Admiral Group (ADM)

[everhopeful]

Hmmm, thanks for flagging up Admiral Group. Present situation/share price/yield has got me thinking.....

What are you thinking?

[BullDog]

Hmmm, thanks for flagging up Admiral Group. Present situation/share price/yield has got me thinking.....

What are you thinking?

Perhaps buying a few ADM tomorrow/this week. Maybe. It's one of those shares that I have half an eye on that usually looks at bit too expensive and doesn't quite yield enough to attract me. When a price reset comes along, sometimes I can't resist clicking the buy button. Looking at ADM as a possible addition to the income-ish part of the portfolio, a little opportunistically. Interested in others thoughts here. Thanks.

[idpickering]

Perhaps buying a few ADM tomorrow/this week. Maybe. It's one of those shares that I have half an eye on that usually looks at bit too expensive and doesn't quite yield enough to attract me. When a price reset comes along, sometimes I can't resist clicking the buy button. Looking at ADM as a possible addition to the income-ish part of the portfolio, a little opportunistically. Interested in others thoughts here. Thanks.

I agree with your thoughts on ADM, and do intend buying more of their shares soon. As of now they make up just over 4% in capital value terms of my 28 share HYP.

Ian.

[Gerry557]

I originally bought when the price dipped due to the big seller.
Added more on the 13% drop.

I still have not managed to do detailed review of the results and presentation, maybe later today if I have time as I didn't manage it this weekend as planned.

My thoughts are that it's likely that current events have knocked this down, as they have with most shares and at some point will likely recover.

So adding a few whilst they are down fits the mantra "buy low sell high"

I'm also aware that my attempts to stay solvent might not last as long as events might and that things can get much worse.

To sum up, you pays your money and take a chance.

[monabri]

Down nearly 13% today ... can't see any news to suggest why the sell off?

[Itsallaguess]

Down nearly 13% today ... can't see any news to suggest why the sell off?

Some insurance-sector spill-over from negative news coming out of Sabre Insurance -

Sabre Insurance shares slid 35% today after it warned over the price impact of current “extraordinary” levels of inflation.

The company, which sells policies through brokers as well as directly via its brands Go Girl and Insure 2 Drive, has been forced into a significant repricing of new business in an effort to offset rapidly rising claims costs.

Despite price increases of about 19% year to date, it said the inflationary pressures will continue to have an impact.

Chief executive Geoff Carter added: “The strong recent progress in the business will be impacted in 2022 by the need to reflect the current extraordinary inflationary pressures.”

Sabre’s shares slumped by 67.6p to 121p today, while FTSE 100-listed Admiral dropped 7% and Direct Line Insurance by 5%.

Analysts at Peel Hunt cut their 2022 earnings forecast on Sabre by 65% today. They added: “We have seen this play out during the pandemic, but this time the margin impact is more acute as inflation is accelerating faster than Sabre can keep up with its pricing assumptions.”

The slide for the insurance sector came during another down day for the wider market, with the FTSE 100 index off 1% or 67.68 to 7088.69.

https://www.standard.co.uk/business/ftse-100-live-14-july-jp-morgan-earnings-us-interest-rates-barratt-developments-b1012266.html

Cheers,

Itsallaguess

[monabri]

34% down year to date....Quite a sentiment downturn.

[Dod101]

34% down year to date....Quite a sentiment downturn.

The market is really spooked, now quoted at under £20.

Dod

[monabri]

34% down year to date....Quite a sentiment downturn.

The market is really spooked, now quoted at under £20.

Dod

Sub £20 per share is lower than the shareprice in March 2020 when the markets were in Covid sell off mode!

Sabre Insurance are repricing new business (they're vehicle insurance only by the look of it). Admiral (and Direct Line Gp) have other areas of business. However, as vehicle insurance is a mandatory legal requirement then I would guess that we shall see car insurance price increases to follow to maintain margin.

Perhaps the ADM (not so) special dividends might be challenged in coming years, however there is 6.7% "yield on offer" for new buyers even discounting the specials.

[Dod101]

34% down year to date....Quite a sentiment downturn.

The market is really spooked, now quoted at under £20.

Dod

Sub £20 per share is lower than the shareprice in March 2020 when the markets were in Covid sell off mode!

Sabre Insurance are repricing new business (they're vehicle insurance only by the look of it). Admiral (and Direct Line Gp) have other areas of business. However, as vehicle insurance is a mandatory legal requirement then I would guess that we shall see car insurance price increases to follow to maintain margin.

Perhaps the ADM (not so) special dividends might be challenged in coming years, however there is 6.7% "yield on offer" for new buyers even discounting the specials.

Thanks. All true and they have already flagged that their profits will be lower this year. A cut in their dividend seems very likely. I suspect though that they may have a better grasp of their market and underwriting than many of their rivals and so should be able to react more quickly and effectively than them. Presumably high inflation though will increase their outstanding claims cost and it from there that their 'specials' come. Any increase in current premiums will not help that.

We should get some indication of what goes when they report their half year results next month.

Dod

[AndyPandy]

34% down year to date....Quite a sentiment downturn.

The market is really spooked, now quoted at under £20.

Dod

Sub £20 per share is lower than the shareprice in March 2020 when the markets were in Covid sell off mode!

Sabre Insurance are repricing new business (they're vehicle insurance only by the look of it). Admiral (and Direct Line Gp) have other areas of business. However, as vehicle insurance is a mandatory legal requirement then I would guess that we shall see car insurance price increases to follow to maintain margin.

Perhaps the ADM (not so) special dividends might be challenged in coming years, however there is 6.7% "yield on offer" for new buyers even discounting the specials.

I hold, having bought a couple of tranches in March but have taken the view that Mr Market has punished ADM exceptionally badly after the Sabre news, so have rustled up some top-up funds as a short-term mispricing punt. It does seem to be a severe overreaction, especially on top of the significant drop already this year. We shall see...

[idpickering]

I hold, having bought a couple of tranches in March but have taken the view that Mr Market has punished ADM exceptionally badly after the Sabre news, so have rustled up some top-up funds as a short-term mispricing punt. It does seem to be a severe overreaction, especially on top of the significant drop already this year. We shall see...

I agree with your sentiments. I topped up my ADM holdings recently, and am toying with buying even more.

As a footnote, after the Sabre results last week, and the resultant effects elsewhere, Direct Line have put out their trading update today.

Ian.

[Dod101]

Unless Admiral are really going bust they are surely oversold. Whilst the rest of the market gained about 2% (at least my portfolio did) in the last week, Admiral is down another 5.7% to £17.35. That is, they have more than halved in less than a year. A dividend cut is clearly priced in and not just the specials either. All eyes will be on their half year results when they announce them on 10 August. This has surely set them back several years because a 50% drop in the share price takes a doubling of it to get them back again.

They, even at their peak, were never a very big component of my portfolio. I have always been slightly wary of them, relying as they do on the UK motor insurance market for most of their profits. Still, they have done very well for most of us, that is, until, as always, they do not.

Dod

[idpickering]

2022 Interim Results Highlights.

The Group delivered another solid set of results in the first half of 2022 against a backdrop of challenging market conditions and
an elevated inflationary environment. Following on from two outlier years of higher profits resulting from Covid and related
factors, Group profits have returned to a level more comparable to pre-Covid periods whilst delivering positive change in a
number of key metrics. Highlights are as follows:
• 9.1 million Group customers at the end of the first half of 2022, a 35% increase from 6.7 million at the end of the first
half of 2019 and with over 1 million customers added since half year 2021
• Group pre-tax profits of £251 million, 48% lower than the exceptional first half of 2021, but 19% higher than H1 2019
• UK Insurance business year-on-year growth in both turnover (+3%) and customer numbers (+12%), despite significant
rate increases in UK Motor in response to elevated claims inflation
• UK Insurance profit of £322 million, 41% lower than 2021 (£544 million) with higher current period claims and lower
reserve releases and profit commission, but 26% ahead of H1 2019
• Strong performance from UK Household, with pre-tax profit of £7 million (£17 million excluding the impact of exceptional
weather in the period)
• A worse overall International Insurance result (loss of £22 million v loss of £1 million in H1 2021) than recent years,
4
primarily driven by a more significant loss in US Motor Insurance (due to much higher claims inflation) offsetting a small
profit in European motor insurance
• Strong performance from Admiral Money, with a 68% increase in loans balances compared to 30 June 2021, continued
favourable default experience and a first small profit for the first half of 2022

Dividend

The Board has declared an interim dividend of 60.0 pence per share, made up of a normal dividend of 44.2 pence and a special
dividend of 15.8 pence per share. The payment represents 90% of earnings per share for the first half.
The Board has also declared a further special dividend of 45.0 pence per share reflecting the final payment of the phased return
to shareholders of the proceeds from the sale of the Penguin Portals comparison businesses. This payment, along with the
previous two payments of 46.0 pence per share, brings the total amount returned to shareholders to just over £400 million.
The total interim dividend, including the further special dividend is 105.0 pence per share, made of a normal dividend of 44.2
pence per share and a special dividend of 60.8 pence per share.
Payment will be on 30 September 2022. The ex-dividend date is 1 September 2022 and the record date is 2 September 2022.

https://admiralgroup.co.uk/sites/defaul ... ns.pdf?v1=

Ian.

[Dod101]

It is true of course that Covid probably produced artificially benign conditions for the last couple of years, but I find it difficult to describe these results as 'solid'. Profit seems to be down everywhere and of course the dividend has been substantially cut. That is not what management is paid to do. Easy when the going is good to produce good results, but when the going gets tough........

Dod

[monabri]

According to Citywire, Merchants Investment Trust have opened a position in Admiral.

https://citywire.com/investment-trust-i ... efea=91468

(Might require log in but here's a summary)

"Gergel pounces on cheap Admiral
Citywire A-rated Allianz manager Simon Gergel added Admiral (ADM) to his £345m UK equity income fund that he manages with Richard Knight in January after the share price of the ‘quality’ insurer fell steeply."

‘Admiral shares fell sharply in 2022, and this provided us an opportunity to invest at an unusually attractive price for a company of this quality, and paying a high dividend yield"

Gergel notes the insurance industry was hit by inflationary costs last year but have been increasing insurance policy costs to restore profitability.

Nothing that we didn't know and the response of policy price increases by ADM (and others, no doubt) was to be expected.

(The article doesn't indicate the size of the holding...I'd guess less than 2% of the MRCH portfolio....).

[teecee90]

.... have been increasing insurance policy costs to restore profitability.

Tell me about it.....!!

[Dod101]

.... have been increasing insurance policy costs to restore profitability.

Tell me about it.....!!

We should soon know. The 2022 results are due on 8 March. Hopefully we can see some progress in restoring profitability. We will then know if the shares are cheap.

Dod

[teecee90]

Sorry - I was referring to my recent multi-car policy renewal notice from Admiral. Premium is up 75% and they will be losing my custom as a result. If that's replicated across the board they could lose a lot of customers.

[monabri]

(TBH , I was umming and ahhing as to whether to post on the ADM companies board or on the MRCH board).

From the Merchant's Trust website , the latest factsheet reports

https://www.merchantstrust.co.uk/-/medi ... pdf?rev=-1

"Other than the investment in Pets, we continued to build a position in Admiral and added to DCC and Energean. These investments were
funded primarily by some profit taking in CRH and BAE Systems."