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Law360, London (August 12, 2020, 12:58 PM BST ) Profits at Admiral have surged by 31% in the first half of the year because fewer people are driving during the national lockdown, the insurer said on Wednesday.
Pre-tax profit increased to £286.1 million ($372.5 million) in the first six months, from £218.2 million in the same period in 2019. The increase came despite Admiral offering £110 million in refunds to 4.4 million customers in April, the equivalent to £25 per vehicle.
"Lockdown restrictions in the group's markets resulted in significantly lower motor insurance claims frequency as customers stayed at home and fewer miles were driven," the Wales-based company said in its results. "The U.K. has lagged behind other markets due to a later lockdown implementation and lifting of restrictions."
The company said it also writes a significant amount of motor insurance business in Texas, which has had a shorter period in lockdown. It said there had been less of an impact there on the company's profits.
Other motor insurers have seen similar boosts from the lockdown imposed to deal with the pandemic.
Direct Line, the second biggest car insurer in the U.K., said last week the amount it paid out in motor claims in the first half of 2002 had fallen by £117 million from the same period last year.
Ratings agency Moody's said that political and social pressure on insurers could force them to grant further rebates to policyholders or keep premiums unprofitably low.
"We anticipate that the bulk of the industry's one-off profit arising from the pandemic will be wiped out," Benjamin Serra, a senior vice president at Moody's, said last week.
Admiral said on Wednesday that it had stopped selling travel insurance and loans early during the pandemic but was now "cautiously re-entering both markets."
It said it could face loan defaults as a result of an expected surge in unemployment. The Office for National Statistics said Tuesday that 730,000 workers had fallen off the payroll between March and July.
"Admiral Loans is prepared for the strong likelihood of increased arrears experience resulting from an increase in unemployment levels, although no significant increase in the level of defaults has been experienced to date," the company said.
--Editing by Ed Harris.
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