Admiral Sees Profits Soar After Cutting Car Premiums

Admiral has reported a significant surge in annual profits, driven by a strategic decision to lower UK motor insurance premiums after an industry-wide price hike. The FTSE 100 company has seen remarkable growth in customer numbers and total revenues, a testament to its pricing strategy and market agility.

The insurer recorded a 15 per cent increase in vehicles insured in the UK, reaching 5.69 million in 2024. This growth was attributed to a proactive move in early 2024, where Admiral slashed prices for car insurance by an average of 10 per cent. The decision starkly contrasted with broader industry trends, where motor premiums climbed to record levels. According to the Association of British Insurers, average premiums rose to £635 in the first quarter of 2024, sparking concerns about affordability for many households.

Admiral’s chief executive, Milena Mondini de Focatiis, highlighted that the company had strategically endured slower growth in 2022 and 2023 by raising prices ahead of competitors. However, this conservative approach allowed the insurer to lower premiums faster than rivals once market conditions stabilised. This move not only attracted customers but also strengthened Admiral’s overall competitive position in the market.

A recent government adjustment to the Ogden rate, which determines the compensation for accident victims in personal injury cases, further bolstered the firm’s profitability. The increase in the Ogden rate reduced Admiral’s liabilities for injury claims, enabling the business to act quickly in lowering insurance costs. By responding immediately, the company enhanced its reputation as a customer-focused service provider.

The financial impact of these decisions has been striking. Admiral’s full-year revenues rose 28 per cent to £6.15 billion, while pre-tax profits soared by 90 per cent to £839.2 million. Shareholders also benefitted from this robust performance, with the company increasing its final dividend to 121p per share, up from 52p the previous year. This adjustment will return approximately £366.6 million to investors.

Despite ongoing challenges in the insurance industry, Admiral’s willingness to adapt and innovate has proven highly profitable. The company now serves 11 million customers globally, including those in the UK, France, Spain, Italy, and the US. Its upward trajectory presents a compelling case study in balancing customer needs with sustainable long-term growth.

Admiral shares reflected the positive results, closing up by 145p, or 5 per cent, at £30.46. The insurer’s performance serves as a reminder of the rewards to be gained from calculated, consumer-conscious decisions in a dynamic market.