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Insurer Admiral posts profit above estimates, flags no-deal Brexit risks

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By Reuters

(Reuters) – Admiral Group <ADML.L> posted a better-than-expected rise in first-half pre-tax profit on Wednesday on demand for its insurance products, but flagged potential risks from a no-deal Brexit.

The motor and home insurer said it did not currently foresee a material adverse impact on day to day operations from Brexit, but other issues may emerge over time, particularly if Britain quits the European Union without striking a formal agreement with the bloc.

From the start of 2019, Admiral’s European insurance businesses will operate through newly licensed entities, said the insurer, which has picked Madrid for its EU base.

The company said entities for its European price comparison operations will be set up in the second half of this year.

The cost of the restructuring activity is not expected to be material, it added.

Admiral said its pre-tax profit rose 9 percent to 211 million pounds for the six months ended June.

Analysts expected pre-tax profit of 207.8 million pounds, according to company supplied consensus from 11 analysts.

First-half turnover rose 14 percent to 1.66 billion pounds, while customer numbers also rose 14 percent to 6.23 million, Admiral said.

The insurer’s UK insurance business performed strongly in the first half, it said.

Admiral also posted a smaller loss of 600,000 pounds in its international insurance businesses, compared with a loss of 10.1 million pounds a year earlier.

The FTSE 100 with a market capitalisation of 5.77 billion pounds competes with firms such as Aviva <AV.L>, RSA <RSA.L>, Direct Line <DLGD.L>, esure <ESUR.L> and Hastings <HSTG.L> in a highly competitive car insurance market.

Private equity firm Bain Capital agreed on Tuesday to buy smaller rival esure for 1.21 billion pounds.

Admiral said its solvency II capital ratio was 196 percent, compared with 205 percent at the end of 2017. The lower the ratio, the greater the chances of a company defaulting on its obligations.

The company proposed an interim dividend of 60 pence per share, including a special dividend of 19.2 pence.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr, Amrutha Gayathri)