The insurer still rewarded its staff with free shares, despite cutting its dividend
Admiral Group’s share price dropped by 7.2% in pre-market trading, according to the insurer’s full-year financial results for 2022, published on 8 March 2023.
Within this report, the insurer recorded a 39% drop in pre-tax profits to £469m, compared to £769m of pre-tax profits in 2021.
Admiral Group’s board therefore proposed a final dividend of 52p per share - this meant that its total payout to shareholders for 2022 amounted to 112p per share, down from 187p.
This represents a 40% cut to the full-year dividend.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Markets have punished Admiral shares after a 5% miss on profit before tax and shares were down around 7% in early trading.
”Higher claims and an increase in the cost of servicing those claims weighed on [Admiral’s] performance - though to some degree, that was already priced in.
”What spooked markets was the performance of the international business, which management described as having ’very low’ average premiums, specifically from Italy and Spain.
”The result for underwriting is an unprofitable position, with total costs exceeding premiums - though Admiral’s unlikely to be the only insurer navigating choppy waters.”
For example, Direct Line Group completely cut its dividend in January 2023.
Staff as shareholders
The insurer has delivered a Total Shareholder Return (TSR) - a way of measuring the overall returns an investor earns from a stock, based on capital gains and dividends - of 259% over the last 10 years.
However, around 10,000 Admiral Group employees will receive free shares awards worth up to £3,600 under the insurer’s employee share scheme.
The company’s outgoing chair, Annette Court, said: “We are always looking for new ways to add value and have consistently been recognised as a great place to work for over 11,000 colleagues.
“A key foundation stone of Admiral that has been continuously reinforced as the company has grown is that everyone matters, regardless of their role. This is demonstrated by the fact that all colleagues receive shares in the company every year.
“Having our people as shareholders remains a distinctive element of Admiral’s incentive schemes. These are designed to ensure that decisions support long-term value growth, that the right behaviours are rewarded and that our people’s interests are aligned with those of shareholders.
”We believe that, over the long term, share price appreciation depends on delivering great outcomes for our customers.”
No comments yet