- U.K. motor insurance is a target-rich sector for dividend investors, with the 3 listed players offering Dividend Yields of between 5.5% and 8%.
- Motor premiums have long-term structural growth, driven by the number of vehicles growing 1-2% and claim costs rising 3-5% annually.
- Sector profits have been pressured by accelerated cost inflation and weak pricing in recent years, but the cycle will turn when smaller players exit.
- Upcoming reforms are neutral to positive; when the pricing cycle turns, stronger players will gain faster growth and a step change in profitability.
- Admiral, Sabre, and Direct Line are all potentially attractive targets, on which we plan to conduct further research in the coming weeks.
For further details see:
U.K. Motor Insurance: 5.5% To 8% Yields For Dividend Investors