After Direct Line’s shocking profit warning and dividend cancellation earlier this year, it’s fair to say that expectations were low ahead of Admiral’s latest results.
However, they still make for ugly reading, which is why the share price has slumped on the news.
AJ Bell’s Russ Mould said: “The full year ordinary dividend has been cut by 40%, although investors are still getting a special dividend on top. In light of what happened with Direct Line, Admiral’s shareholders should thank their lucky stars they’re getting any cash at all.
“Part of the reason why Admiral is still able to return money to shareholders is that it is better capitalised and argues that it was quicker than most to react to changing market conditions. Inflation pushed up the cost of fixing cars and homes under insurance policies, and unfavourable weather conditions have caused an increase in claims.
“Admiral pushed up its prices as soon as its could, which hurt its growth as it became less competitive but helped to protect profits to some degree.”