Admiral sees higher premiums but margins fall - UPDATE

13th Aug 2014 07:25

Car insurer Admiral forecast a rise in premiums in the next few months but said margins on business secured this year were lower.Admiral, which also owns price comparison site Confused.com, said there were signs in the UK that premiums had halted a decline sparked by tough competition as companies tried to increase their market share.The group said premiums were likely to be higher in December than they were in June but it was uncertain about the scale of the rise.Admiral's premium rates were broadly flat in the first half of the year, though reductions in 2013 drove a 9% drop in total premiums against the first half of 2013. It increased UK customers by 130,000 compared to this time last year.It said the number and frequency of accidents giving rise to claims had gone down in the last decade and the economy had improved, but the market was driven more by companies' desire to boost market share.Chief executive Henry Engelhardt told reporters on a media conference call: "I see prices perhaps going up a little bit in the course of the next few months and up a bit more in the next year."The group said its expectations for its UK business in 2014 were unchanged, but margin expectations for business earned this year were lower than in recent years due to falling premium levels in the last three years.It refused to comment on speculation about proposed acquisitions in telematics and said a bond issue in July had nothing to do with any such plans.But it said the issue would help it to cash in on "growth opportunities" in all its businesses in coming years as well as to meet more stringent capital requirements demanded by the industry's Solvency II regulations.Engelhardt said: "With all the businesses we have and the uncertainty about capital requirements for Solvency II, there's a likelihood we'd need new capital."Admiral reported a 2% rise in interim pre-tax profits, excluding minority interests, to £184.9bn. Statutory profits before tax increased 1% to £183.3m. Turnover at the group level fell 5% to £1.04bn. The group's combined ratio improved to 85.1% from 87.4% in the comparable period of a year ago. Profits in UK car insurance rose 8% to £207.7m, but losses in its international operations widened by 44% to £15.5m.At 49.4p per share the interim dividend was slightly ahead of the 48.9p expected by some analysts. Shares fell 65p or 4.45 to 1385p by 12:27 in London.PW