Share price rises 3.9% after two-week slump

Stocks

Admiral stock rose 3.9% in trading yesterday amid rumours that the insurer would pay out a £1 a share dividend in 2011.

Analysts had slashed dividend expectations to 75p a share after Admiral warned of lower-than-expected full -year profits due to rising bodily injury claims.

However, the Financial Times reported speculation that the payout would be higher as Admiral sought to appease shareholders disgruntled by the profit warning and resulting share slump.

Admiral paid a full-year dividend of 68.1p in 2010, up 18% on 2009’s 57.5p.

Admiral’s stock closed at 847.50p yesterday, up from 815.50 on Monday. The shares dropped 25.6% on November 9, the day of the profit warning, and continued to fall since. Admiral’s stock had dropped 46% between the profit warning announcement and yesterday’s rise.