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Investing.com - Citi upgraded Admiral Group PLC (LON:ADML) to Buy from its previous rating and raised its price target to £42.43, citing expectations that the UK motor insurance market is entering a hardening phase with Admiral Group leading rate increases.
The firm raised its earnings per share estimates for Admiral Group by 8% for 2027 and 6% for 2028, putting its forecasts 15-17% above consensus. Citi said Admiral Group implemented approximately 60 basis points of real rate increases in January and February 2026, which if sustained could support a materially better UK Motor combined operating ratio than currently expected.
Citi estimates Admiral Group’s underwriting year booked loss ratios at 82% for 2026, 80% for 2027, and 80% for 2028. The firm said these figures suggest the calendar year UK motor combined ratio could be 1-2 percentage points better than consensus estimates.
The research firm expects Admiral Group’s European operations in Spain, Italy and France to show improving momentum after inflation shocks and post-Covid complications. Citi said the intellectual property in these countries should be significant and the earnings contribution does not yet reflect value potential.
Admiral Group previously set a profit target to double non-UK motor profit between 2025 and 2028. Citi identified elevated inflation from Middle East conflict and slower than expected rate increases as key risks to its recommendation.
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