LONDON (ShareCast) - (Sharecast News) - Insurer Admiral reported record profits for 2018 on Thursday, helped in part by the government's decision to unwind partially the change in the Ogden discount rate.
In the year to the end of December 2018, pre-tax profit rose 18% to a record £479.3m, while group net revenue increased 12% to £1.26bn and customer numbers grew 14% to 6.51 million. UK insurance customers grew 13% to 5.24m.

Admiral said the jump in profit was partly down to a £66m boost from a change in assumption on the Ogden discount rate - used to calculate compensation for personal injuries - to 0% from the previous 0.75%.

Without the Ogden change benefit, pre-tax profit was up just 2% to £410.2m.

Net insurance premium revenue came in at £671.8m from £619.1m the year before and the total dividend for the year was lifted 11% to 126p a share.

Chief executive officer David Stevens was pretty upfront in his assessment of the results: "Yes, we delivered record profits and dividends, but we were helped by the UK government's decision to unwind partially the change in the Ogden discount rate from a couple of years ago.

"Yes, we grew rapidly pretty much across the board, but growth in the core UK motor business slowed in the second half as we reduced our competitiveness in the face of rising claims costs.

"Yes, our biggest price comparison site, Confused.com, grew both market share and profits, butCompare.com, our US site, struggled as other advertisers upped their spends.

"There were, however, two unequivocal yes's. The rapid growth and improved ratios from our international insurers and our first ever 'First' in the Sunday Times Best Company to Work For competition."

Shore Capital pointed out that excluding the one-off benefit from Ogden, the results were actually 8% below its expectations.

"Looking into the numbers in a little more depth, as one might expect it is the UK where the majority of the miss to our numbers comes with lower than expected pre-tax profit when we exclude the impact of Ogden. As we have expected, the growth in motor continues to slow and the home and travel businesses have both delivered small losses during the year.

"The international and price comparison businesses are slightly better than expected but given the size of the UK motor book in relation to the whole group, this outweighs the positives elsewhere.

"Admiral has long traded on a premium to the rest of the UK non-life insurers, but we believe that this is not reflective of the actual outlook. The business remains fundamentally a UK motor insurer (97% of earnings, FY2019F) where Admiral is now a mature incumbent rather than a fast-growing challenger. The international operations are making headway but will still take several years to become material to earnings, in our view."

At 0825 GMT, the shares were down 3.2% to 2,120p.

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