12th Aug 2020 09:20
(Alliance News) - Admiral Group PLC on Wednesday lifted its shareholder payout as lower insurance claims boosted first half performance.
The Cardiff, Wales-based motor insurer declared an interim dividend of 70.5 pence per share, made up of a normal dividend of 55.0p and a special dividend of 15.5p, together 12% higher than the 2019 interim dividend of 63.0p per share.
In addition, Admiral said it will pay the previously deferred 2019 special dividend of 20.7p alongside the 2020 interim dividend.
Shares in the company were trading 4.6% higher at 2,641.00p each in London, one of the top gainers in the FTSE 100 index.
Admiral's pretax profit for the six months to June 30 jumped 31% to GBP286.1 million from GBP218.2 million recorded a year ago. Operating profit increased 30% to GBP292.3 million.
The rise in profit was attributed to strong prior-year reserve releases in the UK and internationally and also some non-recurrence of negative items in 2019 including the GBP33 million Ogden discount rate impact.
Combined ratio - a key profit measure for insurers - improved to 83.0% from 92.3%. A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums
Insurance premium revenue for the interim period inched higher to GBP350.8 million from GBP349.2 million, with net revenue rising 6.6% at GBP689.7 million from GBP647.2 million.
First half net insurance claims fell to GBP141.3 million from GBP200.0 million.
"Lockdown restrictions in the group's markets resulted in significantly lower motor insurance claims frequency as customers stayed at home and fewer miles were driven. The UK has lagged other markets due to a later lockdown implementation and lifting of restrictions. In contrast, the US saw a shorter restriction period, particularly in Texas where Admiral writes a large portion of its US business, and hence the claims frequency impact was lower," Admiral explained.
The company also said that it is cautiously re-starting Travel insurance and its lending products after pausing their sales in March due to the virus outbreak.
Admiral ended the first half with 7.2 million customers, up from 6.7 million a year ago.
Chief Executive Officer David Stevens said: "This year's interims benefit again from our consistently competent underwriting and conservative reserving on past years, feeding into another strong set of results in the core business and beyond."
By Tapan Panchal; [email protected]
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