Admiral Group PLC
LSE:ADM
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Intrinsic Value
The intrinsic value of one ADM stock under the Base Case scenario is 3 746.91 GBX. Compared to the current market price of 2 524 GBX, Admiral Group PLC is Undervalued by 33%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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Admiral Group PLC
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Fundamental Analysis
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Admiral Group PLC, founded in 1993, has evolved into one of the UK's leading insurance providers, primarily focusing on car insurance but also extending its offerings to home and travel insurance. The company’s remarkable growth story is attributed to its commitment to innovation, customer service, and efficiency. By leveraging advanced technology and data analytics, Admiral has created a streamlined insurance process that not only simplifies policy purchasing for customers but also enhances their overall experience. This strong focus on customer-centricity has contributed to high levels of customer retention, positioning Admiral as a trusted name in the competitive insurance market. For in...
Admiral Group PLC, founded in 1993, has evolved into one of the UK's leading insurance providers, primarily focusing on car insurance but also extending its offerings to home and travel insurance. The company’s remarkable growth story is attributed to its commitment to innovation, customer service, and efficiency. By leveraging advanced technology and data analytics, Admiral has created a streamlined insurance process that not only simplifies policy purchasing for customers but also enhances their overall experience. This strong focus on customer-centricity has contributed to high levels of customer retention, positioning Admiral as a trusted name in the competitive insurance market.
For investors, Admiral's consistent financial performance and strategic expansion initiatives stand out. With a proven track record of profitability, the company has shown resilience against market fluctuations, aided by its diverse range of products and services, which helps mitigate risk. In recent years, Admiral has ventured into new markets, including Spain and the United States, demonstrating its ambitions for international growth. The company's disciplined approach to underwriting and keen focus on operational efficiency have resulted in robust margins and attractive returns on equity. As the insurance landscape continues to evolve amidst regulatory changes and technological advancements, Admiral Group remains well-positioned to capitalize on emerging opportunities, making it a compelling choice for investors seeking stability and growth in the insurance sector.
Admiral Group PLC is a UK-based insurance provider, primarily known for its car insurance services. However, it operates across several core business segments:
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Car Insurance: This is Admiral's primary business segment, offering comprehensive car insurance policies through its various brands. It focuses on providing competitive pricing and strong customer service.
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Home Insurance: Admiral provides home insurance policies, including buildings and contents insurance. This segment allows customers to protect their property against various risks and enhances the company's portfolio of insurance products.
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Travel Insurance: This segment includes policies that cover medical expenses, trip cancellations, lost luggage, and other travel-related risks. It caters to consumers looking for short-term or annual travel coverage.
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Van Insurance: Admiral also offers insurance products tailored for van owners and businesses that require commercial vehicle coverage.
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Bike Insurance: Targeting motorcyclists, this segment provides insurance policies specifically for motorbikes, addressing the unique risks associated with motorcycle ownership.
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Financial Services: While not primarily an insurance segment, Admiral offers other financial products, including loans and payment protection insurance. This diversification helps in capturing a broader market.
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Admiral's International Operations: The Group has expanded its footprint beyond the UK, operating in various international markets, which includes a growing presence in Spain, Italy, France, and the USA.
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Comparison Services: Through the Confused.com platform, Admiral also operates in the price comparison sector, allowing consumers to compare insurance products from various providers.
These segments reflect Admiral Group PLC's strategy of diversification in insurance products and geographical expansion, which helps mitigate risks and capitalize on growth opportunities in the insurance market.
Admiral Group PLC, a prominent player in the insurance sector, particularly known for its car insurance offerings, possesses several unique competitive advantages over its rivals:
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Strong Brand Recognition: Admiral has established a strong brand in the UK insurance market, known for its customer-centric approach and competitive pricing. This brand loyalty can result in higher retention rates compared to non-established competitors.
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Diversified Product Offering: Besides car insurance, Admiral offers a range of insurance products, including household, travel, and pet insurance. This diversification allows the company to cross-sell to existing customers and appeal to a broader market.
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Innovative Technology and Data Analytics: Admiral Group utilizes advanced technology and data analytics to refine its underwriting processes and improve customer service. This data-driven approach allows for better risk assessment, pricing precision, and tailored customer experiences.
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Customer Service Excellence: Admiral has received accolades for its customer service, often ranking high in customer satisfaction surveys. A strong focus on enhancing the customer experience can lead to higher retention and referral rates.
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Behavioral Pricing Strategies: The company has implemented unique pricing strategies that account for the behavior of customers, such as telematics (pay-as-you-drive insurance). This not only attracts lower-risk drivers but also optimizes profit margins.
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Strong Financial Position: Admiral's robust financial performance and capital reserves provide a buffer against market fluctuations and the ability to invest in growth opportunities such as technology and expansion.
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Culture and Management: The company’s culture fosters employee engagement and innovation, which can contribute to operational efficiencies and adaptiveness to market changes. A stable, experienced management team can navigate challenges effectively.
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Economies of Scale: As one of the larger players in the UK insurance market, Admiral benefits from economies of scale in operations, marketing, and claims handling, allowing it to operate more efficiently than smaller competitors.
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Group Structure: Admiral’s unique ownership structure, where the company shares profits with its employees through a share scheme, enhances motivation and aligns interests, contributing to better overall performance.
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International Expansion: Admiral has successfully expanded into various international markets, notably Spain, which allows for revenue diversification and reducing dependence on the UK market.
Through these advantages, Admiral Group PLC can effectively compete and maintain a strong position in the insurance industry.
Admiral Group PLC, as a major player in the insurance industry, faces several risks and challenges that could impact its operations and financial performance in the near future:
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Regulatory Changes: Changes in insurance regulations and compliance requirements can increase operational costs and affect pricing strategies. The UK’s post-Brexit regulatory landscape and potential changes to solvency rules are particularly relevant.
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Economic Conditions: The macroeconomic environment, including inflation rates, interest rates, and economic growth, can affect consumer behavior and claims frequency. A downturn in the economy may lead to reduced demand for insurance products.
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Competition: The insurance market is highly competitive, and Admiral faces pressure from both traditional insurance companies and new entrants, including insurtech firms. Innovations and aggressive pricing strategies from competitors may erode market share.
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Claims Frequency and Severity: Changes in claims patterns, influenced by factors such as natural disasters, changes in driving behavior, or emerging risks (like cyber threats), can lead to higher-than-expected claims, impacting profitability.
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Technological Disruption: The rise of digital platforms and advancements in technology pose both opportunities and threats. Admiral must keep pace with technological innovations and customer expectations while managing cybersecurity risks.
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Customer Loyalty and Retention: As policies often hinge on price competitiveness, maintaining customer loyalty against the backdrop of comparison sites and easy switching could be a challenge.
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Reinsurance Dependence: Changes in the reinsurance market, including rising costs or availability issues, may affect Admiral's ability to manage risk effectively.
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Environmental and Social Risks: Increasing focus on sustainability and climate change could necessitate adaptation in underwriting practices, risk assessments, and liability coverage, raising costs or limiting coverage options.
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Pandemic-Related Risks: The ongoing effects of the COVID-19 pandemic, particularly concerning shifts in claims and changes in consumer behavior, may continue to pose challenges.
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Investment Risk: Admiral’s investment portfolio may be subject to market volatility. Economic fluctuations may negatively impact the returns on investments, affecting the company’s overall financial health.
Addressing these challenges will require strategic agility, a solid risk management framework, and a proactive approach to innovation and customer service.
Balance Sheet Decomposition
Admiral Group PLC
Cash & Short-Term Investments | 363.6m |
Insurance Receivable | 400.2m |
Deferred Policy Acquisition Cost | 52m |
PP&E | 82m |
Long-Term Investments | 5.4B |
Other Assets | 1.5B |
Insurance Policy Liabilities | 4.9B |
Long Term Debt | 1.3B |
Other Liabilities | 409.8m |
The U.K. Insurance business realized a profit increase of approximately 5%, reaching just over ÂŁ300 million compared to the first half of 2022. Motor profit remained robust, while investments in distribution and growth tempered international gains. Globally, past underwriting years are still affecting results amid claims inflation. Nonetheless, underwriting improvements and substantial rate increases promise better '23 performance. Profits are also supported by a lower impact from severe weather compared to previous periods. The interim dividend is announced at 51p per share, staying consistent at 89% of post-tax profits, with firm guidance holding steady.
What is Earnings Call?
Wall St
Price Targets
ADM Price Targets Summary
Admiral Group PLC
According to Wall Street analysts, the average 1-year price target for ADM is 3 103.71 GBX with a low forecast of 1 964.45 GBX and a high forecast of 3 727.5 GBX.
Dividends
Current shareholder yield for ADM is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
ADM Insider Trading
Buy and sell transactions by insiders
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Description
Admiral Group Plc is a holding company, which engages in the business of sale and underwriting of private car insurance. The firm is engaged in offering motor insurance, household insurance, travel insurance and lending products. The firm has four segments: UK Insurance, International Insurance, Admiral Loans and other. The UK Insurance segment consists of the underwriting of car insurance, van insurance, household insurance, travel insurance and other products that supplement insurance policy within the United Kingdom. The International Insurance segment consists of the underwriting of car and home insurance and the generation of revenue from additional products, and fees from underwriting car insurance outside of the United Kingdom. The Admiral Loans segment provides unsecured personal loans and car finance products in the United Kingdom. The Other segment includes compare.com, the US comparison business, and Admiral Pioneer.
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The intrinsic value of one ADM stock under the Base Case scenario is 3 746.91 GBX.
Compared to the current market price of 2 524 GBX, Admiral Group PLC is Undervalued by 33%.