Admiral: Reviewing Competitor Results Ahead Of H1 Report

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

Summary

• Admiral shares fell 26% in three trading days in July after two competitors warned on profits; it reports H1 results next week.

• Competitors' H1 results showed large claim cost inflation, profit margin declines and relatively flat volumes. Admiral is likely similar.

• Competitors have raised their pricing to fully reflect inflation and kept their old margin targets, implying a benign market for Admiral.

• Ultimately, the sector is cyclical but long-term profitability is intact, and Admiral should gain when the rebound comes.

• With shares at 1,965.9p, we expect a total return of 104% (26.9% annualised) by 2025 year-end. The Dividend Yield is 7%+. Buy.

Introduction

Admiral Group PLC, the #1 U.K. motor insurer which has been Buy-rated in our coverage since October 2020, is scheduled to release its H1 2022 results next Wednesday (August 10).

Admiral shares fell 26% (in GBP in London) between July 14 and July 18, after profit warnings at competitors Sabre Insurance and Direct, but have regained …