* Direct Line Q3 profit down 4 percent
* Admiral Q3 revenue 2 percent lower
* Admiral shares down 5.1 pct, leading FTSE 100 fallers
By Myles Neligan
LONDON, Nov 2 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
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.