The motor insurance market was a great place to be during the pandemic, no-one was on the road but they still needed to keep their vehicles insured. This meant the premiums piled up while businesses like Admiral were paying out relatively few claims.
That trend has reversed now and the cost of claims has been subject to the same inflationary pressures as everything else.
While premiums have been going up, a competitive market means Admiral and its peers have not been able to claw back all their extra costs.
AJ Bell’s Russ Mould said: “Little wonder Admiral has pointed to discipline in its pricing, even if that’s meant sacrificing customer numbers. The company has also had to be more disciplined in terms of capital returns – scaling back dividend payments which will have come as a shock to investors who saw it as a reliable source of dividend growth.
“At least the company seems to think the cycle is turning and shareholders will hope that, as it does, Admiral can return to its previous track record of impressive performance.”