News emanating from London it that Admiral are looking to sell AdmiralDirekt, their German Car insurance business. Full report below from the Dow Jones Reporter.
LONDON (Dow Jones)–U.K. car insurer Admiral Group PLC (ADM.LN) said Tuesday it is in exclusive talks to sell its loss-making AdmiralDirekt insurance business in Germany to German insurer Itzehoer Versicherung, signalling an exit after just three years in that market.
Admiral said AdmiralDirekt, which was launched in October 2007, “continues its operations as normal” and that it “remains focused on continuing the profitable growth of U.K. operations and on building profitable, growing, sustainable businesses in Spain, Italy, the U.S. and France.”
Admiral didn’t explain why it is selling the German business. A spokeswoman didn’t immediately answer questions.
In its interim report in August, Admiral said AdmiralDirekt “experienced a very tough year in 2009″ and its management “pulled back on new business acquisition in Germany by raising rates substantially before the busy season” in the fourth quarter of 2009.
This led to a 25% fall in first-half premiums written by the unit to GBP8.6 million from GBP11.4 million. The number of cars insured also fell, by 17% to 31,300, it said.
Admiral said in August that its four international businesses in Germany, Spain, Italy and the U.S., collectively made a loss of GBP4.1 million, “which is in line with the first half of 2009.”
“To put this result into context, it equates to only 3% of the profits in our U.K. car insurance business and demonstrates our cautious approach to expansion,” it said.
After a presentation by Admiral to analysts last month, Keefe, Bruyette & Woods said: “We expect it to exit from Germany–management says it is “looking at all options here.” KBW also said Admiral’s presentation on the Italian market “implies that the company is unlikely to accelerate growth here in the near term.”
In August, Admiral posted a 21% rise in first-half pretax profit to GBP126.9 million on a continued rise in the number of customers signing up for car insurance.
Its share price has risen 35% since the start of the year. At 1125 GMT, Admiral shares were up 0.1% at 1,612 pence while the FTSE100 index was up 1%.