Admiral: H1 Results Show Why It Is The Best UK Motor Insurance Stock

(Preview) Company Update (ADM LN) (Buy)

Summary

• Admiral shares rose 12.6% in London on Wednesday after the company released H1 2022 results that were much stronger than expected.

• Uniquely among U.K. motor insurers, Admiral profits were larger than in 2019, despite elevated claim cost inflation so far in 2022.

• We believe Admiral benefited from more disciplined pricing and a narrower past price gap between new business and renewals.

• With large price increases across the U.K. motor sector, we expect customer churn to rise and Admiral to gain share even faster.

• With shares at 2,237.0p, the dividend Yield is 7%, and we expect a total return of 101% (26.3% annualized) by 2025 year-end. Buy.

Introduction

Admiral Group plc shares rose 12.6% in London on Wednesday (August 10) after better-than-expected H1 2022 results.

We upgraded our rating on Admiral to Buy in October 2020. Shares fell to a multi-year low in late July after two of its peers issued profit warnings, blaming elevated claim cost inflation. Even with Wednesday's rebound, Admir…