Car insurance group sees share prices tumble by 30 per cent

One of the largest car insurance groups in the UK experienced a 30 per cent drop in its share price after it issued a warning that increased motor car insurance claims may impede its profits growth.

In its trading statement for the third quarter of 2011, discount car insurance provider Admiral reported that its profits would be much reduced from its original expectations.  The insurer, who employs in excess of 4,000 staff in Swansea, Newport, and Cardiff, did add that it was not all bad news, as their profits would still be 10 per cent higher than 2010 figures.

The announcement follows on the heels of the news that the car insurance industry may soon be subject to a referral fee ban handed down by the Government.  However, Admiral has been supportive of the impending ban, stating that something needs to be done about the so-called ‘compensation culture’ that currently grips the country.

Henry Engeldhardt, chief executive for the insurance group, remarked that Admiral is likely to have grown its UK vehicle count in excess of 20 per cent across 2011 in its entirety.  Mr Engeldhardt also said that the firm’s international insurance business has also been contributing to further improvement and strong growth in operating results.

The chief executive also remarked that he expected Admiral to once again post record profit figures for the entire year regardless of the increased number and value of large injury claims in 2011’s third quarter.  He expressed confidence that the insurance group was in a strong position for good news in the form of continued long term growth well into the New Year, thanks to Admiral’s growing customer base.

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