WRAPUP 1-UK car insurers stall as prices flatline
* Direct Line Q3 profit down 4 percent
* Admiral Q3 revenue 2 percent lower
* Admiral shares down 5.1 pct, leading FTSE 100 fallers
LONDON, Nov 2 (Reuters) - Britain's two top car insurers, Direct Line Group and Admiral, reported weaker quarterly results, held back by flat or falling prices amid mounting competitive pressure.
In its first results statement since listing on the stock market on Oct. 11, Direct Line on Friday said its profit between July and September fell 4 percent, while Admiral reported a 2 percent drop in sales over the same period.
Both companies said the price of motor cover was under pressure as insurers compete aggressively for new business. The British motor insurance industry has not made a collective underwriting profit in 16 years, weighed down by a combination of falling prices and steadily rising claims, according to the Association of British Insurers.
Direct Line Chief Executive Paul Geddes said average prices were flat compared with the start of the year, having fallen back after initially climbing 2 percent.
"It's been up a bit through the year, but it's now back where we started," he said. "The market remains competitive."
Cardiff-based Admiral said motor insurance premiums were falling, and that it had responded by reining in sales growth to protect profits.
Car insurance prices went into reverse in the first half of 2012, ending a two-year increase which helped insurers absorb big increases in bodily injury claims, accountants Ernst and Young said in June.
Despite the companies' insistence that conditions are fiercely competitive, British anti-trust regulators are to probe the car insurance market after a consumer watchdog found evidence that drivers are being overcharged.
Shares in Admiral were down 5.1 percent by 1135 GMT, topping the list of FTSE 100 fallers. Direct Line shares were 1.4 percent lower, still 12.2 percent above their offer price.
Analysts said the drop in Admiral's quarterly sales suggested its earnings growth would slow, making it harder to justify the premium its stock trades at relative to peers.
"The group's revenue is slowing and profits are under pressure, in our view," Investec analyst Kevin Ryan wrote in a note. "This is an unappealing outlook for a stock on a price earnings ratio premium to the market."
Direct Line, Britain's biggest motor insurer, said it was halfway towards a targeted 100 million pounds ($161.40 million)of cost cuts, thanks in part to a previously-announced 900 job losses, or 6 percent of its workforce.
Royal Bank of Scotland, Direct Line's parent, sold a one-third stake in the company to stock market investors in the first stage of a disposal aimed at winning regulatory approval for state aid the bank received during the 2008 crisis.
Direct Line's cost reductions are intended to boost profit as the insurer, owner of the Churchill, Privilege and Green Flag brands, prepares for life as an independently listed group.
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