Admiral Group PLC ADM

Admiral Group is a unique company and has grown rapidly while maintaining very high levels of profitability. While the company is a relatively new player in the U.K. auto insurance market, having gone public in 2004, it has quickly become the second-largest personal auto insurer in the country and writes policies on more than 11% of the U.K.'s vehicles. Admiral has consistently posted robust underwriting margins and generated returns on capital that are unheard of within the competitive insurance marketplace. Though we have some questions about the sustainability of certain of the company's revenue streams, especially in the face of increasing regulation, we believe even absent many of these sources of ancillary revenue its underwriting profitability is sustainable and endows the company with a narrow economic moat.