Admiral Earnings: Price Rises Over Inflation Lead to Underwriting Improvements That Should Continue

For 2023, Admiral reported profit before tax of GBP 442.8 million, or GBX 111.20 in earnings per share, and a GBX 103 per share full-year dividend. These stack up slightly lower than our respective estimates of GBP 468.6 million, GBX 117 per share, and GBX 105 per share, which were based on IFRS 4. The new accounting standard resulted in lower profit in UK motor in 2022 for comparison. Consensus estimates per LSEG were for GBX 116.60 in earnings per share and GBX 107.60 for a dividend for 2023. The proposed final dividend to be paid is GBX 52 per share, made up of a normal dividend of GBX 35.40 per share equal to 65% of post-tax profits and a GBX 16.60 per share special dividend. Admiral shares will trade excluding this final dividend from May 9, with May 10 as the record date. The final dividend will be paid June 10. The group’s solvency ratio at the end of 2023 stood at 200%, a rise of 20 percentage points on the prior year. This increase is predominantly a result of a rise in operating capital generation, in particular from UK motor. Sensitivities remain broadly unchanged. Total cash at the end of the year was GBP 353.1 million. We maintain our fair value estimate and narrow moat rating.