Admiral shares surged 6.2% to 2,091p in late morning trading, despite a 48% pre-tax profit decline to £251.3 million in HY1 2022 against £482.2 million in HY1 2021.
The insurance firm’s net revenue fell 9% to £720 million compared to £790 million, and its EPS dropped 50% to 67p from 132.9p the last year linked to higher inflation and a volatile market environment.
“A big drop in profits is unusual for Admiral but comes as no surprise if you’ve already seen recent warnings from fellow insurers Sabre and Direct Line,” said AJ Bell financial analyst Danni Hewson.
“Claims inflation has caused significant headaches in the motor insurance industry, fueled by used car prices shooting up, higher repair costs, fixes taking longer to complete and wages going up.”
Meanwhile, Admiral reported a 6% growth in group turnover to £1.8 billion against £1.7 billion.
The company mentioned a 14% rise in customers to 9.1 million from 8 million, with a 12% climb in UK insurance customers to 6.9 million against 6.2 million and a 13% increase in international insurance customers to 1.9 million compared to 1.7 million the year before.
Dividend
Admiral confirmed a 48% reduction in HY1 dividend per share to 60p against 115p year-on-year, however the insurance group announced a 45p special dividend from the sale of Penguin Portals comparison business.
“The Board has declared an interim dividend of 60.0 pence per share, made up of a normal dividend of 44.2 pence and a special dividend of 15.8 pence per share. The payment represents 90% of earnings per share for the first half,” said Admiral CEO Milena Mondini de Focatiis.
“The Board has also declared a further special dividend of 45.0 pence per share reflecting the final payment of the phased return to shareholders of the proceeds from the sale of the Penguin Portals comparison businesses. This payment, along with the previous two payments of 46.0 pence per share, brings the total amount returned to shareholders to just over £400 million.”
“The total interim dividend, including the further special dividend is 105.0 pence per share, made of a normal dividend of 44.2 pence per share and a special dividend of 60.8 pence per share.”