The chief executive of Admiral, Milena Mondini de Focatiis, has dismissed accusations of profiteering after the company reported a significant increase in first-half profits, driven by higher premiums and substantial cash returns for shareholders. The FTSE 100-listed motor insurer saw its revenues climb by 43 percent year-on-year to £3.2 billion in the six months to the end of June, resulting in a 32 percent jump in pre-tax profits to £309.8 million.
Admiral attributed its strong top-line performance to the “significant rate increases” it had implemented in the previous year and in 2022, a period when motor insurance premiums across the industry rose sharply to combat inflation. As a result of the higher half-year profits, the Cardiff-based company will return approximately £213 million to its stock market investors by increasing its interim dividend to 71p a share, a 39 percent rise compared to the previous year. This announcement caused Admiral’s shares to surge by 226p, or 8 percent, to 30.36p.
The rapid increase in motor insurance prices over the past two years has been driven by higher costs for spare parts, second-hand cars, and rising labour costs in repair shops, which have pushed up the cost of handling claims for the industry. However, this has left some households struggling to afford motor cover, with the average premium reaching a record high of £635 in the first quarter of this year, according to data from the Association of British Insurers (ABI).
Despite the criticism faced by insurers for potentially profiting unfairly from the inflationary environment, Mondini de Focatiis insisted that Admiral’s pricing had remained competitive and that the company had moved earlier than its rivals to reduce premiums this year. She stated that this proactive approach to pricing was the reason behind Admiral’s rapid growth, with its UK insurance customer base expanding by 17 percent year-on-year to 8.2 million.
When questioned about the allegations of profiteering, Mondini de Focatiis emphasised Admiral’s focus on its customers and its commitment to remaining competitive in the market. The company’s core UK insurance business saw profits climb by a fifth to £363 million, which Admiral attributed to “higher average premiums now earning through” and “continued significant releases of prior period claims reserves.”
The motor division of Admiral delivered a combined ratio of 73.8 percent, an improvement from the 82.3 percent reported a year earlier. This ratio serves as a key indicator of an insurer’s underwriting performance, with a reading below 100 percent indicating a profit and anything above that level implying a loss.
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