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UPDATE 1-Admiral says revenue falls, sees no UK insurance premium growth
July 9, 2014 / 10:41 AM / 3 years ago

UPDATE 1-Admiral says revenue falls, sees no UK insurance premium growth

* H1 revenues 1 bln pounds from 1.1 bln in 2013

* Group premiums down 9 percent, margins squeezed

* UK premiums stabilising but no signs of growth

* Shares down 5.5 pct, lead FTSE 100 fallers (Adds analyst quote, share reaction)

By Simon Jessop

LONDON, July 9 (Reuters) - UK car insurer Admiral Group was hit hard on Wednesday after it said first half revenues fell, margins were squeezed and there was no firm evidence of a return to growth in UK car insurance premiums.

Its shares were down 5.6 percent at 0932 GMT, the biggest fall among the UK’s blue-chip FTSE 100, after the surprise update which accompanied news it planned an inaugural bond issue.

Group turnover in the six months to June was 1 billion pounds ($1.70 billion), down from 1.1 billion in the same period a year earlier, with total premiums down 9 percent, Admiral said.

“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,” said Chief Executive Henry Engelhardt in a statement.

While the number of UK cars insured rose to 3.1 million, turnover in that unit was down to 850 million pounds from 920 million pounds, it added.

That did not change its outlook for the business in 2014, although the company reiterated that margin expectations for business earned this year would be lower than in recent years, largely in response to the decline in premiums.

“Much of the impact of the reduced margin will be reflected in earnings of subsequent years,” Engelhardt said.

Admiral plans to launch its first ever bond offering, of up to 200 million pounds, to diversify its capital base and help it prepare to meet new regulations.

Berenberg analyst Peter Eliot repeated his “sell” advice.

While Admiral flagged growth in its international operations, with the number of vehicles insured rising to 600,000 from 500,000, turnover remained flat and Eliot said there was no sign of an improvement in underwriting “from what have been heavily loss-making businesses”.

Admiral’s full first-half results will be released on Aug. 13.

$1 = 0.5877 British Pounds Reporting by Simon Jessop; editing by Steve Slater and Elaine Hardcastle

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