Shares in motor insurance firm Admiral (ADM) gained 1% to £34.87 after it increased its interim dividend by a hefty 63% to 115p and announced a special dividend of 46p per share.

The increased pay-out came after the group posted pre-tax profits for the six months to June of £482.2 million, a 76% increase on last year's £274.4 million and comfortably ahead of estimates.

Group turnover rose from £1.6 billion to £1.75 billion, an increase of 9%, reflecting a 12% jump in customer numbers to just over 8 million.

The muted share price response to today’s strong numbers reflects the fact these results were partly flagged in a trading update last month, since when the share price has risen by 10%.

The drivers of this strong business performance have been robust delivery on its core motor insurance business coupled with reserve releases and commission payments from previous cohorts of business.

Two factors which have further boosted today’s results, specifically the cost of UK motor industry claims and the lower frequency of motor insurance claims during the pandemic, are both one-off in nature.

In a similar vein, cash for the special dividend has to a large extent been funded by the disposal of the group’s Penguin portal comparison businesses that raised £460 million.

The stock currently trades on a price to earnings multiple of 14.4 2021 forecast earnings, and for income investors offers a 7.4% dividend yield.

READ MORE ABOUT ADMIRAL GROUP HERE

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJ Bell logo

Issue Date: 11 Aug 2021