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Published: Sat, August 20, 2016
Economy | By Melissa Porter

Admiral may move business away from United Kingdom over Brexit

Admiral may move business away from United Kingdom over Brexit

"And so, basically, lower interest rates means bigger liability valuation and hence less capital and a lower solvency ratio", Mr Jones said.

LONDON, Aug 17 (Reuters) - A slump in Admiral shares dragged Britain's top share index down further from the 14-month highs it hit on Wednesday, after the auto insurer said that market volatility caused by Britain's vote to leave the European Union had hit its solvency ratio.

Geraint Jones, Admiral's finance director, said: "What we saw immediately after the Brexit vote were quite sharp falls in gilt yields and risk-free interest rates".

Motor insurer Admiral Group PLC hiked its dividend and posted higher pretax profit for the first half of 2016 on Wednesday, but shares in the company sank amid concerns about a fall in its Solvency II ratio and as pretax profit slightly missed expectations.

He said these concerns "question the wisdom" of Admiral's capital returns strategy.

The group said it does not expect day-to-day operations to be adversely impacted by the Brexit vote, but warned of the risk of potential market turbulence and fears over passporting rules in the EU.

Jones said vehicle insurance business usually held up well during an economic downturn because it is a legal requirement. "Some people may get rid of their vehicle or downgrade their coverage but sales of our products are fairly resilient".

Shares dropped as much as 8% despite assurances over its capital strength and as it revealed an extra £33 million for shareholders from a special dividend payout. PPOs are court orders to ensure pension-like payments to policyholders with severe, long-term injuries as a results of a auto accident.

And in price comparison results were also encouraging: Confused.com in the United Kingdom grew revenue and saw a significant increase in profit to £8.3 million from £4.8 million; the Group's European operations retained leadership positions in their respective markets; and continued encouraging progress in developing the panel of insurers and key metrics was made in the U.S. at compare.com.

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