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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Admiral Group plc    ADM   GB00B02J6398

ADMIRAL GROUP PLC

(ADM)
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Admiral : H1 pretax profit up 4% despite Ogden rate hit

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08/14/2019 | 06:47am EDT

LONDON (Reuters) - British insurer Admiral on Wednesday posted a 4% rise in first-half pretax profit helped by the release of money put aside for claims written in previous years.

Admiral, one of Britain's largest motor insurers, reported a pretax profit of 220 million pounds ($265 million), up from 212 million a year earlier and topping the 197.1 million in a company-supplied poll of 13 analysts.

Profit rose despite a change in the so-called 'Ogden Rate' which cost the company 33.3 million pounds in the first half of the year.

The improvement was mainly due to the release of reserves which had been put aside to pay out old insurance contracts.

"Profit growth, even if modest, is more exciting considering the 33 million pound Ogden headwind," David Stevens, group chief executive officer, said in a statement.

The change in the 'Ogden rate', or discount rate, has required insurers in Britain to set aside more money than they expected to compensate victims of serious car crashes.

The insurer said it expected the total impact of the change to be between 50 and 60 million pounds.

The change also negatively impacted the company's Solvency ratio, a measure of balance sheet strength, which fell to 190% from 196% a year earlier, CFO Geraint Jones told Reuters.

The company increased its interim dividend and said it would pay 63 pence per share, higher than the 56.5p predicted by the analysts in a company-supplied poll.

Admiral was the top gainer on the FTSE 100 with shares up 4.1% at 0900 GMT.

Its group loss ratio weakened to 69.1% from 65.2% last year, driven by losses in international insurance businesses totalling 2.7 million pounds compared with 0.6 million pounds a year earlier.

European operations strengthened, but that improvement was offset by higher claims costs in the United States.

"Whilst trends in European remain strong, International Insurance missed [UBS estimates] driven by a higher loss ratio in the U.S.," UBS said in an analyst note.

In Britain, Admiral saw a smaller than normal rise in the number of customers, said CFO Jones.

"In the last 12 months we've started to move our prices up and that's made us less competitive in the market and so fewer customers are coming to us," he said.

"The reason we are raising our prices is that we're seeing the cost of claims increasing."

(Reporting by Lena Masri; editing by Simon Jessop)

By Lena Masri

Stocks mentioned in the article
ChangeLast1st jan.
ADMIRAL GROUP PLC -0.14% 2157 Delayed Quote.5.37%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
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Financials (GBP)
Sales 2019 719 M
EBIT 2019 476 M
Net income 2019 361 M
Debt 2019 48,6 M
Yield 2019 5,78%
P/E ratio 2019 18,1x
P/E ratio 2020 17,0x
EV / Sales2019 8,14x
EV / Sales2020 7,65x
Capitalization 5 810 M
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Technical analysis trends ADMIRAL GROUP PLC
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Income Statement Evolution
Consensus
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Mean consensus UNDERPERFORM
Number of Analysts 18
Average target price 2 020,11  GBp
Last Close Price 2 157,00  GBp
Spread / Highest target 17,8%
Spread / Average Target -6,35%
Spread / Lowest Target -28,1%
EPS Revisions
Managers
NameTitle
David Graham Stevens Chief Executive Officer & Executive Director
Annette Elizabeth Court Chairman
Geraint Allan Jones Chief Financial Officer & Executive Director
Charlotte Bennett Head-Information Technology
Matt Wintle Chief Information Officer
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