ii view: income play Admiral drives better than expected profits

First-half results to 30 June 2025

• Turnover flat at £3.1 billion
• Pre-tax profit up 67% £516 million
• Earnings up 69% to 130.9p per share
• Interim dividend up 62% to 115p per share
• Solvency ratio or capital cushion down 4% to 194%

Chief executive Milena Mondini de Focatiis said: “We have delivered another excellent first half with strong execution across all strategic objectives. In March, we said that our priority was to stay efficient and agile and we are continuously investing in our data and technological capabilities to future-proof our competitive advantage. 

“I’m very excited to see our businesses go from strength to strength. I’m confident in our fundamentals and adaptability which mean that we are well-placed for further success, delivering even more value for our shareholders and our growing customer base.”

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ii round-up:

Insurer Admiral Group (LSE:ADM) today detailed profits and a dividend payment beating City expectations and aided by an additional one million customers.

Competitively priced premiums and strong retention pushed customers numbers to 11.42 million and up from 10.38 million, driving pre-tax profits up 67% to £516 million. Analysts had forecast profit of £492 million. A total interim dividend of 115p per share soared 62% from a year ago and is payable to eligible shareholders on 3 October. 

Shares for the FTSE 100 company rose 5% in UK trading having come into these latest results up by just over a quarter so far in 2025. That’s similar to rival Hiscox Ltd (LSE:HSX). The FTSE 100 is up almost 11% year to date.

Selling via brands including Elephant, Diamond, and Confused.com, Admiral offers products from UK and overseas motor insurance to personal loans.  

Profit for the core UK motor insurance business surged 56% to £559 million, aided by strong underwriting and an improved profit margin on customer servicing despite reduced premiums given lower inflation.

UK household insurance-related profits more than doubled to £25 million, helped by 29% higher turnover, and including more customers.  

Reduced losses for both its Italian and Spanish insurance businesses sat alongside a profit in France, with an overall European loss of £0.6 million, down from £1.3 million a year ago.  

Profits for Admiral Money, and including a 25% increase in gross loan balances to £1.28 billion, more than doubled year-over-year to £16.3 million.

Broker UBS reiterated its ‘buy’ stance on the shares post the results, flagging an estimated fair value target price of 3775p. 

ii view:

Headquartered in Cardiff, Admiral employs around 15,000 people. Geographically, the UK generated most sales in 2024 at 83%, with overseas sales accounting for most of the balance. The insurer previously completed its first significant acquisition, acquiring direct household and pet insurance renewal rights for the ‘More Than’ brand, as well as transferring staff from then owner Royal Sun Alliance.   

For investors, the many factors feeding into insurance claims, including the weather and even climate change, cannot be forgotten. Acquisitions such as that for some of the ‘More Than’ business are not without risk. The group’s capital cushion or solvency ratio, although robust, is down 4% to 194%, while competitors across the industry are not standing still. 

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More favourably, Admiral has proven agile in its product offering with rewards now materialising. Action to reduce overseas losses is ongoing and previously included discontinuing its US business. Acquisitions can help fuel growth, while diversity of business type includes a growing loans book.  

On balance, and despite continuing risks, an estimated future dividend yield of over 5.5% should keep fans of this major UK insurer firmly supportive. 

Positives: 

• Diversity of both product and geographical location
• Attractive dividend yield (not guaranteed)

Negatives:

• Events outside of management’s control like the weather can impact
• Tough economic backdrop

The average rating of stock market analysts:

Buy