7th Nov 2014 07:29
LONDON (Alliance News) - Admiral Group PLC Friday reported a 3% fall in third-quarter turnover, hit by a drop in its UK car insurance business, though its expectations for that main profit driver remain on track for the current financial year, thanks to positive claims development on its back years.
However, Admiral Chief Executive Henry Engelhardt reiterated previous warnings that future earnings will be hit by the decline in car insurance premiums across the market in recent years, coupled with a return to higher claims inflation.
As Admiral reported turnover of GBP513 million in the quarter ended September 30, compared with GBP528 million in the corresponding quarter last year, Engelhardt remained optimistic on the group's prospects of growth.
"Looking further out, in the UK, Admiral's industry-leading combined ratios mean that we are well placed to grow and continue to deliver strong returns for our shareholders," the CEO said in a statement.
Despite reporting 3.18 million UK car insurance customers compared with 3.03 million in the corresponding period last year, citing improved retention, Admiral's third-quarter UK car insurance turnover fell to GBP419 million from GBP440 million in the same quarter last year.
Taking into account a 34% rise in other customers to 854,000, which comprise UK household insurance, international car insurance and commercial vehicle insurance broker Gladiator, overall group customers increased by 10% to 4.03 million compared with the corresponding quarter last year.
Engelhardt also said Admiral's four car insurance and three price comparison businesses outside the UK, and its developing UK home insurance operation, all represent opportunities for future growth and creation of value, highlighting US price comparison website Comparenow.com as a business that justifies ongoing investment due to its progress.
But Admiral's competitive challenges are not limited to its UK car insurance business, as Engelhardt cautioned that Confused.com, its UK price comparison website, has come under pressure from competition in the market.
"However, the UK price comparison market remains highly competitive and we expect Confused.com to deliver a lower result in the second half compared to the first half of 2014."
By Samuel Agini; [email protected]; @samuelagini
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