Lower than expected bodily injury claims helped Admiral prove that small can be efficient with a 49% jump in profits for 2002.

The direct motor insurer made £55m, up from £37m in 2001. The ten-year-old company achieved a combined ratio of 80%, showing a higher degree of efficiency than many of its competitors. It achieved 91.2% in 2001.

Cox previously described its 89% motor combined ratio as market leading, although its figure is based on a much larger business: its motor syndicate wrote gross premium of £526.7m compared to Admiral's total written premium of £333m.

Admiral's written premium income, after taking off payments to reinsurers, was £69m. Its customer base increased by 16% to 705,000 from 608,500 for its brands Admiral,

Bell Direct, Diamond and
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Key to its combined ratio was a claims ratio of 64.6%, due partly to lower than expected bodily injury claims, said chief executive Henry Engelhardt.

There had been an "element of pessimism" in the company's forecasts coupled with good claims management, he said. Other factors were good risk selection and pricing. He said: "These are fantastic numbers and go a long way to dispelling the myth of `critical mass'. We're quite a bit smaller than our peer group, yet we have the best combined ratio."