Admiral Sales Drop 6% as Growth in Home U.K. Market Contracts

Admiral Group Plc, the U.K. auto insurer that owns the price-comparison website, said revenue fell 6 percent in the first quarter as the firm restricted its pursuit of new business to protect profitability.

Revenue dropped to 551 million pounds ($843 million) in the first three months of the year, compared with 586 million pounds in the same period a year earlier, the Cardiff, Wales-based company said in a statement today. U.K. sales shrank 9 percent to 470 million pounds, while international revenue rose 20 percent to 48 million pounds.

“We continue to be focused on margin, not volume, and we believe this is not the right time for us to grow our market share in the U.K.,” Chief Executive Officer Henry Engelhardt said in the statement. “Our claims trends continue to be positive.”

Admiral, which insures 3 million vehicles in the U.K. and 458,000 overseas, grew rapidly after its initial public offering in 2004 by choosing better drivers and selling policy add-ons such as legal coverage. That expansion has tailed off, while no-win, no-fee lawyers are pursuing more claims against the unprofitable British motor-insurance industry.

The statement “confirms our view that growth in the U.K. is over and that profitability is under pressure,” said Peter Eliot, a London-based analyst at Berenberg Bank with a sell rating on the stock. “The profitable U.K. business is in fact declining fast. Unprofitable foreign growth does not compensate for this.”

The stock declined 1.5 percent to 1,329 pence a share at 9 a.m. in London, valuing the company at about 3.6 billion pounds.