Admiral Group

third largest private car insurer UK (7% market share)


brands - Admiral, Bell, Diamond, and Elephant.

offering direct auto insurance via the Internet and phone. (This capital-light model)

overseas, Spain, Germany, France, Italy, and the US as well.


Positive

opportunity in the US - bullish. (US market enormous with 1.17 cars on the road per American)

launched US operations last year

direct, low-cost insurance companies like Progressive and GEICO.
1. It has a solid balance sheet with no debt.

2. Substantial dividend (last year it paid out 97% of profits) and has a projected yield of 4.8%.

3. Executives are financially invested -- as of 1 May, the CEO owned 15.2% of shares outstanding.

4. Combined ratio is 92% versus the peer average of 115-120% (anything below 100% means the insurer is receiving more in premiums than it is paying out in claims), and

5. Admiral's investment portfolio is fortified with short-term, high-quality, and lower risk investments like cash deposits and money market funds.




Of course, Admiral's strengths are already well-known by investors and there's a good reason why its shares trade at a premium in the market. A bit of bad news could send shares lower and provide a better buying opportunity.

That's why I would consider buying only a one-third stake in Admiral around today's price of 1,460p. Look to complete your purchase around 1,300p or below.