Insurance firm Admiral has slashed its dividend after announcing a 39 per cent fall in its full year profits.
Shares in the Cardiff insurer plummeted on the news, before recovering slightly in today’s morning session, as Admiral said its 2022 dividend would be 40 per cent lower than in 2021 and 20 lower than in 2019.
Admiral said its business was hit by an uptick in claims, adverse weather, inflation, and new rules from the UK’s financial watchdog that prevent motor insurers from ‘price walking’.
The Financial Conduct Authority (FCA) rules block insurers from charging loyal customers more while offering cheaper prices to new customers.
Britain’s insurance firms have also suffered from an uptick in claims caused by extreme weather in 2022 and high levels of inflation, that has made it more expensive for them to fulfil claims for their customers.
The sector has also experienced an uptick in claims related to the lifting of the UK’s lockdown restrictions.
Speaking to City A.M., Admiral chief executive Milena Mondini de Focatiis said “2022 has been a challenging year” as she explained “high levels of inflation” hit the insurer’s business.
She noted that the weather 2022 had a “strong impact” on Admiral’s balance sheet as the insurance chief noted “hot summer” led to a surge in subsidence claims.
The “cold snap” in the winter 2022 also drove an uptick in home insurance claims as householders claimed for burst pipes.
The tough market conditions saw Admiral’s revenues drop by four per cent, to £1.49bn, causing its profits to plummet 39 per cent from £769m in 2021 to £469m in 2022.