British motor insurer Admiral soared on Monday after the company upped its first-half profit guidance as motor accident claims fell during the coronavirus pandemic.
Shares rose 4.1% on Monday morning, after the group told shareholders pre-tax profits for the first half of 2021 will be between £450m ($624m) and £500m. It posted a £286m profit for the same period last year.
Admiral said it will pay out an interim dividend of between 110p and 125p per share as a result.
"The stronger result is due to unusually positive development in the cost of UK motor bodily injury claims from a number of prior underwriting years which has led to higher reserve releases and profit commission revenue," a company trading update said.
The FTSE 100 (^FTSE) company added that the frequency of motor claims so far in 2021 has also been lower than expected as the extended pandemic lockdown measures across the UK hit travel.
"Further, motor claims frequency in 2021 to date has been lower than expected due to extended lockdown restrictions resulting in a favourable current period loss ratio, despite the significant reductions in Admiral’s premium rates over the past twelve months."
The group said the windfall is likely to be a one-time event and would not be repeated in the second half. "It is not currently expected that the level of reserve releases and profit commission for the first half of 2021 will be repeated in the second half," Admiral added.
Admiral also completed the sale of its Penguin Portals comparison businesses for £460m in the first half, with around £400m to be returned to shareholders in the form of special dividends phased over 2021 and 2022.
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