Profits surge at Admiral as insurer prepares for float

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The Independent Online

Admiral Group, the car insurer which in April announced plans for flotation, unveiled half-yearly figures yesterday that showed a 30.5 per cent increase in profits and sales up 30.2 per cent.

Admiral Group, the car insurer which in April announced plans for flotation, unveiled half-yearly figures yesterday that showed a 30.5 per cent increase in profits and sales up 30.2 per cent.

Henry Engelhardt, the chief executive whose stake in the company he co-founded in 1993 is expected to be worth £80m on flotation, said the company expected to start trading on the stock market in "the last two weeks of September".

No new money will be raised from the float but the company's existing shareholders are expected to raise more than £200m when they sell about a third of the company as part of the initial public offering.

Mr Engelhardt said Admiral was considering the option of selling a further 15 per cent of the company if demand for the company's shares was strong. "All these things are up in the air at the moment as you can imagine. It will all come down to valuation in the next couple of weeks," he said.

The company's interim results showed its core profit was up 30.5 per cent to £45.3m, while turnover rose 30.2 per cent to £269.3m, in the six months to the end of June.

Admiral generally targets young drivers living in urban areas who do not have a full no-claims bonus. The amount the company paid out in claims plus expenses - the combined ratio - was equal to 77.5 per cent of premiums taken in. This compared with a combined ratio of 104-105 per cent of premiums for the industry as a whole, Mr Engelhardt said.

"It is a hard part of the market to underwrite profitably. We tend to ask more questions than other insurers and price policies in more detail," he said.

The company generates 70 per cent of its sales over the internet, which is up from 52 per cent at the same time last year. Its online distribution model means it has limited need for capital to support its organic growth. However, its advertising for its other brands, such as Elephant.co.uk, is high profile.

Mr Engelhardt, 46, formed the company out of a Lloyd's of London syndicate 11 years ago and now has 942,000 customers, which represents a 136,000 increase in the first six months of the year.

The company's float is being handled by Merrill Lynch and Lazards.

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