One of the UK’s biggest insurers today confirmed it will increase its interim dividend by 10% - while voicing consternation at the impact of the discount rate on its results.
Admiral Group published interim figures for the six months ended 30 June 2017, in which it was confirmed the dividend is likely to be 56p per share, compared to 51p in the same period in 2016.
The group’s profit before tax rose 2% to £195m while group turnover climbed 15% to £1.45bn. The group now boasts 4.34m customers in the UK.
David Stevens, group chief executive, said most of the adverse impact from the change in the discount rate was absorbed in the second half of 2016, with some extra costs carrying over into 2017.
The government elected in February to change the level of deduction from personal injury compensation, also known as the Ogden rate, from 2.5% to -0.75%.
Admiral said the estimated cost to its business is around £150m, of which £105m was recognised in 2016 results. The balance will be recognised in the form of lower reserve releases and profit commission in the current period and subsequent two to four financial years as the affected claims settle.
Admiral also confirmed that turnover from car insurance ‘other revenue’ - which includes upgrade products such as breakdown, car hire and personal injury cover - has increased in the last year from £90.7m to £94.3m.
While profit increases are not at the same level as those reported by other insurers, claimant lobbyists point to dividend figures as proof that companies are not suffering from the new discount rate as much as they had warned.
Tom Jones, head of policy at Thompsons Solicitors, said: 'Insurers seem to think it’s perfectly acceptable to talk up a crisis and scare motorists into accepting that booming premiums are unavoidable while quietly pocketing the profit.
’Admiral’s profits and dividends are up yet again just like those at their competitors. Where is any credible independent evidence of the problematic market conditions insurers go on about?’