The market may have expected Admiral to issue a profit warning when it unveiled half-year figures this month, but even though none was forthcoming the insurer hasn’t been cut much slack. Shares in the FTSE 100 member have fallen by more than a quarter since the start of this year, as investors rightly expect parts inflation and higher wage costs in garages and the home repairs sector to quash the bumper profits reported last year. A share price of 5.6 times forecast book value at the end of December is way below a five-year average multiple of 7.2.
A moderation in earnings expectations for the Cardiff-based insurer is justified. The combined ratio, an industry gauge of profitability, shot up to a less fortuitous 96.7 per
