ii view: motor profits help almost double Admiral dividend
Growing customer numbers and a highly attractive dividend yield. We assess prospects for this FTSE 100 company.
6th March 2025 15:34
by Keith Bowman from interactive investor
Full-year results to 31 December 2024
- Turnover up 28% to £6.15 billion
- Pre-tax profit up 90% to £839 million
- Final dividend of 121p per share
- Total 2024 dividend up 86% to 192p per share
- Solvency ratio or capital cushion up 3% to 203%
Chief executive Milena Mondini de Focatiis said:
“To remain one of the most competitive insurers for the largest number of people is a priority for us. We have emerged from several rather challenging years so when we saw conditions improve we were quick to respond.
“As we enter into 2025, the market is softening, and the outlook is uncertain. Our priority is to stay efficient and agile so that we can adapt as needed and deliver long-term growth by building on our strong foundations and talented team.”
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ii round-up:
Insurer Admiral Group (LSE:ADM) today detailed profits and a dividend that beat City expectations and fuelled by a significant recovery for its core motoring insurance business.
Group profits soared 90% to £839 million, exceeding analyst forecasts of £730 million and funding a final dividend of 121p per share. That takes the total 2024 payment up 86% to 192p per share.
Shares in the FTSE 100 company rose 5% in UK trading having come into these latest results up 9% over the last year. That’s behind a 12% gain for the FTSE 100 index itself over that time and comfortably below a 28% gain for rival and takeover target Direct Line Insurance Group (LSE:DLG).
Selling via brands including Elephant, Diamond, and Confused.com, Admiral offers products from UK and overseas motor insurance to personal loans.
Group-wide profit for motoring insurance almost doubled as Admiral’s early action in raising insurance premiums at the start of the pandemic allowed it to offer highly competitive pricing in 2024.
A 14% increase in total customer numbers included a near one-fifth increase in UK insurance customers to 8.8 million. Admiral customer loan balances rose by close to a quarter to £1.17 billion.
Profit for UK-related household insurance hit £34 million, up from £8 million a year ago. The final dividend of 121p per share is made up of a 91.4p ordinary payment and 29.6p special dividend. Both are due to be paid to eligible shareholders on 13 June.
The Cardiff headquartered company’s capital cushion, or solvency ratio improved 3% to 203%. The group’s AGM is likely to be held mid-to-late April.
ii view:
Started in 1993, Admiral today employs over 13,000 people and serves customers across the UK, France, Italy, Spain and the USA. The insurer previously completed its first significant acquisition, acquiring direct household and pet insurance renewal rights of the ‘More Than’ brand, as well as transferring around 300 staff from owner Royal Sun Alliance.
For investors, the many factors feeding into insurance claims and including the weather and even climate change, cannot be forgotten. Competitors across the industry are not standing still. Acquisitions such as that for some of the ‘More Than’ business are not without risk, while management’s cautious outlook comments are also notable.
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On the upside, Admiral has proven agile in its product offering, with rewards now being seen. Diversity of both business type and geographical region exist. Acquisitions can help fuel growth, while its solvency ratio is robust.
In all, despite ongoing risks and with the shares already at a multi-year high, a forecast dividend yield of over 5% is likely to keep fans of this major insurer happy.
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
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