Admiral races ahead as full year numbers beat expectations

Shares in Admiral raced ahead on Thursday after the insurer posted a forecast-beating and record 6% jump in full year pre-tax profit as its car insurance customers grew.

For the year to the end of December, pre-tax profit rose to £377m from £357m in 2014 as customer numbers grew 9% to 4.43m.

Car insurance customers rose 14% to 673,000 and the UK car insurance business increased profits by 11% to £443m.

Earnings per share were up 4% at 107.3p and the company – which owns comparison website confused.com – lifted its full year dividend by 16% to 114.4p per share.

RBC Capital Markets said profit was ahead of its estimate of £350.7m, while the dividend was also better than its forecast for 103.1p and substantially stronger than consensus expectations of 97.3p.

Admiral’s combined operating ratio strengthened to 85.6% from 86.5% in 2014.

Chief executive officer Henry Engelhardt said: “I would describe 2015 as: the year of the uncut diamond. When the year started many people thought it would turn out to be a lump of coal. But no, 2015 was no lumpy coal year.

"A lot of good things happened in 2015. The work we did on the UK business in terms of rate increases ahead of the market and the continued attention to operational detail amongst other things, all led to an excellent economic outcome. Following on from the success last year of our Italian business, ConTe, which made another small profit in 2015, the break-even result (underwriting year basis) in Admiral Seguros, our Spanish operation, was also a great achievement."

Numis, which rates the stock at ‘add’, said: “We upgraded the shares on 28-Jan-16 on the basis that market forecasts for 2016 and 2017 look too conservative given Admiral’s ability to grow in the current favourable underwriting environment. On first read these results look supportive of that thesis.”

At 0930 GMT, Admiral shares were up 7% to 1,884p.