Car insurer Admiral has booked a rise in first half profits, helped by price increases for drivers as it looked to mitigate the impact of a change in the way personal injury claims are calculated.
The Cardiff-based group saw pre-tax profits rise 2% to £193 million in the six months to June 30, while turnover rose 15% to £1.45 billion.
Earlier this year, Admiral said it was taking "pre-emptive" action to increase prices as it looks to recoup a £150 million hit following a Government decision to cut the so-called Ogden discount rate calculation.
On Wednesday the firm said: "The UK car insurance business benefited from continued success in attracting and retaining customers in the competitive UK market and this, together with higher average premiums, contributed to an increase in turnover.
"Admiral increased its rates in December 2016 in advance of the Ogden change and has continued to do so throughout the first half."
As a result, UK insurance turnover rose 9% to over £1 billion.
Shares in the insurance sector plunged earlier in the year after then lord chancellor Liz Truss put forward changes to the discount rate calculation, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.
Ms Truss said, from March 20, the rate would be cut from 2.5% to minus 0.75%, but the Government is now consulting on the move.
Admiral, which also owns price comparison website Confused.com, saw its annual profits tumbled by a quarter in March after accounting for the change.
David Stevens, group chief executive of Admiral, said: "Most of the adverse impact from the increase in the costs of large injury claims, resulting from the change in the Ogden discount rate, was captured in our 2016 second half result.
"However, some extra costs carry into 2017.
"In these circumstances, we are happy to report a marginal increase in profitability and to deliver a more material increase in the underlying dividend."
Shares in Admiral plunged nearly 6% in morning trading to 2,051p as observers pointed to "sluggish" bottom-line growth.
Andreas van Embden, analyst at Peel Hunt, said: "Bottom-line growth is sluggish, in part held back by the changes in the Ogden discount rate.
"We believe Admiral has a geared business model that benefits from a hardening UK Motor market providing the cash to fund international expansion.
"However, we see more attractive investment opportunities in the sector at a discount to Admiral's premium multiples."
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