Admiral profits to drop amid tough insurance market

Elephant and Diamond insurer Admiral is expected post a fall in profits when it reports its first-half results next week amid tough competition among motor insurers.

Insurer Admiral. Picture: Contributed

Analysts at brokerage firm Numis expect Admiral, which has just over four million customers, to turn in pre-tax profits in the first six months of the year down 11 per cent to £165.2 million compared to a year earlier, due to pressure on motor premium margins.

The analysts forecast premiums from UK car insurance will fall 7.6 per cent to £192m, while the firm could see a rise in large bodily injury claims costs – which has been an issue for the business in the past.

Earlier this month rival Direct Line said it had noticed a rise in large bodily injury claims.

In another recent update, Sheilas’ Wheels owner Esure said it was planning to drive up premiums after a surge in small injury claims had seen half-year profits in its motor insurance underwriting business fall by four-fifths.

Cardiff-based Admiral revealed earlier this year that annual profits for 2014 had fallen by 4 per cent to £357m, the first fall in a decade, after it wrote fewer car policies in a “highly competitive” market.

A recent AA report said car premiums rose by 5.5 per cent in the second quarter of this year across the industry after years of decline.

But the same report also pointed to claims inflation, due to more frequent claims with higher damages.

The latest set of results, which are due on Wednesday, will be the first since Admiral boss Henry Engelhardt said in May he will step down next year after clocking up nearly 25 years at the group he co-founded in 1991.

The 57-year-old US entrepreneur will be replaced by co-founder and current Admiral chief operating officer David Stevens next May.