Admiral thinks big but it faces an uphill task

Marc Sidwell
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ADMIRAL’S chief executive said yesterday that after twenty years the insurance group has just about finished pouring its metaphorical foundations and is ready to build its business skyward. Talk about long-term thinking. Luckily, investors have not had to be as patient as that might imply.

Yet strong performance following Admiral’s float in 2004 hit a snag in 2011, when the share price sank from highs in the summer above 1,740p to a November low of 800.5p.

Shares have recovered since, though not to their highs, despite the 15 per cent rise in profit before tax in 2012 announced yesterday sending the share price even higher.

But times are tough for insurers, as new rules and technological advances threaten to crash their business model: the EU gender directive, the OFT’s referral of the UK car insurance market to the Competition Commission and telematics all loom large, not to mention the coming float of rival Esure. Admiral will need steady hands to build high in this market.