Admiral Group PLC (LON:ADM) said full-year profits would be higher than expected due to elevated levels of injury claims from road accidents.
Profit before tax for 2019 will be in the range of £510-540mln, the FTSE 100-listed general insurer said in a statement, up between 6% and 13% on the previous year.
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Thanks to this, and a “strong” solvency position, Admiral will propose a final dividend in the range of 73-78p per share.
The Odgen rate, which is set by the government, is the amount of discount applied to compensation paid to victims of life-changing injuries, and was changed to -0.25% from -0.75% in 2019.
Even though the change was less than expected this led to “unusually positive” developments, Admiral said, with an increase in the number of large claims settling in 2019 compared to recent years, which in turn led to elevated releases from the reserves the insurer had set aside as well as increased profit commissions.
“There has been no change to Admiral’s prudent approach to reserving,” the company insisted.
However, Admiral said profitability in 2020 was being hit by the higher levels of claims inflation during 2019 and as a result, Admiral expects its 2019 loss ratio to be higher than recent years.
The group’s UK motor insurance business saw customer numbers grow marginally during 2019.