Rising car insurance rates mean high profits for Admiral

Rising car insurance rates have led to high profits for one of the UK’s largest car insurance groups, according to new industry reports.

Pre-tax profits for discount car insurance provider Admiral have been reported at £160.6 million for the first six months of the year.  This is an increase of 27 per cent from last year’s first half profits for the insurer, they reported.

Total sales for the Cardiff-based insurance provider increased in excess of 50 per cent.  This led Admiral’s total sales to shoot past the £1 billion threshold for half year earnings for the first time ever.  Admiral, which also owns Diamonds, Elephant.co.uk, Confused.com, and other brands, said that the momentum of price rises and vehicle growth from last year and 2011’s first quarter carried it through through the year’s first half, even as the costs related to injury claims continue to increase in the UK marketplace, according to Henry Engelhardt, chief executive of Admiral.

The car insurance firm had 3.15 million policyholders in the first half of the year, significantly up from its 2010 first half figure of only 2.37 million.  However, Admiral’s loss ratio, which is the amount it pays out on claims in comparison to the amount it took in as premium payments, also rose by a substantial amount.

In the first six months of 2010, Admiral’s loss ratio was only 67.8 per cent.  However for the same period of time this year, the insurer’s ratio increased to 77.5 per cent.

Thanks to investors’ concerns regarding the increasing costs of claims, the insurance group’s shares tumbled in recent trading, resulting in a 9 per cent loss by midday.

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