MARKET REPORT: Motor insurance claims send Admiral into reverse

Insurer Admiral took a hit when it cut its dividend after auto claims hurt profits.

The blue-chip company lamented one of its most “challenging years” in decades, reporting a 39 per cent drop in profits for 2022 to £469m.

That was well below the £485 million bid by analysts and Admiral cut the dividend payment by 40 per cent to 112 pence per share. The stock fell 4.1 percent, or 85p, to 2003p.

Admiral has been hit by the rising cost of auto parts, which has driven up the value of claims.

Bad weather also took its toll amid a spate of claims for everything from burst water pipes during the cold spell to damage caused by Storm Eunice. But it attracted more customers, while sales rose 5 percent to £3.7 billion.

Peel Hunt said a decision to raise car insurance premiums by 20 per cent in response to rising claims costs was “a good sign that the UK car market is returning to some form of discipline”.

But the setbacks echoed those of Direct Line, which cut its dividend in January after claims surged after the December freeze. It wasn’t all doom and gloom, however.

Hiscox, the Lloyd’s of London insurer that covers everything from natural disasters to cyber-attacks, posted a profit of £38m for 2022.

While this was well below 2021’s £162m, analysts had expected a loss of £75m. Hiscox rose 5.2 percent, or 55.5 pence, to 1128.5 pence.

The FTSE 100 rose 0.1 percent, or 10.44 points, to 7929.92 while the FTSE 250 fell 0.5 percent, or 104.64 points, to 19,851.97.

Guardrail maker Hill & Smith praised the strength of its US business after sales rose 17 percent to £732.1 million in 2022, while profits jumped 62 percent to £69.3 million.

Stock Watch – Amigo Holdings

Amigo Holdings has warned that its bid to raise £45 million from investors remains ‘extremely challenging’.

The lender has until May 26 to find the money, otherwise the company will have to be wound down.

But Amigo said it is “required by law” to close once it thinks the capital raise will fail. So far it has received ‘non-binding indicative interest’ from investors to the tune of around £25 million.

Shares, which floated at 275p in June 2018, fell 26.4 per cent, or 0.66p, to 1.84p.

But shares fell 6.7 percent, or 94p, to 1320p. There was better news for Capita after the series of divestments showed little sign of slowing down.

As part of efforts to focus on key divisions and reduce debt, the outsourcing giant has agreed to sell its Security Watchdog business to Matrix for £14 million.

On Monday it closed a £21 million deal to sell three of its human resources business. Shares fell 2.1 percent, or 0.9 pence, to 41.4 pence.

Tullow Oil fell 8.1 percent, or 2.76 pence, to 31.5 pence after it warned cash flow would decline this year as production ramped up off Ghana’s coast.

Wealth manager Quilter rose 3.4 per cent or 2.98 pence to 92.06p after revenue fell 2 per cent to £606m in 2022, but was ahead of the £590m analysts had predicted. A profit drop of 3 per cent to £134m was still £21m above market expectations.

Amte Power, which makes lithium-ion and sodium-ion battery cells for the energy storage and automotive sectors, reported a loss of £3.72 million for the six months ended December 3, up from £2.65 million a year ago .

The group invests heavily in the development of battery cells that can be used in hybrid electric vehicles, places without grid access and the oil and gas sector. Shares fell 2.9 percent, or 2 pence, to 66 pence.

IP Group, which invests in science and technology based companies such as Oxford Nanopore, suffered a loss after the value of its listed companies fell by £428.5 million by 2022.

The company posted a loss of £344.5 million last year, compared to a profit of £449.3 million the year before.

It dropped 4.8 percent, or 2.95p, to 58.65p.

MusicMagpie seemed to have hit a bad note after it warned that “the near-term outlook remains challenging.”

The company, which helps consumers buy and sell second-hand CDs and electronics, said an expected post-pandemic slump in its book and disc media categories last year was offset by growth in its consumer technology business. It tumbled 14.9 percent, or 5.6 pence, to 31.9 pence.