Admiral in rough seas as it sends out a profits warning

Admiral came down to earth with a hefty bump today, issuing a profits warning that sent the shares plunging by a third.

The much-praised company has had an unbroken run of profit increases since joining the stock market in 2004, a result it has put down to a superior ability to measure risk.

Its skill or luck seems to have run out. The company reported it has suffered injury claims "above historical levels of experience" as it succumbed to an industrywide trend.

Investec analyst Kevin Ryan said: "They've just had a shock. You cannot outperform a commoditised market for ever. It just doesn't work like that."

Admiral, which sponsors the Welsh rugby team, now insures one in 10 cars in Britain through brands including Bell, Diamond, Elephant and price comparison website Confused.com.

The shares tumbled 30%, or 348p to 844p.

Henry Engelhardt, the charismatic chief executive, is hit more than most. He owns 14% of the stock.

British motor insurers have paid out more in claims than they have received in premiums every year since 1994, according to the Association of British Insurers, partly because of big increases in bodily injury claims fuelled by "no-win, no-fee" lawyers.

Insurers claim many bodily injury claims are spurious and hope a ban announced in September on lawyers paying fees to those who refer accident victims to them will temper the increase.

Admiral itself makes considerable income from referral fees that are paid to insurers for passing on details of accident victims to third parties.

Its profits were up 23% to £265.5 million in 2010.