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Admiral Group plc Sails Up As Profit Rises

admAdmiral Group, the insurance company behind brands such as Diamond, elephant.co.uk and Confused.com — with its not-in-the-least-irritating robot..(!) — has seen its share price rise close to 6% so far today, following the publication of its results for year to 31 December 2013

Group profit before tax was up 7%, at £370m, and group vehicle count grew 4% to 3.7m, but total group turnover was down 8%, to £2.03bn.  The company also reported an improved combined ratio (a measure of the profitability of an insurer), attributing the improvement to higher reserve releases resulting from positive claims development.

Earnings per share rose 10%, to 104.6p, and the board has proposed a final dividend of 50.6p per share (comprised of 24.4p normal and 26.2p special), bringing the full year dividend to 99.5p per share — an increase of 10% over 2012’s payout.

Commenting on the results, group CEO Henry Engelhardt said:

2013 was the year of the baked potato. It was a good, solid year, something on the plate that is appreciated but doesn’t really grab the spotlight. This is a comfort food set of results.

“Why the baked potato? Because the year was solid, but not flashy. We made more money than ever before, we grew customer numbers a little bit, we launched one new overseas business (comparenow.com), but there was no growth surge, there were no claims shocks; we just went about our business.

At 1,500p, Admiral’s share price is up 18.6% on  this time last year, compared to a rise of just 5.6% in the FTSE 100 over the same period. But over five years, Admiral is trailing the index, with a gain of only 75.7%, versus 77.4% for the FTSE 100.  

However, its generous dividend — Admiral currently yields a hefty 6.6%, which is almost double the FTSE 100 average — means the total return for shareholders will have beaten the index by a reasonable margin.

Indeed, dividends have driven most of the gains in the FTSE 100 since 1999, as the Fool's top analysts.explain in their exclusive report "How To Create Dividends For Life".

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> Jon doesn't own shares in Admiral Group.