Admiral is a low-cost market leader in UK motor insurance, with a founder-led mentality and exceptional capital allocation track record. I bought the stock in September 2022, with the expectation of a strong recovery in cyclically depressed 2022 earnings. I expected future earnings to benefit from higher interest rates, reduced losses in new businesses (particularly US) and stronger UK insurance market.
The company’s strong 2024 results reported earlier this week have confirmed my original assumptions.
The key earnings drivers were:
Reduced frequency claims and market share gains in UK motor
Stronger investment income (4% yield vs 1.6% in 2022)
Continued growth in Admiral Money and Home Insurance