Admiral hopes to return £400m to its shareholders via special dividends following the sale of Penguin Portals completing in April
Admiral Group predicts it will reap high pre-tax profits for the first half of 2021 - it has anticipated a group profit in the range of £450m to £500m before tax, which is higher than it expected.
The insurer attributed this stronger result to an unusually positive development for the cost of UK motor bodily injury claims from a number of previous underwriting years, which has led to higher reserve releases and profit commission revenue.
Admiral has not changed its prudent approach to claims reserving as a result of this, however.
In addition, motor claims frequency in 2021 to date has been lower than expected due to extended Covid-19 lockdown restrictions - this has resulted in a favourable current period loss ratio, despite the significant reductions in Admiral’s premium rates over the past 12 months, which followed the £110m of premium it refunded to customers in May 2020.
The insurer does not expect that the level of reserve releases and profit commission for the first half of 2021 will be repeated in the second half of the year.
Very strong solvency position
Based on these preliminary results and a very strong solvency position, the proposed 2021 interim dividend is expected to be in the range of 110 to 125 pence per share.
Meanwhile, the sale of the Penguin Portals comparison businesses, which completed on 30 April 2021, created net proceeds of approximately £460m.
As a result, Admiral expects to return £400m to its shareholders in the form of special dividends, which it hopes to implement across 2021 as well as 2022.
The first payment will be made with the interim 2021 dividend.
Further details on these figures will be provided within the group’s half year results in August, Admiral said.