Admiral announces special dividend as revenues beat forecast

7th Mar 2012 07:20

Car insurance giant Admiral has decided to pay a special dividend as it seeks to curb the number of high value bodily injury claims which have dented recent figures.Admiral saw pre-tax profits rise 13% to £299m in 2011 with net revenue up 36% at £870.3m. Both those figures beat the consensus forecast of £291m and £849m, respectively.Earnings per share came in at 81.9p, against a market expectation of of 81p.Admiral has also decided to pay a special dividend of 38.8p, raising the total dividend for the year to 75.6p, an 11% rise over 2010.The problem for the company has been the number of high value (£100,000+) bodily injury claims through 2009 and 2010, which has seen the share price drop nearly 40% in the last 12 months.In 2011 however, Admiral says: "a combination of benign weather, higher policy excesses, higher petrol prices and lower disposable income led to a fall in claims frequency of over 10% for the market as a whole...and helped slow the relentless rise in the cost of bodily injury claims in the UK market."A key metric for Admiral, like most insurers, is its combined operating ratio, which divides total claims by total written premiums; in 2011 this worsened from 89.3% in 2010 to 95.7%. Any number below 100% indicates a profit but this was a significant movement the wrong way.Nevertheless, Admiral's Chief Executive Henry Engelhardt was bullish, saying: "every year since we became a public company, Admiral Group has reported record turnover and record profits with a return on capital of 59%. If this is, as Dickens put it, the winter of despair, then I say: Please, Sir, may I have some more?"Investors appeared to like what they saw, just after the open the stock was up 6%.BS