Admiral shares soared to the top of the FTSE 100 leaderboard on Monday after the insurer announced a special dividend.
The special dividend was made possible by a very strong first half for Admiral, in which profit before tax grew 32%, driven by a 43% surge in revenue.
Investors were not only rewarded with a 19.7p per share, but a bumper increase in the ordinary dividend from 51p to 71p.
After a challenging period for insurers, shareholders would have been delighted when they digested the group’s half-year report and a sharp increase in customer numbers and insurance premiums.
“If something goes wrong, we might ask – will the insurance pay out? Admiral certainly has this morning, announcing a special dividend after posting a very robust set of results,” said Adam Vettese, Market Analyst at investment platform eToro.
“Inflation has sent costs of everything higher, insurance premiums included, which is great for firms like Admiral, but the firm has astutely used that buffer in the first half of this year to cut prices and get a competitive edge on its peers. It’s hard to argue against this strategy having paid off with turnover up 43%.”
“This performance was predominately driven my motor policies and with the acquisition of More Than, Admiral can bolster its household and pet divisions with diversity. As inflation eases, we could see premiums cool off further which no doubt the firm will have one eye on. Shares are still almost 30% away from their post-Covid peak and investors will be hoping more strong performance can propel the price back up towards those levels.”