The shares of Admiral (LSE: ADM) were flat at 1,272p in early London trade this morning after the vehicle insurer announced it had scaled back its growth in UK written premiums, against a backdrop of tough industry pricing.
Admiral, which also operates under the Elephant and Diamond brands, maintained its coverage of around 3 million vehicles in the UK. However, underwriting competition caused turnover from UK car insurance to fall 12% to £440m, reflecting the increased pricing pressure for car insurers.
Internationally meanwhile, Admiral took advantage of underlying conditions to expand its foreign vehicle count by 17% to 500,000, boosting turnover by 26% to £49m.
Explaining the difficult pricing conditions in the UK, Admiral boss Henry Engelhardt added:
“In the competitive UK car insurance market our strategy is to focus on profitability. Year-on-year market premiums are down, a situation which we believe will ultimately cause the cycle to turn. The current environment has led us to reduce UK turnover, but encouraging trends in our claims experience and our industry-leading combined ratio means that we continue to deliver strong returns for our shareholders”.
Admiral normally distributes a significant portion of its annual earnings to shareholders each year, in the form of a special dividend. This year should be no exception — analysts believe Admiral should yield an impressive 7.5% over the next 12 months, paying out almost 93 pence per share.