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ADMIRAL reported a 4% increase in pre-tax profits for the first half of 2016 and raised its dividend by 23%, but spooked investors with a warning that market volatility after Brexit had squeezed its solvency ratio.

The insurer announced a pre-tax profit of PS193m, higher than analysts' expectations, as was the firsthalf dividend of 62.9p. Admiral said it had increased premiums in line with the market while still seeing strong volume growth. Customer numbers grew by 15% from the same period last year to 4.8m.

The group continues to explore new products, such as car loans, to exploit its customer database and to cross-sell. Away from insurance, it made an overall loss of PS1.1m on its price comparison businesses, though profits at its UK operation increased to PS8.3m.

The shares responded to the results by falling heavily amid concerns about Admiral's solvency ratio - down from 206% at the end of December to 180% at the end of June, driven by lower post-Brexit interest rates. The group insisted its capital position remains strong and its solvency ratio is well above the 125%-150% target range.

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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Aug 24, 2016
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