It has been a rotten year for lots of non-life insurers. Rampant inflation in the sector’s claims supply chains has played havoc with pricing structures, while vehicle-related claims are well up since pandemic restrictions lifted. Worse still, insurers can no longer milk loyal policyholders with progressively higher rates now that the Financial Conduct Authority has banned “price walking”. As a result, the appeal of 12-month teaser rates has reduced, making potential customers much harder to pry away from competitors.
On balance, the sector looks like an old banger with a dodgy transmission. However, as seasoned investors will know, pessimism is also an opportunity to lock in good prices for excellent companies. In this context, and following some strong recent half-year figures, we think personal insurer Admiral (ADM) will float a few value investor boats.
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