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FTSE 100: Admiral Group profit halves to £251m

Admiral Group
Admiral Group's profits were hit by accelerating claims inflation in its motor insurance arm. Photo: Getty

UK insurer Admiral Group (ADM.L) posted a 48% first-half profit fall to £251.3m ($303.5m/€297m) as inflation makes claims more costly.

The FTSE 100 company saw its total number of customers rise to 9.11 million from 8.02 million, with international insurance customers rising 13%.

Revenue in the six months to June 30 rose 5.7% year-on-year to £1.85bn from £1.75bn.

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“A big drop in profits is unusual for Admiral but comes as no surprise if you’ve already seen recent warnings from fellow insurers Sabre and Direct Line. Claims inflation has caused significant headaches in the motor insurance industry, fueled by used car prices shooting up, higher repair costs, fixes taking longer to complete and wages going up,” Danni Hewson, financial analyst at AJ Bell, said.

Total UK premiums written, which includes its motor, home and travel insurance units, was 2.8% higher year-on-year at £1.27bn from £1.23bn.

"Although, as expected, profit has decreased against last year, the unique conditions of the pandemic years make 2019 a better comparison – with profit and customer numbers increasing by 19% and 35% respectively since then," Admiral chief executive Milena Mondini de Focatiis said in a first-half earnings statement.

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"We have remained disciplined, adapting our rates in response to the higher inflation environment earlier than the market and maintaining a cautious approach to reserving, as we always do. We continue to focus on good execution through the cycle. Our strong balance sheet and focus on profitability over growth puts us on a strong footing for when conditions improve," she added.

Around 10,000 employees each will receive free shares worth up to £1,800 under the employee share scheme.

The company, that provides home, car, pet and travel insurance, said it would pay a total interim dividend, which included a further special dividend following the sale of the Penguin Portals comparison businesses, of 105 pence per share. That is down 35%.

Watch: What is inflation and why is it important?