Profitable growth in UK ‘is over’ according to Berenberg’s Peter Eliot


UK motor insurer Admiral should consider selling more of its international units, suggests Berenberg Bank equity analyst Peter Eliot.

While Admiral as a group had a record year in 2012, its international motor insurance operations posted a combined operating ratio of 177% (2011: 164%) and a loss of £24.5m (2011: £9.5m loss).

Eliot wrote in a research note that the international operations are now “costing the company”.

He said: “We never expected the international insurance operations to be able to replicate Admiral’s UK success, but we had also not expected them to cost Admiral the amount of money that they are now doing.

“Admiral would do well to make more disposals.”

Admiral pulled out of the German car insurance market in 2011 as a result of losses.

UK growth ‘over’

Eliot also said that profitable growth for Admiral in the UK is “over”.

He said: “Admiral grew its UK vehicle count by only 2% across 2012 and H2 showed a decline. This can largely be attributed to the lack of further growth of price comparison websites and the increase in competition in Admiral’s target markets.

“We expect these headwinds to be similar, if not become more severe, in 2013.”

Berenberg rates Admiral stock as a “sell”.