Sector movers: Admiral drags non-life insurers lower on subdued premiums
Poorly-received first-half numbers from Admiral were dragging the non-line insurance sector lower on Wednesday, while life insurers were given a boost by Prudential.
Admiral's shares were down 6% at 1,365p in afternoon trade after the car insurance group said that turnover in the first half was down 5% to £1.04bn despite a 9% rise in customers.
While premiums were essentially flat over the six months, reductions in 2013 meant that rates were down year-on-year. The company said that while UK premiums are no longer falling, a return to growth remains elusive.
"Some in the City had hoped to see a slight recovery in pricing," said Garry White from Charles Stanley.
Admiral also said that it has replaced chief financial officer Kevin Chidwick with Geraint Jones, who has in the past held a number of senior finance positions at the company. Chidwick is handing over his duties to focus on his role as head of the Elephant Auto Insurance business in the States.
Ben Vartia from Accendo Markets said that board change "has not impressed investors and shows a lack of confidence in Chidwick and the company going forward".
Other stocks in the non-life insurance sector such as Esure, Lancashire Holdings and Direct Line were also in the red, though the latter was lower after going ex-dividend.
In contrast, life insurers were on the rise with Prudential extending gains after impressing the market on Tuesday with its own interim report.
The insurer's US and Asia businesses helped to boost group operating profits by a better-than-expected 17% to £1.52bn in the first half, despite a drop in UK annuity sales sparked by government pension changes
Berenberg, Barclays Capital, Deutsche Bank and Credit Suisse all reiterated their positive ratings on the stock on Wednesday.
Peers Standard Life, Aviva, Old Mutual and St James's Place were also in demand.
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