* UK motor premiums fall 9 pct
* Reserve releases higher by 40 pct
* No firm evidence of return to premium growth
(Adds quotes, details, share reaction)
By Richa Naidu
LONDON, Aug 13 British motor insurer Admiral
Group Plc posted a 2 percent rise in first-half pretax
profit, offsetting a decline in turnover by releasing reserves
set aside to pay off claims.
The company also reiterated a bleak outlook for domestic
premiums as it continues to cut prices to compete with rivals
Direct Line and esure Group and increasingly
popular price-comparison websites.
Admiral's shares were the biggest loser on the FTSE 100
index, falling as much as 5 percent early on Wednesday.
"In the UK there are some signs that premiums are no longer
falling but we have yet to see firm evidence of an inflection
point and a return to premium growth," Chief Executive Officer
Henry Engelhardt said in a statement.
Premiums written fell about 9 percent to 776 million pounds
($1.3 billion) at Admiral's core UK car insurance business,
dragging overall turnover down by 5 percent.
"Unless the market turns, Admiral's earnings are likely to
come under pressure," UBS analyst James Shuck said, maintaining
his "neutral" rating on the stock.
Admiral's adjusted pretax profit increased to 184.9 million
pounds in the first-half ended June, due mainly to a 40 percent
rise in reserve releases, the funds that had been set aside to
cover claims losses.
"(Profit) was entirely driven by higher reserve releases and
commutations," Shuck said, adding that it was important to note
that without these funds, Admiral's UK motor loss ratio
deteriorated to 85.3 percent from 81.5 percent.
Admiral said the loss ratio improved to 66 percent from 67.2
percent with the reserve releases.
A higher ratio means the insurer paid out more in losses and
expenses than it earned in premiums.
Admiral also said its international car insurance business
widened its pretax loss to 15.5 million pounds, while operating
profit more than halved at its price comparison unit, which owns
the Confused.com brand.
The insurer promoted deputy CFO Geraint Jones to chief
financial officer with immediate effect on Wednesday. Jones
replaces Kevin Chidwick who will focus on his role heading
Admiral's Elephant Auto Insurance business in the United States.
Admiral raised its interim dividend by 1 percent to 49.4
pence per share. The company's London-listed shares were down
about 4.5 percent at 1,385 pence at 1024 GMT.
($1 = 0.5945 British pounds)
(Reporting by Richa Naidu; Editing by Nishant Kumar and William