(Releads, adds solvency ratio, CFO comment, analyst, shares)
By Carolyn Cohn
LONDON, March 3 (Reuters) - British insurer Admiral undercut rivals in 2015 to win new customers on generally higher car insurance rates, driving a 6 percent rise in pre-tax profit which sent its shares to a record high on Thursday.
Strong competition in British motor insurance has put pressure on prices in the past few years, although in recent quarters prices have been increasing.
UK car insurance premiums rose 7 percent in the last quarter of 2015 compared with the previous quarter and 8 percent over 2015. A rise in insurance premium tax fuelled some of the rises, the Association of British Insurers said.
“We have seen prices moving up in the market in the latter part of 2015,” chief financial officer Geraint Jones said, adding that Admiral’s prices “were becoming more competitive than the market”.
The Cardiff-based firm said chief executive and co-founder Henry Engelhardt, who is due to stand down in May and be replaced by chief operating officer and co-founder David Stevens, will work for Admiral on a part-time basis, managing the chief executives of the firm’s price comparison business.
Admiral, which owns UK price comparison site Confused.com and U.S. site compare.com as well as the Elephant, Diamond and Bell brands, posted an above-forecast pre-tax profit of 377 million pounds ($530.78 million), where analysts in a company-supplied poll had forecast profit of 350.4 million pounds.
Customer numbers rose 9 percent to 4.43 million and the firm’s combined operating ratio strengthened to 85.6 percent from 86.5 percent the previous year. A level below 100 percent indicates an underwriting profit.
“Admiral continues to benefit from strongly rising prices, rising reserve releases, higher capital buffer returned to shareholders and extremely low investment risk,” analysts at Bernstein said in a note.
The group’s shares rose 4.5 percent to a record high 1,840 pence, the top performer in the FTSE 100 index.
Admiral said it would pay a final dividend of 63.4 pence and total dividend of 114.4 pence per share, up 16 percent from a year earlier and above a forecast 97.3 pence.
The final dividend is made up of a normal dividend of 33.6 pence and a special dividend of 29.8 pence per share.
Admiral announced a solvency capital ratio of 206 percent under new European rules. A ratio of 100 percent means an insurer has set aside enough capital to meet underwriting, investment and operational risks.
$1 = 0.7103 pounds Editing by Sinead Cruise and Alexander Smith