Admiral H1 profits rise as UK household stages turnaround
Insurer takes £33m hit from Ogden rate change
Insurer Admiral said interim pre-tax profits rose 4% to £218.2m as it booked a £33m charge as a result of changes in the rate used to calculate personal injury claims payouts.
The company on Wednesday said its UK Insurance division recorded “modest” growth in turnover to £1.34bn, up from £1.32bn with customer numbers reaching 5.32m compared with 5.07m a year ago.
The Ministry of Justice in July announced that the so-called Ogden rate - used to calculate the likely investment return on compensation payouts - would rise from -0.75% to -0.25%. The total impact was expected to be between £50m - £60m, the company said.
Admiral's UK household insurance business swung to a £4.2m profit from a £1.9m loss last year, but the loss at its international insurance business widened to £2.7m from £0.6m.
The UK Insurance unit saw profits increased 3.1% to £254.7m, while motor insurance profit was up slightly to £251.7m from £249m.
The company declared an interim dividend of 63p a share, up 5%, representing a normal dividend of 41.8p a special payout of 21.2p.
Admiral's combined ratio moved to 92.3% from 87.4% a year earlier. Underwriting profit rose 2.8% to £96m year on year.
“If it’s a can’t-put-down, read-in-one-go page-turner that you’re after, then I’m afraid our half-year results don’t fit the bill. Frankly, they are a bit dull. Turnover up mid-single digits, profit up low-single digits. Hardly 'hold the front page',” said chief executive David Stevens in a departure from the usual dry statement offered by companies.
"However, for dedicated aficionados who look behind the headlines, there’s some reward for reading on. Profit growth, even if modest, is more exciting considering the £33m Ogden headwind. Low growth in UK Motor policy count reflects a consciously reduced competitiveness, as we price rationally in the face of any rising claims costs across the market as a whole.