Car insurer Admiral Group PLC (LON:ADM) reported a slight increase in first-half profits as growth in its UK insurance business was offset by costs related to changes to the Ogden discount rate.
Statutory profit before tax in the six months to 30 June was £193mln, 2% higher on the same period a year earlier.
Chief executive, David Stevens, said most of the increase in costs resulting from a cut to the Ogden discount rate, which determines the size of personal injury payouts, were accounted for in its 2016 second-half results but extra charges have carried into 2017.
The Ogden rate was changed from 2.5% to -0.75% in March, leading to higher costs for motor insurers. The total cost of this change to Admiral was £150mln, in line with previous estimates.
Admiral said a rise in charges and business costs were mitigated by higher UK insurance profit, a narrowed loss in its international insurance arm and an improvement in its price comparison businesses, including Compare.com. Confused.com .
The group declared an interim dividend of 56p, 10% higher than the previous year on an underlying basis including the return of surplus capital. Excluding surplus capital paid last year, the dividend was cut by 11%.
Net revenue rose 8% to £0.55bn as the number of customers across the group grew 13% to 5.46mln.
"We've grown turnover and customer numbers in our existing businesses by over 13% while also delivering a first half of important ‘firsts’ - the first loans originated on our new dedicated lending system, the first cars sold on Confused.com, the first vans directly underwritten in the UK and Spain,” said Stevens.
Shares fell 6.34% to 2,040p in morning trading.