LONDON (Reuters) - The cost of paying auto claims is running particularly high in Britain and the United States, insurer Admiral's chief said on Wednesday, after the company posted a 48% fall in pretax profit due to a "more turbulent cycle".
Motor insurers did well during the initial stages of the COVID-19 pandemic as fewer cars on the roads meant fewer claims, but that benign environment has changed.
Supply-chain issues and inflation following the pandemic and Russia's invasion of Ukraine have pushed up the cost of motor repairs, leading to higher premiums.
"The UK has historically suffered a bit more from some of the supply-chain issues like spare-part cost inflation," Admiral Chief Executive Milena Mondini de Focatiis told Reuters.
Brexit contributed "a small extent" to Britain's higher claims inflation, she said, adding the trend was running at similar levels in the United States but was lower in continental Europe.
Admiral said it saw claims inflation overall of around 11% in the first half and had raised premiums by around 16% from March to the end of July.
It said it had adapted its rates in response to rising prices earlier than the market as a whole and had maintained a cautious approach to holding reserves.
Admiral's first-half pretax profit nearly halved to 251.3 million pounds ($303.5 million), but its total number of customers rose to 9.11 million from 8.02 million, with international insurance customers rising 13%.
Barclays (LON:BARC) analysts said Admiral had "weathered the challenging H1 22 well", reiterating their "overweight" rating on the stock. Admiral shares jumped 4.6% by 0907 GMT, among the top gainers in the FTSE 100 blue chip index.
Rival Direct Line last week reported a 32% fall in pretax profit.
Admiral pledged to pay a total interim dividend, including a further special dividend following the sale of the Penguin Portals comparison businesses, of 105 pence per share.