Admiral increases interim dividend payout after insurer profits top £300m

Admiral Group has announced a significant dividend increase after profit rose sharply in the first half of the year thanks to the company’s strong motor insurance business.

The insurer said investors would receive a payout of 71 pence per share, made up of a normal dividend of 51.3p per share and a special dividend of 19.7p per share.

Pre-tax profits rose by almost a third to £309.8m in the six months to June. Profit from its motor insurance division rose by a fifth to £358.9m on higher premiums earned.

As Covid restrictions eased in 2022 and 2023 and people began to travel more, supply chain issues and rising costs for used vehicles and repairs meant Admiral faced rising claims costs.

The company responded by raising premiums, which increased profits, but sent hundreds of thousands of customers switching to competing insurers.

However, the company lowered premiums earlier this year, while market prices were still rising, which led to more drivers.

Admiral’s total customer base grew by 12 per cent year-on-year to 10.5 million, supported by an increase in the number of insurance customers in the UK of around 1.2 million to 8.2 million.

This increased turnover by around £1 billion to £3.2 billion, while insurance income rose by 38 per cent to £2.2 billion.

Milena Mondini de Focatiis, CEO of Admiral, said: ‘We have delivered strong results in the first half of the year, with increased profits, revenues and customer numbers, demonstrating our resilience and agility in the face of changing market dynamics.

‘Given our previous price response to inflation in previous years, we were able to be more competitive in (the first half of the year)’

Based on the result, Admiral shares rose 7.1 percent to £30.10 just before midday on Thursday, making it the best performing company in the FTSE 100.

Founded in 1993, Admiral is one of the UK’s largest motor insurers and is expanding its activities to include home contents, pet and travel insurance.

In March, the Cardiff-based company acquired the home and pet insurance business of More Than from rival RSA in a deal potentially worth £115m.

According to Derren Nathan, head of equity research at Hargreaves Lansdown, Admiral is ‘well positioned to seize similar opportunities if they arise, but at the moment the company is doing an excellent job of driving organic growth.

‘Outside of the engine, the group’s businesses are too small to move the dial. If it can replicate its success in other products, that could accelerate growth, but there is some execution risk if it steps away from its livelihood.’