Motor insurance giant Admiral Group PLC (LON:ADM) posted a 45% jump in 2017 profits, buoyed by record turnover and customer numbers.
Statutory profit before tax rose to £403.5mln in the year to December 31 from £278.4mln in 2016.
Group turnover grew 15% to £2.9bn and net revenue increased 11% to £1.13bn as customer numbers rose 11% to 5.73mln.
In the UK, turnover rose 14% to £2.35bn and customer numbers edged up 12% to 4.62mln, driven by the core car insurance business.
Odgen rate uncertainty
However, Admiral acknowledged the uncertainty facing the UK car insurance unit due to the government’s ongoing deliberations over the so-called Ogden discount rate, used to calculate personal injury payments.
The government proposed a rate of between 0% and 1% in draft legislation in September after receiving a backlash from insurers in February when the rate was cut from 2.5% to -0.75%.
READ: Admiral Group upgraded as Deutsche Bank recalculates after government's Ogden rate rethink
“We expect to see some conclusions on the way forward in 2018,” Admiral said.
“In the meantime, we have taken a prudent approach and reflected the current discount rate in our reserves.”
In the company’s international insurance business, turnover rose by 35% to £144.8mln and customer numbers jumped 20% to 1.03 million.
Admiral declares 27th special dividend
Admiral raised its final dividend to 58.0p from 51.5p in 2016, bringing its total payout for the year to 114p, up 11% from the prior year. The final dividend included a special dividend of 18.5p per share.
“Admiral has paid a special dividend every year since it floated on the stock market in 2004, predominantly twice a year. It continues this tradition in the latest set of full year results with its 27th special dividend declaration," said AJ Bell investment director Russ Mould.
“However, there is always a big danger associated with paying special dividends year in, year out. Shareholders get used to this extra cash and the stock would be punished if it stopped paying ‘specials’ in the future.”
Shares rose 1.3% to 1,957p in morning trade.