Admiral motor insurance price hikes drive revenue to £2.2bn
- Admiral’s turnover jumped by 21% to £2.24bn for the six months ending June
- Claims inflation has been hit by more expensive repairs and supply chain snags
- Admiral shares were the top riser on the FTSE 100 by early Wednesday afternoon
Admiral defied difficult economic conditions in the first half as price hikes helped drive double-digit revenue growth.
The insurer has hikes prices to offset elevated claims inflation, particularly within its motoring business, which has seen more expensive repairs, supply chain snags and soaring used car costs.
Price hikes led to Admiral’s revenues jumping by 21 per cent to £2.24billion for the six months ending June, with its UK motor insurance arm providing most of the growth.
Cost challenges: Motor insurers like Admiral have been hit by more expensive repairs, supply chain snags and soaring used car costs over the past year
Although the division’s customer numbers dipped slightly, turnover climbed by around £250million thanks to higher average premiums after lifting prices by about a fifth across new business and renewals.
Revenues also expanded in its international insurance and UK household segments for the same reasons, although they further benefited from a bump in customers.
Pre-tax profits rebounded by 4 per cent due to higher interest rates pushing up investment income and fewer payout claims than initially expected.
Milena Mondini de Focatiis, chief executive of Admiral, said: ‘The group has once again delivered a solid performance and strong growth in the context of a challenging market, although we believe that the cycle is turning.’
Admiral noted that secondhand vehicle prices, a major contributor to damage inflation, had seen prices begin to stabilise.
She added: ‘Inflation persists, but we have navigated the cycle well, maintaining pricing discipline and a focus on medium-term profitability.
‘We recognise that these are challenging times for many people, and we are committed to being there for them when they need us the most, delivering good service and competitively priced products while also actively managing our costs.’
Admiral shares were the FTSE 100 Index’s top performer by early Wednesday afternoon, rising by 6.6 per cent, or 146p, to £23.45.
They have still slumped by over a third from their peak in summer 2021 when the firm was buoyed by a growing customer base and a drop in car accidents from people travelling less often.
Trading has inevitably struggled since then as the end of Covid-related restrictions encouraged Britons to take more journeys.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said: ‘Conditions are likely to remain tough over the rest of the year, but Admiral should be able to continue its string of outperformance versus peers with selective underwriting and strong pricing power.
‘The group’s also been very prudent with reserves in recent years, now sitting on a good chunk of excess which should be unwound into profits over the next few years.’
Aviva also released half-year results on Wednesday, showing operating profits increasing amidst soaring demand for private health insurance as Britons sought to beat record NHS waiting lists.