I've been a fan of eSure Group(LSE: ESUR) for a very, very long time.
A backdrop of rising car insurance premiums supported a scenario of solid and sustained profits growth, but this was not the main reason I was compelled to champion the FTSE 250 component. Rather, its ability to grab market share from its rivals was what really appealed to me.
Market appetite for eSure has eroded over the past year as investors have fretted over the increasing competitive pressures washing over the motor insurance segment. While I wouldn't say I was unconcerned, I reckon that this particular stock has the smarts to overcome this scenario and keep delivering delicious shareholder returns.
Policies continue marching higher
Latest trading numbers released by eSure at the start of May reinforced my positive outlook. The insurer saw gross written premiums across the group boom 18% during January-March to £221.2m, helped by a 21% increase in premiums at its Motor division to £201.4m.
Although the business highlighted the increased competition it's facing, this factor didn't stop the number of customers on its books from surging again. It had a total of 1.96m policies up and running as of March, up 17% year-on-year.
The numbers paid testament to eSure's ongoing bid to boost its footprint and have left it "well placed to deliver profitable growth in 2018," according to temporary chief executive Darren Ogden. And the company's aim to have an aggregated 3m home and motor insurance policies up and running by the close of the decade is looking like a very real possibility. It had 2.43m in force as of the close of March.
To add a cherry on top, eSure's head advised that it "remains on track to achieve a combined operating ratio similar to 2017" in this month's latest update. This improved to 96.7% last year from 98.8% back in 2016.
Rising dividends = remarkable yields
eSure paid a special dividend in 2017 to keep the annual dividend locked at 13.5p per share. With earnings expected to keep rising and cash flow remaining strong, the City is anticipating further special rewards in the near term and beyond, estimates that nudge payout projections above last year's levels.
An expected 8% earnings bounce this year results in an anticipated 14.4p dividend, meaning the yield stands at an eye-watering 6%.
And with an 11% profits boost expected in 2019, a dividend of 15.9p is being predicted. Consequently the yield marches to an excellent 6.7%.
I understand that many of you may not share my enthusiasm for eSure. However, those fearful over the impact of intensifying competition on the firm's future profits can take some solace in an ultra-low forward P/E ratio of 11.5 times.
In fact, this undemanding multiple leaves plenty of upside should -- as I fully expect -- eSure continue to report exceptional business growth.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.