Admiral Group Plc surged to the highest level since 2011 after the U.K. car insurer increased its full-year profit and dividend, boosted by lower-than-expected customer claims.
The stock jumped 7.5 percent to 1,526 pence to the highest since August 2011. Pretax profit rose 7 percent to 370 million pounds ($619 million) in 2013, the Cardiff, Wales-based company said today in a statement. The final dividend increased to 50.6 pence a share, including a 26.2 pence special payout.
“Investors will cheer the 10 percent rise in the dividend,” Marcus Barnard, an analyst at Oriel Securities, who has a sell rating on the shares, said in a note to clients. “Results are ahead of consensus estimates on most measures, but much of this beat can be attributed to reserve releases.”
Chief Financial Officer Kevin Chidwick said lower-than-expected U.K. claims in 2013 led to “strong release” in reserves that the insurer had set aside to pay to customers in prior years. The combined ratio, or claims and expenses as a percentage of premiums, improved to 81 percent from 89.1 percent.