THE CHIEF executive of car insurer Admiral saw more than £115m wiped off the value of his stake in the business yesterday after the group finally succumbed to the industry-wide slump in profit growth.
Shares in Admiral, which also trades under the Bell, Diamond and Elephant brands, closed down 25.61 per cent at 887.5p after it said this year’s profit would come in near the bottom of forecasts because of a rise in injury claims.
Chief executive Henry Engelhardt is the biggest loser. His stake of 14.1 per cent stake, worth £454m at the start of the day, had fallen by £116.3m last night.
Admiral had outperformed the market with an unbroken run of profit increases since going public seven years ago, based on its ability to avoid high-risk drivers, but yesterday it said growth in its pre-tax surplus could be limited to 10 per cent this year.
The Cardiff firm, which also owns comparison website Confused.com, blamed a level of injury claims “above historical levels of experience” in the three months to the end of September. Analysts had expected profits to rise 21 per cent to £324m.
Motor insurers have paid out more in claims than they received in premiums every year since 1994, according to the Association of British Insurers, as claims filed by “no win, no fee” lawyers have increased.
Insurers have long battled fraudulent claims and are hopeful that plans to ban lawyers from paying fees to agents who refer accident victims to them will temper the increase.
However, Admiral revealed in August that fees from referring its own customers to <a href="http://www.fentons.co.uk/" target="_new">personal injury lawyers</a> generate six per cent of its UK pre-tax profit.