Admiral Group plc (LON:ADM) has announced its 2024 half-year report.
Six months ended: | |||
| 30 June 2024 | 30 June 2023 | % change vs. 2023 | |
| Group profit before tax | £309.8m | £233.9m | +32% |
| Earnings per share | 77.5p | 57.6p | +35% |
| Interim dividend per share | 71.0p | 51.0p | +39% |
| Return on equity *1 | 45% | 39% | +6pts |
| Group turnover *1 | £3.21bn | £2.24bn | +43% |
| Insurance revenue | £2.21bn | £1.61bn | +38% |
| Group customers*1 | 10.53m | 9.41m | +12% |
| UK insurance customers*1 | 8.23m | 7.01m | +17% |
| International insurance customers*1 | 2.12m | 2.21m | -4% |
| Admiral Money gross loan balances | £1.03bn | £1.03bn | — |
| Solvency ratio (post-dividend) *1 | 198% | 182% | +16pts |
*1 Alternative Performance Measures – refer to the end of the report for definition and explanation.
Over 12,500 employees each receive free share awards worth up to £1,800 under the employee share scheme based on the interim 2024 results.
Comment from Milena Mondini de Focatiis, Admiral Group Chief Executive Officer:
“We have delivered a strong set of results in the first half, growing profits, revenues and customer numbers, demonstrating our resilience and agility in changing market dynamics.“Given our earlier pricing response to inflation in previous years, we have been able to be more competitive in H1 and this helped grow our customer base 12 per cent to 10.5 million. This was driven by a record 5.5 million vehicles on cover in the UK and nearly half a million more customers across other product lines in the UK.
“Our Group turnover increased 43 per cent to £3.2 billion and Group profit has increased by 32 per cent to £310 million, led by strong UK Motor performance. We maintained a strong capital position with a solvency ratio of 198 per cent after a higher interim dividend per share of 71p.
“We continue to evolve our core technical competences leveraging new data and technology. Our focus now is on unlocking the benefit for our customers of scaled agile for faster delivery and enhancing our capabilities in AI application.
“I am pleased to announce that our science-based targets have been approved by the SBTi and our ESG score was recently upgraded to AAA by MSCI.
“Looking ahead, we remain well-positioned for continued success.
“As always, I am particularly proud of our people and hearing how they have been there for our customers. Because of their hard work, they have been an instrumental part of our financial strength and our success so far.”
Dividend
The Board has declared an interim dividend of 71.0 pence per share (2023 interim: 51.0 pence per share) representing a normal dividend (65% of post-tax profits) of 51.3 pence per share and a special dividend of 19.7 pence per share. The interim dividend will be paid on 4 October 2024. The ex-dividend date is 5 September 2024 and the record date is 6 September 2024.
Management presentation
Analysts and investors will be able to access the Admiral Group management presentation which commences at 9.30 BST on Thursday 15 August 2024 by registering at the following link to attend the presentation in person, or access the presentation live via webcast or conference call: 2024 Interim Results | Admiral Group Plc. A copy of the presentation slides will be available at the following link: Results, reports and presentations | Admiral Group Plc (www.admiralgroup.co.uk).
H1 2024 Group overview
| £m | 30 June 2024 | 30 June 2023 | % change vs. 2023*4 |
| Group turnover (£bn) *1*3 | 3.21 | 2.24 | +43% |
| Net insurance and investment result | 280.9 | 181.4 | +55% |
| Net interest income from financial services | 36.3 | 31.7 | +14% |
| Other income and expenses | 6.5 | 27.1 | -76% |
| Operating profit | 323.7 | 240.2 | +35% |
| Group profit before tax | 309.8 | 233.9 | +32% |
| Analysis of profit | |||
| UK Insurance | 363.3 | 303.9 | +20% |
| International Insurance | 1.7 | (7.6) | nm |
| International Insurance – European Motor | 1.1 | 4.7 | -77% |
| International Insurance – US Motor | 3.0 | (10.4) | nm |
| International Insurance – Other | (2.4) | (1.9) | -27% |
| Admiral Money | 6.8 | 2.7 | +154% |
| Other | (62.0) | (65.1) | +5% |
| Group profit before tax | 309.8 | 233.9 | +32% |
| Key metrics | |||
| Reported Group loss ratio*1*2 | 57.3% | 63.5% | +6pts |
| Reported Group expense ratio *1*2 | 23.1% | 26.3% | +3pts |
| Reported Group combined ratio *1*2 | 80.4% | 89.8% | +9pts |
| Insurance service margin *1*2 | 11.9% | 10.7% | +1pts |
| Customer numbers (million) *1 | 10.53 | 9.41 | +12% |
| Earnings per share | 77.5p | 57.6p | +35% |
| Dividend per share | 71.0p | 51.0p | +39% |
| Return on equity *1 | 45% | 39% | +6pts |
| Solvency ratio *1 | 198% | 182% | +16pts |
*1 Alternative Performance Measures – refer to the end of the report for definition and explanation.
*2 Reported Group loss and expense ratios are calculated on a basis inclusive of all insurance revenue – this includes insurance premium revenue, net of excess of loss reinsurance plus revenue from underwritten ancillaries, an allocation of instalment income and administration fees/related commissions. See glossary for an explanation of the ratios and Appendix 1a for a reconciliation of reported loss and expense ratios, and insurance service margin, to the financial statements.
*3 Refer to note 14 for reconciliation to statutory income statement measures.
*4 For % change vs 2023, + shows favourable movements, – shows unfavourable movements. Nm – not meaningful.
Group Highlights
Admiral reports strong growth in its UK motor insurance business and increased profits for the first half of 2024. Highlights are as follows:
- 10.53 million Group customers at 30 June 2024, a 12% increase driven by UK Motor where over the past six months Admiral’s prices were very competitive relative to the market
- Group turnover 43% higher driven both by growth in the number of customers and the impact of higher average premiums across the Group
- Group pre-tax profits of £310 million, 32% higher than the first half of 2023, driven by an improved current year underwriting performance and continued significant prior period releases
- The UK Insurance business generated strong year-on-year growth in customers (+17%) and turnover (+57%). The increase in turnover is due to the significant rate increases in 2022 and 2023 in response to the elevated claims inflation experienced over the past few years. Admiral decreased rates modestly around the start of 2024 as market rates were still increasing, leading to an improved competitive position and significant growth in UK Motor customer numbers
- UK Insurance profit was £363 million, 20% higher than H1 2023 (£304 million), as a result of the higher average premiums now earning through which positively impacted the current period combined ratio, along with continued significant releases of prior period claims reserves
- Positive performance from UK Household, with pre-tax profit of £11 million (H1 2023: £9 million) driven by favourable prior year development and an improved current year combined ratio. Customer numbers grew by 8% to 1.8 million
- The More Than acquisition completed in March 2024, with renewals having started in late July 2024 for UK Household and due to commence later in August for UK Pet
- An improved International Insurance result (profit of £2 million v loss of £8 million in H1 2023), featuring a positive result in US Motor and a small profit in European Motor. The result includes the adverse impact of updating Italian reserves for the recent Milan court update on injury claims costs
- Another encouraging period for Admiral Money, where loan balances were flat half-year on half-year, but higher than 31 December 2023, and profit increased to £6.8 million (H1 2023: £2.7 million).
Earnings per share
Earnings per share for the first half of 2024 is 77.5 pence (H1 2023: 57.6 pence), with the increase of 35% slightly higher than the growth in pre-tax profit (32%). This is as a result of a lower effective tax rate in the first half of 2024.
Return on equity
The Group’s return on equity was 45% in the first half of 2024, 6 points higher than the 39% reported for H1 2023. The increase is the result of significantly higher profit recognised in H1 2024, partially offset by higher average equity.
Dividends and solvency
The Group’s dividend policy is to pay 65% of post-tax profits as a normal dividend and to pay a further special dividend comprising earnings not required to be held in the Group for solvency, buffers or purchasing shares for the Group’s employee share plans. No shares are expected to be purchased for the share plans until 2026.
The Board has declared an interim dividend of 71.0 pence per share (approximately £213 million) split as follows:
- 51.3 pence per share normal dividend
- A special dividend of 19.7 pence per share
The 2024 interim dividend reflects a pay-out ratio of 92% of earnings per share. 71.0 pence per share is 39% higher than the interim 2023 dividend (51.0 pence per share), in line with the growth in earnings per share.
The 2024 interim dividend payment date is 4 October 2024, ex-dividend date 5 September 2024 and record date 6 September 2024.
The Group reports a strong post-dividend solvency ratio of 198%. The ratio has decreased by 2 percentage points compared to the end of 2023, the strong underwriting performance in UK Motor being more than offset by a reduction of circa 11 points as a result of the exclusion of intangible assets recognised from the More Than acquisition, and an increase in the solvency capital requirement as a result of growth in the business.
The Group’s results are presented in the following sections:
- UK Insurance – including UK Motor (Car and Van), Household, Travel and Pet
- International Insurance – including L’olivier (France), Admiral Seguros (Spain), ConTe (Italy), and Elephant (US)
- Admiral Money
- Other Group Items – including Admiral Pioneer and other central costs
Economic background
Whilst remaining higher than its long-term average, the elevated inflation observed over the course of 2022 and 2023 appeared to be reducing in the first half of the year, including in the Group’s main UK market. Price increases implemented to mitigate the impact of the higher inflation have resulted in a stronger current period underwriting performance compared to the prior year, particularly in UK Motor.
Admiral focuses on medium term profitability and has maintained a disciplined approach to business volumes. The customer base in UK Motor grew significantly in H1 2024 as price reductions by Admiral around the start of the year significantly improved the competitive position. The Group continues to set claims reserves prudently.
Admiral Money continuously evolves its underwriting criteria to reflect the macroeconomic environment. The business continues to hold appropriately cautious provisions for credit losses.
