Large claims put dampener on record year at Admiral

Insurance firm Admiral announced it expected record profits this year but warned they would be at the lower end of expectations due to a jump in personal injury claims.

In its third quarter statement the firm said it expected to report record profits for the full year, around 10% higher than the previous year.

Chief Executive, Henry Engelhardt, said Admiral now insured over three million vehicles.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

"Across 2011 as a whole we are likely to have grown our UK vehicle count by more than 20%," he said.

"Our international insurance business also continues to achieve strong growth and further improvement in operating results."

However, the firm said that the frequency and expected cost of new large personal injury claims had remained above historical levels of experience.

Admiral said it expected this trend would hit projected ultimate loss ratios for 2010 and 2011, which would in turn affect both overall reserve movements and recognised profit commission.

"If there is no reversal [in the fourth quarter] of this higher than normal level of large claims, we anticipate that full year pre-tax profits will be towards the lower end of the range of analysts' estimates, or some 10% ahead of 2010, with no further reserve releases in the second half," Engelhart said.

Admiral's third quarter figures showed group turnover increased by 30% to £582m, while International car insurance turnover was up 45% to £27m.

The total number of vehicles it insured increased 27% to 3.3 million, with the company's international car insurance vehicle count up 53% to 267,000.