insurance market. Admiral's response has been to prioritise margin protection rather than attempting to grow market share materially," the company said.

"In the latter part of 2014, some evidence emerged of prices in the market increasing, though not yet in a material way."

The average written premium over the year was 453 pounds, it said, a fall of 10 percent from the previous year. In January, roadside recovery service the AA said premiums had risen slightly in the fourth quarter.

By releasing 137.4 million pounds from reserves it had built up in previous years to pay for potential claims, it was able to boost profitability, with pretax profit at 357 million pounds, down from 371 million in 2013 and compared with a Thomson Reuters SmartEstimate of 359 million.

Excluding this, however, its combined ratio, which weighs the amount of money taken in in premiums against that paid out for claims and costs, would have risen to 86.9 percent from 81.2 percent in 2013.

Describing the underlying ratio jump as a "real shocker", Shore Capital analyst Eamonn Flanagan reiterated his "sell" recommendation on the stock.

"We worry that both claims frequency and claims inflation are rising, with any expected improvement in prices during 2015 simply reflecting a lag in a worsening claims environment," Flanagan wrote in a note to clients.

The company said it would pay a final dividend of 98.4 pence a share, down 1 percent from 2013 and the first time the company had cut its dividend, said ShoreCap's Flanagan. The dividend was made up of a 22.5p normal dividend and a 26.5p special payout.

The results contrast with those of Direct Line, which this week reported a 12 percent rise in full-year pretax profit and a special dividend of 4p a share.

($1 = 0.6563 British Pounds)

(Editing by Sinead Cruise and David Holmes)

By Simon Jessop


© Reuters 2015
Stocks mentioned in the article
ChangeLast1st jan.
ADMIRAL GROUP PLC 0.33% 3016 Delayed Quote.3.58%
FTSE 100 -0.35% 7196.39 Delayed Quote.11.72%
MSCI UNITED KINGDOM (STRD) 0.21% 1168.709 Real-time Quote.12.24%
RISE, INC. 0.00% 27 End-of-day quote.12.50%
RSA INSURANCE GROUP 0.00%End-of-day quote.1.00%
S&P UNITED KINGDOM (PDS) -0.33% 1434.53 Delayed Quote.12.31%
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Analyst Recommendations on ADMIRAL GROUP PLC
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Financials
Sales 2021 815 M 1 124 M 1 124 M
Net income 2021 1 028 M 1 419 M 1 419 M
Net Debt 2021 - - -
P/E ratio 2021 8,64x
Yield 2021 9,62%
Capitalization 8 766 M 12 118 M 12 099 M
Capi. / Sales 2021 10,8x
Capi. / Sales 2022 10,9x
Nbr of Employees 11 445
Free-Float 70,2%
Chart ADMIRAL GROUP PLC
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Admiral Group plc Technical Analysis Chart | ADM | GB00B02J6398 | MarketScreener
Technical analysis trends ADMIRAL GROUP PLC
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Income Statement Evolution
Consensus
Sell
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Mean consensus UNDERPERFORM
Number of Analysts 16
Last Close Price 3 010,00 GBX
Average target price 2 859,63 GBX
Spread / Average Target -5,00%
EPS Revisions
Managers and Directors
Milena Mondini de Focatiis Chief Executive Officer & Executive Director
Geraint Allan Jones Chief Financial Officer & Executive Director
Annette Elizabeth Court Non-Executive Chairman
Charlotte Bennett Head-Information Technology
Matt Wintle Chief Information Officer
Sector and Competitors