Insurance company Admiral has confirmed it's on track to smash its expected profit target for the first half of the year following a profit rise from its motor injury claims provision.
The trading update was released on Monday, July 12 and revealed profit from the Cardiff-headquartered company's operations would come in between £450m and £500m. It's said, as a result, the firm would pay out an interim dividend of between 110p and 125p per share.
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A statement released about the trading update reads: "Based on preliminary figures, Admiral Group anticipates a higher than expected Group profit before tax for the first half of 2021 in the range of £450 to £500 million.
"The stronger result is due to unusually positive development in the cost of UK motor bodily injury claims from a number of prior underwriting years which has led to higher reserve releases and profit commission revenue. There has been no change to Admiral’s prudent approach to claims reserving.
"Further, motor claims frequency in 2021 to date has been lower than expected due to extended lockdown restrictions resulting in a favourable current period loss ratio, despite the significant reductions in Admiral’s premium rates over the past twelve months, which followed the £110 million of premium refunded to customers in May 2020.
"On the basis of these preliminary results and a very strong solvency position, the proposed 2021 interim dividend is expected to be in the range of 110 to 125 pence per share."
Despite the company's good news it looks like the profit boost may only be a one-off, with the insurer claiming it would not see the same results repeated during the second half of the year.
During the first half of the year the company also completed the sale of its Penguin Portals comparison businesses, netting the firm £460m. It's expected around £400m of this would be returned to its shareholders in the form of special dividends.
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The statement continued: "The sale of the Penguin Portals comparison businesses was completed on 30 April 2021. Of the net proceeds from the transaction of approximately £460 million, Admiral expects to return £400 million to shareholders in the form of special dividends phased over 2021 and 2022.
"The first payment will be made with the interim 2021 dividend referred to above. Further detail will be provided with the Group’s half year results announcement in August."
During the coronavirus lockdown, Admiral gave back £110million to car and van insurance customers due to people staying at home and driving less. You can find out more about their Stay at Home Refund here.
