More on Admiral
Admiral: Trading statement
Admiral, the specialist motor insurer reported that turnover for the first half of 2005 grew by 20% (to £319.4m) while the number of policyholders rose by 16% to 1m.
Sales of non-underwriting products and services (principally unsecured personal loans and credit cards) increased by 25% to £36m in the first half of the year.
While these figures do look good, the company makes little comment on its profitability, simply saying that management is pleased with current performance. Admiral’s comments on the state of the market however make for grim reading.
The company has seen premium growth of 2.9% in the first half, below the market claims inflation factor of 5%. The company says it is slowing policy growth in an attempt to protect margins while marketing spend has grown by 15%. Industry marketing spend has grown by 54%, according to AC Nielsen, something that indicates the level of competition in the industry.
As we pointed out in one of our earlier pieces, the specialist motor insurance industry seems ready for another shakeout. While short term prospects do not look particularly good, longer term prospects look even even murkier and are dependent on surviving a possible shakeout.
The share trades at 370p on a prospective PE of 11.7x (2006 earnings) with a yield of 3.8%.
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