Admiral Group Plc (ADM), the U.K. car insurer that owns the confused.com website, said full-year pretax profit may be toward the lower end of analysts’ estimates should a spate of large claims continue in the fourth quarter.
Third-quarter revenue climbed 30 percent to 582 million pounds ($935.5 million) in the three months to Sept. 30, compared with 446 million pounds a year earlier, the Cardiff, U.K.-based insurer said today in a statement. U.K. ancillary income per vehicle was “in line” with first-half results, the company said.
“Notwithstanding the continued higher level of large claims in the quarter, I expect us to once again report record profits for the full year, probably some 10 percent higher than last year,” Chief Executive Officer Henry Engelhardt said in the statement.
Admiral, which insures about 3 million U.K. vehicles, is the worst-performing stock in the Bloomberg Europe 500 Insurance Index over the last three months after the firm held back more cash to cover claims from previous years. Admiral’s shares fell 15 percent in the period, while the index rose 5.3 percent.
If there is “no reversal” in the fourth quarter “of this higher than normal level of large claims, we anticipate that full year pretax profits will be toward the lower end of the range of analysts’ estimates, or some 10 percent ahead of 2010, with no further reserve releases in the second half,” the company said in the statement.
The insurer has won market share by undercutting rivals on price over the last two years and posting better underwriting results. British insurers, including Admiral, make extra income by selling accident victims’ details to personal injury lawyers and car-rental firms. The U.K. government said in September it plans to ban referral fees, which analysts say will crimp Admiral’s earnings.
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