UBS Upgrades Admiral Group to 'Buy' Amid Positive Pricing Outlook

UBS Upgrades Admiral Group#

UBS has upgraded Admiral Group from a ‘neutral’ rating to a ‘buy’ on Tuesday. The brokerage raised its 12-month price target by about 8%, increasing it from 3,300p to 3,550p. This change is based on expectations of a positive shift in UK motor insurance pricing, growth in non-motor earnings, and potential capital distribution due to an internal solvency model approval. Following the announcement, Admiral's shares rose over 2%, trading at 3,120p as of March 9.

Earnings Forecasts and Pricing Trends#

UBS has adjusted its earnings per share (EPS) estimates for Admiral, increasing the 2026 forecast by 7% to 238.52p. The estimates for 2027 and 2028 have also been raised by 3% each, reaching 250.57p and 297.66p, respectively. Currently, Admiral is trading at a price-to-earnings ratio of 12.5x for 2027, which is lower than its five-year average of approximately 16x.

The brokerage noted that Admiral has raised its prices by a few percentage points in the first two months of 2026, while the overall market has remained relatively flat. UBS expects Admiral's pricing to exceed inflation by 2.5 percentage points for the rest of 2026, before aligning with inflation afterward.

Growth in Non-Motor Earnings#

Admiral's non-motor businesses, including UK Home, Travel, and Pet insurance, are projected to see significant growth. The company reported a pretax profit of £95 million from these divisions in 2025, surpassing expectations of £70 million. UBS now anticipates that profits from these areas will more than double by 2028, contributing to about 15% of the company's earnings by that time.

Capital Distribution and Solvency Model#

UBS also highlighted the potential for a one-time capital distribution of 1.5% to 3% of market capitalization, pending approval of Admiral's Solvency II internal model. This approval is expected by the end of FY26. The revised solvency target range under this model is set at 150%-170%. Shareholders are projected to receive an all-in yield of 5.7% in 2026 based on an 82% payout ratio.