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Risk Warning
07/05/2011
Car insurer Admiral shrugged off rising costs in the sector as it posted a sharp hike in revenues for the first three months of the year yesterday.
The group, which owns price comparison website Confused.com, said it was in line to "at least" meet profit forecasts for the full year. It revealed yesterday that year-on-year turnover grew 56 per cent to £539 million in the three months to the end of March, fuelled by higher premiums and growth in customer numbers.
Analysts have predicted 2011 pre-tax profits of £320m, up from £266m last year.
Admiral's UK car insurance base increased by a third to 2.9 million in the first quarter following a similar full year rise in 2010, as demand for its low-cost policies, sold over the phone and online, continued to grow.
The Cardiff-based group, which also trades under the Bell, Diamond and Elephant brands, insures one in ten cars on Britain's roads. It is one of just a few insurers making a profit in a market hit by rising claims losses and growing competition pressures.
Car insurance costs have risen steeply in the last two years as insurers have passed on the higher cost of collisions involving uninsured drivers and the rise in personal injury claims, a trend driven by no-win, no-fee solicitors.
Hundreds of pounds were added to the cost of the typical car insurance policy last year, AA figures show, with young drivers bearing the biggest increases.
Henry Engelhardt, chief executive of the FTSE 100-listed insurer, said: "I'm pleased to report that our business has continued to grow and prosper in the first quarter of the year. Admiral's UK car insurance business had another great quarter and has continued to benefit from positive market conditions.
"We grew rapidly and were also able to raise premiums. We continue to remain focused on maintaining the quality of our business."
Richard Curr, head of dealing at Prime Markets, said: "Observers of Admiral Group could be forgiven for thinking that the insurer takes pleasure in confounding the analysts, having been written off on numerous occasions, only to come back bigger, stronger and better."
But revenues at Confused.com remained flat as profit margins came under pressure in an increasingly competitive market. Confused was among the earliest comparison sites to become established but has suffered from the intense advertising campaigns run by competitors including Gocompare.com and Comparethemarket.com.
Curr said: "Traders, investors and shareholders are by now well accustomed to underperformance from Confused.com, (the huge TV campaign notwithstanding), but in spite of this, Admiral has grown turnover by 56 per cent and the vehicle count by 33 per cent - a seriously impressive achievement by any standards."
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