Insurer Admiral to post higher-than-expected profits

Insurer Admiral has said it is set to reveal higher-than-expected profits for the past six months after a boost from its motor injury claims business.

Shares in the company jumped in early trading after it told shareholders that pre-tax profits for the first half of 2021 will be between £450 million and £500 million.

The group posted a profit of £286 million for the same period last year.

As a result of the profit improvement, Admiral said it will now pay out an interim dividend of between 110p and 125p per share.

The “stronger” profit performance was driven by improvements in the cost of motor injury claims from previous years, resulting in “higher reserve releases and profit commission revenue”.

It added that the frequency of motor claims so far this year has also been lower than expected as the extended coronavirus lockdown restrictions across the UK impacted upon travel.

The insurer said this offset the impact of significant reductions in premium rates over the past 12 months.

“It is not currently expected that the level of reserve releases and profit commission for the first half of 2021 will be repeated in the second half,” the firm added.

Admiral also completed the sale of its Penguin Portals comparison business during the first half of the year, netting the company around £460 million.

It told shareholders that around £400 million of this would be returned to investors in the form of special dividends phased over 2021 and 2022.

Shares in Admiral were 3.8% higher at 3,289p on Monday morning.