(Reuters) - Insurer Admiral Group Plc said on Thursday it had run stress tests to Brexit-proof its business, but warned of potential economic disruptions that may arise from a “hard Brexit”, as it reported better-than-expected 2018 earnings.
The Cardiff-based motor and home insurer’s pretax profit jumped 18 percent to 479.3 million pounds for the year ended Dec. 31, above a company-supplied forecast of 445.8 million pounds, boosted by a change in the rate used to calculate compensation for personal injuries.
Admiral said it had started to restructure its European businesses, three insurers and two price comparison websites, in late 2017, ensuring trade regardless of the ultimate outcome of Brexit. It spent 3.5 million euros ($3.96 million) to set up its Brexit hub in Spain.
The FTSE 100 company’s Italy, Spain and France businesses are now underwritten from a regulated entity in Spain, with all existing liabilities and contracts transferred, it said.
Admiral, however, still flagged potential risks from Brexit, including market volatility, free movement of people between the UK and the European Union, impact on the import of car parts with potential impact on claims costs, its capital position and future dividend payments.
“Group has performed a stress testing exercise for its Brexit assessment of the impact of a recession through 2019 on the UK insurance business,” the company said, adding results had shown it could manage disruptions from Brexit.
Admiral, the only British motor insurer to end 2018 with gains in its share value, also said its UK motor business slowed in the second half.
Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta