Car insurer Admiral reinstated its special dividend today as it reported a jump in first-half profit thanks to a slump in claims as coronavirus lockdowns kept drivers off the road in March and April.
The company’s combined ratio, considered the main gauge of an insurer’s profitability, dropped to 83 per cent from 92.3 per cent a year earlier. A level below 100 per cent indicates that premiums earned exceeded claims.
Admiral shares rose 5.2 per cent this morning to 2,658p.
Admiral’s results were similar to those from rival and Britain’s biggest car insurer Direct Line, which last week beat estimates for half-year profits and hiked its interim dividend due to the drastic drop in claims.
“Lockdown restrictions in the group’s markets resulted in significantly lower motor insurance claims frequency as customers stayed at home and fewer miles were driven,” Admiral said.
The company, which in April suspended its special dividend due to the global health crisis, said an interim dividend of 91.2p a share, including the 20.7p special dividend deferred in 2019, has been set.
Statutory pretax profit surged 31 per cent to £286.1m for the six months ended 30 June, beating the £233.2m analyst consensus.
Chief executive David Stevens said: “A year ago I described our results as ‘frankly a bit dull’. With the benefit of hindsight there’s a lot to be said for ‘dull’ if the alternative is a global pandemic.”
He added: “This year’s interims benefit again from our consistently competent underwriting and conservative reserving on past years, feeding into another strong set of results in the core business and beyond.”
During the crisis Admiral offered relaxed payment terms to customers, reduced or waived administration fees and in the UK offered a £110m premium refund for its motor insurance customers which amounted to £25 per vehicle on cover.