11th Nov 2013 09:11
LONDON (Alliance News) - Admiral Group PLC Monday said its third quarter revenue has suffered as a result of competition in the UK car insurance market, but said it is still on track to meet its expectations for the full year.
Shore Capital analyst Eamonn Flanagan described Admiral's interim management statement as "brief but worrying". Group turnover decreased by 7.3% to GBP528 million for the quarter to September 30, compared with GBP570 million for the corresponding period last year.
The decline was caused by a 12% decline in UK car insurance revenue, which came in at GBP440 million for the third quarter, a figure Flanagan described as "somewhat disturbing".
In a statement, Admiral Chief Executive Henry Engelhardt sought to provide reassurance. "Not much has changed since the half year; 2013 continues to shape up well and we remain on track to meet our expectations for the full year," Engelhardt said. "In the competitive UK car insurance market our strategy is to focus on profitability. Year-on-year market premiums are down, a situation which we believe will ultimately cause the cycle to turn."
Engelhardt added: "The current environment has led us to reduce UK turnover, but encouraging trends in our claims experience and our industry-leading combined ratio means that we continue to deliver strong returns for our shareholders."
Despite concerns regarding the UK car insurance business, international car insurance revenue increased by 26% to GBP49 million for the quarter, as the motor insurer insured 500,000 vehicles outside the UK.
Meanwhile, the insurer's price comparison operations, such as confused.com, continue to grow, while Engelhardt said good progress is being made with Admiral's new home insurance product.
Admiral shares were Monday quoted at 1,274.75 pence, down 0.2%.
By Samuel Agini; [email protected]; @samuelagini
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