MARKET REPORT: Motor insurance claims send Admiral into reverse

Insurer Admiral took a hit as it slashed its dividend after motor claims hurt profit.

Bemoaning one of the most ‘challenging years’ for decades, the blue-chip firm reported a 39 per cent fall in profits for 2022 to £469million.

That was well below the £485million pencilled in by analysts and Admiral cut its dividend payment 40 per cent to 112p a share. The stock fell 4.1 per cent, or 85p, to 2003p.

Slump: Admiral said it had suffered one of the most ‘challenging years’ for decades and reported profits of £469m for 2022 – well below the £485m pencilled in by analysts

Admiral has been hit by the soaring cost of car parts, which has driven up the value of claims.

Bad weather also took its toll amid a flurry of claims for everything from burst water pipes during the cold snap to damage caused by Storm Eunice. But it pulled in more customers, while revenue was up 5 per cent to £3.7billion.

Peel Hunt said a decision to hike car insurance premiums by 20 per cent, in response to the rising cost of claims, ‘is a good sign that the UK motor market is returning to some form of discipline’.

But the setbacks echoed those at Direct Line, which in January scrapped its dividend after claims surged following the deep freeze in December. It was not all doom and gloom, however.

Hiscox, the Lloyd’s of London insurer which provides cover for everything from natural disasters to cyber attacks, posted a £38million profit for 2022.

While this was far below the £162million of 2021, analysts had expected a £75million loss. Hiscox rose 5.2 per cent, or 55.5p, to 1128.5p.

The FTSE 100 climbed 0.1 per cent, or 10.44 points, to 7929.92 while the FTSE 250 was down 0.5 per cent, or 104.64 points, to 19,851.97.

Safety barrier maker Hill & Smith hailed the strength of its US businesses after its revenue rose 17 per cent to £732.1million in 2022 while profit jumped 62 per cent to £69.3million. 

Stock Watch – Amigo Holdings

Amigo Holdings has warned that its attempt to raise £45million from investors remains ‘extremely challenging’.

The lender has until May 26 to find the funds, otherwise it must wind down the business.

But Amigo said it is ‘legally bound’ to close once it believes the capital raise will fail. So far it has received ‘non-binding indicative interest’ from investors to the tune of around £25million.

The shares, which floated at 275p in June 2018, fell 26.4 per cent, or 0.66p, to 1.84p.

But shares fell 6.7 per cent, or 94p, to 1320p. There was better news for Capita after its string of business disposals showed little sign of slowing down.

As part of efforts to focus on key divisions and cut debt, the outsourcing giant has agreed to sell its Security Watchdog business to Matrix for £14m.

On Monday it secured a £21million deal to sell three of its human resources businesses. Shares dipped 2.1 per cent, or 0.9p, to 41.4p.

Tullow Oil sank 8.1 per cent, or 2.76p, to 31.5p after it warned its cash flow would fall this year as a result of ramping up production off the coast of Ghana.

Wealth manager Quilter rose 3.4 per cent, or 2.98p, to 92.06p after revenue slid 2 per cent to £606million in 2022 but was ahead of the £590million analysts had predicted. A 3 per cent drop in profit to £134million was still £21million above market expectations.

Amte Power, which makes lithium-ion and sodium-ion battery cells for the energy storage and automotive sector, reported a loss of £3.72million for the six months to December 3, which was up from £2.65million a year ago.

The group is investing heavily in developing battery cells that can be used in hybrid electric vehicles, places without grid access and the oil and gas sector. The shares fell 2.9 per cent, or 2p, to 66p.

IP Group, which invests in science and tech-based firms such as Oxford Nanopore, swung to a loss after the value of its public companies plunged £428.5million in 2022.

The company made a loss of £344.5million last year compared to a £449.3million profit the year before.

It sank 4.8 per cent, or 2.95p, to 58.65p.

MusicMagpie appeared to have struck a bad note after it warned that ‘the short-term outlook continues to be challenging’.

The company, which helps consumers to buy and sell secondhand CDs and electronics, said an expected post-pandemic slump across its books and disc media categories last year was offset by the growth in its consumer tech business. It tumbled 14.9 per cent, or 5.6p, to 31.9p.