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Admiral Group Interims

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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idpickering
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Admiral Group Interims

#433897

Postby idpickering » August 11th, 2021, 7:14 am

Comment from Milena Mondini de Focatiis , Group Chief Executive Officer

“A good strategy is a plus; good execution is a must, especially in times of disruption. It’s been a half year of good execution for Admiral. By and large, we’ve done the right things more often and a bit earlier than most.

“This included adjusting pricing ahead of the market in the UK to reflect shifting pandemic-related claims trends and providing more self-service and digital options to our customers. These actions have rewarded us with double digit growth in policy numbers in the UK and in international insurance, whilst operating in very competitive markets.

“Another highlight of this half year is a notably higher level of profit 1 - driven by positive development of prior years in our UK Motor book resulting in increased reserve releases and higher than usual profit commission, as well as lower levels of claims frequency. We also made progress against our long-term strategy, increasing adoption of advanced analytics models and planting new seeds for product diversification.

“I am delighted that we can once again pay a record dividend (which includes a part of the proceeds from the sale our comparison businesses) to our shareholders, including our staff who continued to work hard to provide great service to our customers. I would also like to thank all of our customers for their continued trust in us.”

1 Group profit before tax , Earnings per share, Group turnover, Net revenue and Return on equity presented on a continuing operations basis
2 Alternative Performance Measures - refer to the end of the report for definition and explanation
3 Prior period interim dividend excludes the 20.7 pence special dividend, deferred from 2019
4 Group Turnover in H1 2020 includes the impact of the ‘Stay at Home’ premium refund issued to UK motor insurance customers of £97 million. Refer to the Alternative Performance Measures section at the end of this report for further explanation
5 Solvency ratio excludes positive impact of capital held from Penguin Portals disposal to be returned to shareholders

Dividend
The Board has declared an interim dividend of 115.0 pence, made up of a normal dividend of 87.9 pence per share and a special dividend of 27.1 pence per share, 63% higher than the 2020 interim dividend of 70.5 pence per share (excluding the deferred special dividend of 20.7 pence from 2019 which was paid alongside the 2020 interim dividend). The payment represents 87% of first half earnings per share from continuing operations.

The Board has also declared a further special dividend of 46.0 pence per share reflecting the first payment of the phased return to shareholders of the proceeds from the sale of the Penguin Portals comparison businesses. This brings the total interim dividend to 161.0 pence, made up of a normal dividend of 87.9 pence per share and a total special dividend of 73.1 pence per share.

Payment will be on 1 October 2021. The ex-dividend date is 2 September 2021 and the record date is 3 September 2021


https://www.investegate.co.uk/admiral-g ... 0000H0981/

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Re: Admiral Group Interims

#433904

Postby Wizard » August 11th, 2021, 7:48 am

Admiral is the best performing share I bought when I set up an HYP about 4 years ago. Not good enough to cover all the capital carnage brought about by the likes of Carillion, Imperial Brands, etc., but certainly a welcome positive performer.

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Re: Admiral Group Interims

#433916

Postby Arborbridge » August 11th, 2021, 8:38 am

Well, although ADM is well in the trimming zone at x2.17 capital weight, it looks like I won't do anything at all until well after September 2nd ;)

Maybe by then other shares might have put on weight and brought the ADM weight down :)


Arb.

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Re: Admiral Group Interims

#433921

Postby Dod101 » August 11th, 2021, 8:52 am

Excellent Interim dividend I must say but I wonder why they are phasing in the returns from the sale over two years? I wonder if they will find themselves under pressure to cut premiums given their level of profitability?

As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!

Dod

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Re: Admiral Group Interims

#433926

Postby moorfield » August 11th, 2021, 9:19 am

Dod101 wrote:
As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!



Well either silly season has arrived and the heat is getting to people and there is nothing better for them to do cooped up on their staycations, or we must accept that "trimming" is now an endemic trait of HYP. (Which is not I suspect what pyad was setting out to encourage us to do all those years ago ;) ).

Don't just do something stand there, would be my advice.

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Re: Admiral Group Interims

#433978

Postby 88V8 » August 11th, 2021, 10:57 am

moorfield wrote:
Dod101 wrote:As an aside, given these results, it seems perverse to be thinking of trimming.

Well either silly season has arrived and the heat is getting to people ...or we must accept that "trimming" is now an endemic trait of HYP.

It's probably a prudent trait if one's income were totally dependent on HYP, and it certainly seems to have worked for TJH.

I must admit that yesterday I fully intended to trim Admiral. Not just overweight, but I was looking to ensure that I make better use of my CGT allowance which for an annoying and silly reason I did not last year.

Fortunately I remembered to check the ex-d.
Now, I'm almost tempted to add :shock:

V8

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Re: Admiral Group Interims

#433979

Postby tjh290633 » August 11th, 2021, 10:58 am

Dod101 wrote:Excellent Interim dividend I must say but I wonder why they are phasing in the returns from the sale over two years? I wonder if they will find themselves under pressure to cut premiums given their level of profitability?

As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!

Dod

Excellent indeed. I took some profit on these in March 2020, when the SP was a mere £21.74. The yield at that time was 6.82%, whereas my portfolio was giving 7.69%. The proceeds went into PHP, which was giving a comparable yield. Consequently they now stand at 15% above median weight, about where they were after trimming. However with this big rise in dividends they are now on the naughty step, providing over 5% of my dividend income.

I have held since March 2014, bought at £15.09. The IRR is 17.40% which I regard as very satisfactory.

TJH

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Re: Admiral Group Interims

#433981

Postby tjh290633 » August 11th, 2021, 11:01 am

moorfield wrote:
Dod101 wrote:
As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!



Well either silly season has arrived and the heat is getting to people and there is nothing better for them to do cooped up on their staycations, or we must accept that "trimming" is now an endemic trait of HYP. (Which is not I suspect what pyad was setting out to encourage us to do all those years ago ;) ).

Don't just do something stand there, would be my advice.

Considering how unbalanced HYP1 became, we don't need to speculate on his views back then.

Overweight shares still give a risk to income flow, even if they are giving a high and sustainable yield.

TJH

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Re: Admiral Group Interims

#433996

Postby minerjoe » August 11th, 2021, 11:23 am

I bought my shares at £18 for £2800 worth, they are now £6,670 with a predicted yield of £530 or 19% on my initial investment....

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Re: Admiral Group Interims

#434004

Postby Dod101 » August 11th, 2021, 11:31 am

This is the HYP Board so I must be careful but I will not take a look at the income contribution from Admiral until the year end. In the meantime I am very grateful for the increased dividend even if, as I suspect will happen, next year the 'special' element of it may be reduced. The capital growth is also very attractive.

As an ex insurance professional, I must say that I admire the way that the Admiral management has run the company and indeed is running the company. They have a very co-operative partner in Munichre who are helping them no end and of course making money themselves.

It is not at the glamorous end of insurance but they have certainly made it pay and to some extent I am slightly surprised that they do not have any real competitor other than say Direct Line who are much more conventional.

Dod

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Re: Admiral Group Interims

#434005

Postby Dod101 » August 11th, 2021, 11:32 am

tjh290633 wrote:
moorfield wrote:
Dod101 wrote:
As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!



Well either silly season has arrived and the heat is getting to people and there is nothing better for them to do cooped up on their staycations, or we must accept that "trimming" is now an endemic trait of HYP. (Which is not I suspect what pyad was setting out to encourage us to do all those years ago ;) ).

Don't just do something stand there, would be my advice.

Considering how unbalanced HYP1 became, we don't need to speculate on his views back then.

Overweight shares still give a risk to income flow, even if they are giving a high and sustainable yield.

TJH


I agree but the trouble is so does a pandemic and indeed interference from regulators so I am prepared to take the risk for now at least.

Dod

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Re: Admiral Group Interims

#434070

Postby Wizard » August 11th, 2021, 2:04 pm

tjh290633 wrote:
Dod101 wrote:Excellent Interim dividend I must say but I wonder why they are phasing in the returns from the sale over two years? I wonder if they will find themselves under pressure to cut premiums given their level of profitability?

As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!

Dod

Excellent indeed. I took some profit on these in March 2020, when the SP was a mere £21.74. The yield at that time was 6.82%, whereas my portfolio was giving 7.69%. The proceeds went into PHP, which was giving a comparable yield. Consequently they now stand at 15% above median weight, about where they were after trimming. However with this big rise in dividends they are now on the naughty step, providing over 5% of my dividend income.

I have held since March 2014, bought at £15.09. The IRR is 17.40% which I regard as very satisfactory.

TJH


My bold.

I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my HYP.

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Re: Admiral Group Interims

#434074

Postby Dod101 » August 11th, 2021, 2:17 pm

Yes, perverse indeed.

Dod

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Re: Admiral Group Interims

#434118

Postby moorfield » August 11th, 2021, 4:47 pm

Wizard wrote:I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my


In this case TJH's 5% income rule would seem to be the problem. It would suggest that were ADM suddenly to cut its dividend after 15 years of steady increases would cause an intolerable drop in overall income perhaps.

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Re: Admiral Group Interims

#434131

Postby tjh290633 » August 11th, 2021, 5:40 pm

moorfield wrote:
Wizard wrote:I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my


In this case TJH's 5% income rule would seem to be the problem. It would suggest that were ADM suddenly to cut its dividend after 15 years of steady increases would cause an intolerable drop in overall income perhaps.

I posted this on another forum earlier:

Rank   EPIC   % Income   Cum Inc
1 RIO 9.09% 9.09%
2 ADM 5.77% 14.86%
3 LGEN 4.78% 19.64%
4 IMB 4.59% 24.23%
5 BATS 4.43% 28.66%
6 AV. 4.32% 32.98%
7 GSK 3.88% 36.86%
8 VOD 3.87% 40.73%
9 NG. 3.85% 44.58%
10 SSE 3.64% 48.21%

This shows that the top 6 of 35 provide almost one third of the income and the top 10 almost half. Too concentrated.

TJH

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Re: Admiral Group Interims

#434146

Postby monabri » August 11th, 2021, 6:16 pm

tjh290633 wrote:
moorfield wrote:
Wizard wrote:I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my


In this case TJH's 5% income rule would seem to be the problem. It would suggest that were ADM suddenly to cut its dividend after 15 years of steady increases would cause an intolerable drop in overall income perhaps.

I posted this on another forum earlier:

Rank   EPIC   % Income   Cum Inc
1 RIO 9.09% 9.09%
2 ADM 5.77% 14.86%
3 LGEN 4.78% 19.64%
4 IMB 4.59% 24.23%
5 BATS 4.43% 28.66%
6 AV. 4.32% 32.98%
7 GSK 3.88% 36.86%
8 VOD 3.87% 40.73%
9 NG. 3.85% 44.58%
10 SSE 3.64% 48.21%

This shows that the top 6 of 35 provide almost one third of the income and the top 10 almost half. Too concentrated.

TJH


The top 6 providing one third of the income is currently skewed by the number of non payers.

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Re: Admiral Group Interims

#434147

Postby moorfield » August 11th, 2021, 6:18 pm

tjh290633 wrote:
This shows that the top 6 of 35 provide almost one third of the income and the top 10 almost half. Too concentrated.


Only too concentrated if all of those top 6 cut their dividends at the same time? We digress but it's an interesting question - if all 35 are equally as likely to cut their dividend, whats the chance those top 6 will in the same year? Maybe some clever mathematician will be along to help us out...

As for ADM, an alternative approach may be to just let its dividend run, and bank the surplus over 5% to reserve, or top ups elswhere?

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Re: Admiral Group Interims

#434193

Postby Gengulphus » August 11th, 2021, 9:20 pm

Wizard wrote:
tjh290633 wrote:
Dod101 wrote:Excellent Interim dividend I must say but I wonder why they are phasing in the returns from the sale over two years? I wonder if they will find themselves under pressure to cut premiums given their level of profitability?

As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!

Dod

Excellent indeed. I took some profit on these in March 2020, when the SP was a mere £21.74. The yield at that time was 6.82%, whereas my portfolio was giving 7.69%. The proceeds went into PHP, which was giving a comparable yield. Consequently they now stand at 15% above median weight, about where they were after trimming. However with this big rise in dividends they are now on the naughty step, providing over 5% of my dividend income.

I have held since March 2014, bought at £15.09. The IRR is 17.40% which I regard as very satisfactory.

My bold.

I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my HYP.

I think "now on the naughty step" is a poor choice of words by TJH, but nothing worse than that. A better (but longer!) choice might have been "now on the needs-no-further-help-from-teacher step"...

Gengulphus

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Re: Admiral Group Interims

#434207

Postby Wizard » August 11th, 2021, 10:04 pm

tjh290633 wrote:
moorfield wrote:
Wizard wrote:I struggle to understand how, on the HYP board, the words "big dividend rise" and "now on the naughty step" can apear in the same sentence. I would have thought the issue is with the other shares not providing a big rise in dividends. Admiral are on a gleaming pedestal as far as I am concerned, certainly compared to some of the other rubbish I bought when setting up my


In this case TJH's 5% income rule would seem to be the problem. It would suggest that were ADM suddenly to cut its dividend after 15 years of steady increases would cause an intolerable drop in overall income perhaps.

I posted this on another forum earlier:

Rank   EPIC   % Income   Cum Inc
1 RIO 9.09% 9.09%
2 ADM 5.77% 14.86%
3 LGEN 4.78% 19.64%
4 IMB 4.59% 24.23%
5 BATS 4.43% 28.66%
6 AV. 4.32% 32.98%
7 GSK 3.88% 36.86%
8 VOD 3.87% 40.73%
9 NG. 3.85% 44.58%
10 SSE 3.64% 48.21%

This shows that the top 6 of 35 provide almost one third of the income and the top 10 almost half. Too concentrated.

TJH

My comment was not a critic of the methodology, just about what I found a curious choice of language.

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Re: Admiral Group Interims

#434534

Postby Arborbridge » August 13th, 2021, 11:47 am

Dod101 wrote:Excellent Interim dividend I must say but I wonder why they are phasing in the returns from the sale over two years? I wonder if they will find themselves under pressure to cut premiums given their level of profitability?

As an aside, given these results, it seems perverse to be thinking of trimming. The very thing that HYPers are looking for, dividends, and the first comments are to sell some shares!

Dod


HYP is a policy which depends on its safety factors to mitigate that risk. Originally based on equal weighting as a safety factor, it has been suggested that it makes sense to keep all shares within certain bounds to continue that safety factor. It also is a control on diversity: to push it to the absurd, if ADM were 99% of the portfolio and 35 shares made up the rest, would the portfolio have the diversity it was intended to have at the outset? No, and the diversity safety factor would hardly exist at all.

That does not seem perverse to me. You either use safety factors or you don't. It's just a question for most of us of where one draws the line.

Arb.


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