Admiral expects stronger second half as motor price rises feed through

Admiral Group PLC on Thursday said early pricing changes leave it "well positioned" for an upturn in the UK motor market as it reported mixed half-year results.

The Cardiff-based home and motor insurer said pretax profit from continuing operations fell 18% to £429.2 million in the six months ended June 30 from £521.0 million a year earlier, and below the company-compiled consensus of £435 million.

Earnings per share also declined 18% to 109.0 pence from 132.5p, shy of 111.9p consensus, and return on equity dropped to 45% from 57%.

Turnover was broadly flat at £3.11 billion versus £3.10 billion a year ago, with insurance revenue also little changed at £2.44 billion versus £2.47 billion.

Good growth in 'other personal' lines of 11% was offset by a 5% reduction in UK Motor turnover as average premiums reduced.

UK Motor profit fell 18%, with the reduction in average premiums leading to higher incurred loss and expense ratios.

The core Motor combined ratio worsened to 78.8% from 76.6% on-year but was stronger than the 84.0% consensus.

In response, shares in Admiral were up 3.8% at 3,848.00 pence each in London on Thursday morning.

Admiral said recent petrol price shocks and climate change are driving a transition to greener electric vehicles and newer forms of mobility, and it has seen a 27% increase in its EV book year-on-year.

The group solvency ratio declined to 190% from 194% on-year, in line with consensus. Stable capital generation in the period was offset by the impact of the Flock Ltd acquisition and employee share scheme purchases.

Admiral announced the £80 million acquisition of commercial motor insurer Flock in June.

Admiral said group performance was underpinned by "disciplined underwriting in more challenging UK market conditions."

Chief Executive Milena Mondini de Focatiis called it a "good" set of results.

"Against more challenging market conditions, we are pricing for long-term sustainable growth with our UK Motor business having increased rates earlier than the market, following a softer period in the cycle," the CEO added.

Admiral said the high-single-digit rate increases in the first half of 2026 will continue to earn through over the second half of 2026 and into 2027. As a result, the CEO said Admiral is "well positioned" for an upturn in the UK Motor market.

In Household, Admiral said the market continues to soften, and the outlook is uncertain. Travel picked up despite a shift in demand caused by Middle East disruption.

Admiral lowered its half-year dividend to 70.5p per share from 115.0p a year ago and announced a £45 million share buyback, which will start soon. In March, Admiral said it was revising its approach to shareholder distributions and would pay a normal dividend equal to 65% of post-tax profits, supplemented by either a special dividend or share buybacks.

Claims inflation was stable, with Admiral's current estimate of average claims cost inflation for full-year 2026 being consistent with 2025 at 5% to 7%.

In its results presentation, Admiral said it expects stronger second-half group profits versus the first six months of 2026, with price increases earning through and continued positive underlying trends in other personal lines.

It is "on track" to deliver medium-term ambitions, the firm added.

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