Brexit unease hits shares of car insurer Admiral

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Shares in insurer Admiral have come under pressure as it revealed a Brexit hit and posted weaker-than-expected half-year profits.

The Cardiff-based group, which also owns price comparison website Confused.com, said market turbulence after the Brexit vote upset its balance sheet and warned over a further possible impact of the decision to quit the EU.

Shares dropped as much as 8% despite assurances over its capital strength and as it revealed an extra £33 million for shareholders from a special dividend payout.

Admiral notched up record half-year results as it added another 217,000 UK motor customers and hiked the cost of cover further, with bottom line pre-tax profits up 4% to £189.5 million for the six months to June 30.

But the profits haul fell slightly short of City expectations.

The group said market volatility wiped around 20% off its so-called solvency ratio, which dropped sharply to 180% from 206% a year earlier.

It warned over the impact of potential further market turbulence, economic woes and fears over passporting rules in the EU from the Brexit vote, but added that it does not expect a “material adverse impact on day-to-day operations”.

The group cautioned Brexit could see UK financial services firms lose the right to trade in Europe without a locally-regulated business if UK passporting arrangements are scrapped.

Nicholas Hyett of Hargreaves Lansdown, said: “With insurance operations across Europe, the group could be hit hard if a loss of passporting rights materialises.

“Clearly this depends on what exit terms are negotiated with the trade bloc, although with a substantial operation in the USA, the group has already proven that it can develop businesses outside the streamlined rules of the single market.”