Admiral Group Ord GBP0.01 (ADM)

Company overview

Admiral was set up in 1993 as a direct writer of UK personal motor insurance. It has four brands (Admiral, Diamond, Bell and Elephant) and is now the third largest in the market with a leading position for business introduced on the internet. The group has also developed the market leading internet aggregator in the motor insurance space (Confused.com). Admiral floated on the London Stock Exchange on 23rd September 2004 and is a constituent of the FTSE 100 index.

HL Comment (9 November 2011)

The group's third quarter update (09Nov2011), while announcing progress, also saw the company highlighting above trend levels for large personal injury claims. This effectively led management to provide a profit warning, noting that "If there is no reversal in the final quarter for large claims, then the board anticipates that full year pre-tax profits would be towards the lower end of current analyst estimates." As for the third quarter itself, group turnover increased by 30% to £582m, with vehicle count increasing by 27% to 3.3 million (Q3 2010: 2.6 million). International car insurance turnover grew by 45% to £27.0 million (Q3 2010: £18.6 million), with modest UK premium rate increases being achieved.

Negative Points:

• A rise in personal injury claims looks as though it will impact current full year profitability expectations.
• The insurer operates in a highly competitive insurance space. A renewed outbreak of price competition in the UK motor insurance market could affect operating profit margins.
• The performance of Admiral's international businesses is becoming increasingly important. Failure to penetrate the business model into overseas markets could impact on future growth and profitability.

Positive Points:

• The group continues to increase market share - vehicle count increased by 27% to 3.3 million (Q3 2010: 2.6 million) during the quarter.
• The group's overseas business continues to be expanded.
• The company's combined ratio (an efficiency metric) remains significantly better than the broader market according to management.
• As of the half year results, Admiral declared its highest-ever interim dividend of 39.1 pence per share, up 20% (2010 interim: 32.6p).

Consensus:

On balance, market consensus indicates a hold.

All yield figures are variable and not guaranteed.

Fundamental Data

Values are quoted in the stock's local currency: British pound.

Year Ending	Revenue (m)	Profit Before Tax (m)	EPS (p)	P/E Ratio	PEG	EPS Growth (%)	Total Dividend	Dividend Yield
31-12-2010	574.60	265.50	72.30	21.00	1.00	22.00	50.60	3.30
31-12-2009	386.40	215.80	59.00	20.20	2.50	8.00	26.50	2.20
31-12-2008	301.40	202.50	54.90	16.60	1.30	13.00	24.70	2.70
31-12-2007	233.07	182.10	48.60	22.60	1.00	22.00	21.90	2.00
31-12-2006	188.29	147.34	39.80	27.60	1.30	22.00	18.00	1.60