Admiral’s full-year turnover (an in-house revenue measure) rose 28% to £6.2bn, driven by a 14% rise in customer numbers and higher prices.
Profit before tax rose 90% to £839mn, driven by performance from UK motor insurance which benefited from significantly better insurance profitability.
A final dividend of 91.4p was announced, with a special dividend of 29.6p on top, taking the total to 192.0p for the year, up 86%. Including announced dividends, the solvency ratio, which measures balance sheet strength, improved from 200% to 203%
Admiral expects top line growth in 2025, but at a more modest pace, reflecting a softening market.
The shares rose 6.5% in early trading.
Our view
Admiral is continuing to show why it’s a best-in-class operator, with 2024 performance a decent clip ahead of expectations.
UK motor insurance isn’t the only business unit, but its by far the biggest and most important. Price hikes in the past few years have now started to make a difference and insurance profitability has improved significantly.
The outlook for 2025 is more muted, with Admiral using its strong base to lower prices as we moved through 2024. Given the lag between when prices change and the impact is felt, this will be a headwind for 2025. But the positive news is that by lowering prices ahead of the wider market, Admiral’s been able to attract more customers, reaching record levels.
International efforts are underway and there’s a small but growing home insurance business in the UK. The US market has finally ticked into positive territory but Europe remains loss making. These are small in the grand scheme of things, so not major needle movers.
The business model relies heavily on reinsurance, where an insurer passes on insurance business to a third party who takes on the liability. This is a fairly common practice and allows insurance companies to build their brand by taking on all manner of customers but only being on the hook for risks they want.
Admiral’s ace is a significantly higher reinsurance rate than peers. Relationships are key, and this strategy allows Admiral to be selective on its risks while funnelling more data to the group's bespoke machine learning tools. It's a recipe that's helped deliver market-leading performance; there's no guarantee it will continue.
The key risk we see is regulation. Admiral makes a good chunk of profit selling add-on products. But with the regulator looking to clamp down on unfair practices we see these types of revenue streams as coming under pressure.
The group's strong solvency ratio, well above its target range, supported a generous dividend. Further growth this year seems unlikely due to a softer market and one-off factors boosting the 2024 payout. But even if maintained, current levels provide an attractive yield, though not guaranteed.
We think Admiral has several competitive advantages over many of its peers, from bespoke data analytics to strong relationships with reinsurers. These strengths are not fully reflected in the current valuation, which looks attractive to us. There are no guarantees, and the market is expected to soften in the near term, adding risk.
Environmental, social and governance (ESG) risk
The financials sector is medium-risk in terms of ESG. Product governance is the largest risk for most companies, especially those in the US and Europe with enhanced regulatory scrutiny. Data privacy and security are also an increasingly important risk for banks and diversified financial firms. Business ethics, ESG integration and labour relations are also worth monitoring.
According to Sustainalytics, Admiral’s overall management of material ESG issues is average.
There is board-level oversight and a strong whistleblower programme. But the group’s product governance has room for improvement with no official responsible marketing policy in place as well as a lack of regular training and reporting on its responsible product programme. Admiral’s management of data privacy is average, but lacks oversight and regular assessment.
Admiral key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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