Admiral dividend remains buoyant as profits sink from Ogden bombshell
Admiral's full year profits fell by a quarter due to the government's recent changes to the 'Ogden' rate at which personal injury claims are calculated, though the non-life insurer's hefty dividend was held steady as underlying profits edged higher.
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With customer numbers increasing 16% on the previous year to 5.15m, turnover for calendar-2016 grew 22% to £2.6bn and revenue by 13% to £1.02bn.
Profit fell 25% to £284.3m due to the effect of Ogden, though if that was excluded it would have risen 3% to £389.7m.
Earnings per share were down 27% to 78.7p, but pre-Ogden were up 2% to 109.6p.
The full year dividend was kept flat at 114.4p per share.
Even with the impact of Ogden the return on equity was only reduced from 49% to a still-strong 37%, thanks to the company's extensive use of co- and reinsurance.
In his first full year as chief executive, David Stevens acknowledged that profits being down a quarter after 25 years of almost uninterrupted profit growth under his predecessor was "not exactly a flying start".
"On the other hand our ability to grow our businesses rapidly, both in the UK and overseas, and to absorb the shock of an eccentric government decision on discount rates while delivering a 37% return on equity and again paying a substantial dividend is a tribute to the health of the business and resilience of our model."
Post the dividend the solvency ratio still improved 3% to 212%, with the group loss ratio rising to 72.0% post-Ogden from 65.1% as an improved international ratio was offset by an Ogden-impacted higher UK car insurance ratio/
The group combined ratio rose to 94.4% post Ogden and 86.7% excluding Ogden from the 85.6% in 2015.
The UK insurance business, consisting of UK car and UK household, enjoyed favourable market conditions and delivered a net revenue increase of 8% to £770.9m as customer numbers climbed 14% to 4.1m.
The international businesses grew net revenue 49% to £107.3m as customer numbers grew by 28% to 864,000.