What made Admiral Group (LON: ADM) the top gainer of FTSE 100?   

Summary

  • Admiral Group (LON: ADM) surged almost 4 per cent on Monday to emerge as the top gainer of FTSE 100.
  • The company expects a boost in pretax revenue due to fewer insurance claims during the lockdown period.
  • Admiral Group Plc is likely to announce dividends in the range of 110 to 125 pence per share.

Admiral Group Plc (LON: ADM), an FTSE 100 listed insurance company with a key focus on motor insurance products, anticipates a higher profit before tax in the first half of 2021. The announcement gave a major boost to the stocks on the bourse, and it closed higher by around 4 per cent.

The company’s guided pre-tax profit from continuing operations, during the first half of 2021, is expected to be in the range of £450 to £500 million. The result is expected to be published on 11 August 2021 after the internal governance process and external audit review.

The profit boost is due to fewer motor insurance claims during the lockdown period, which led to the release of reserve and profit commission revenue. Based on the positive outlook and strong solvency position of the company, it is also expected to give an interim dividend in the range of 110 to 125 pence per share.

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The company also completed sales of Penguin Portals businesses on 30 April 2021. The net proceeds received from sales was £460 million, of which £400 million will be distributed as special dividends in 2021 and 2022.

Admiral Group, which also offers personal loan and car finance services, with operations in over eight countries and an employee base of over 11,000 people, has however clarified that the current level of profits is primarily due to lockdown and lower claims during that period and hence profit boost may be one-off, and the same levels of margins may not be expected in the second half of the year as the lockdown open once again.

The current period loss ratio for the company turned favourable due to the extended lockdown restrictions, even though it had reduced its premium rates considerably over the past twelve months. It was the reason that the company had refunded premium of £110 million to customers in May 2020.

Admiral stock’s closed up by 3.94% to GBX 3,244.00 on 12 July, after moving in a range of GBX 3,200-GBX 3,316. The stock’s market cap stood at £9.65 billion, and it has given a return of around 42 per cent to its investors in the last one year.

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