Admiral Group Plc (LSE:ADM) was upgraded to “Overweight” from “Equal-weight” by Morgan Stanley on Monday, with the bank citing rising UK motor insurance pricing and its expectations for improved margins.
Morgan Stanley raised its price target on the FTSE 100 insurer to 4,450p from 3,575p. The new target represents approximately 16% upside from Admiral’s previous closing price of 3,816p.
The bank identified UK motor insurance as an area of firmer pricing within European property and casualty insurance, compared with softer conditions in commercial insurance, reinsurance and continental European retail markets.
UK motor insurance pricing increases
Morgan Stanley said UK motor insurance CPI reached 8% year-on-year in July, marking a fifth consecutive month of acceleration.
Approximately 90% of Admiral’s profits are derived from its UK motor business, according to the research note.
During the first half of 2026, Admiral implemented rate increases in the high-single-digit percentage range. Morgan Stanley compared this with estimated full-year claims inflation of between 5% and 7%.
“Admiral is now rebuilding margins, not just maintaining them, with rate increases well ahead of claims inflation,” Morgan Stanley analysts said, adding that the deterioration in written margins in UK motor had passed its lowest point.
The bank increased its estimates for Admiral’s group pre-tax profit in 2027 and 2028 by approximately 6.5%, reflecting increases of between 7% and 8% in its UK motor profit forecasts.
Morgan Stanley assesses autonomous vehicle exposure
Morgan Stanley also addressed the potential effect of autonomous vehicles on the motor insurance sector, saying concerns about near-term disruption had been premature.
The bank cited commercial deployment obstacles, including regulatory delays affecting robotaxi operators such as Waymo in London and paused Level 3 autonomous vehicle deployments by major automakers.
Morgan Stanley said these factors indicate that any structural change in vehicle liability would represent a longer-term transition.
Morgan Stanley raises Admiral price target to 4,450p
Admiral was trading at approximately 14.5 times Morgan Stanley’s estimated 2027 earnings per share, compared with a 10-year average multiple of 16.5 times.
The bank expects Admiral’s valuation discount relative to broader European peers to narrow as underwriting profitability improves.
Morgan Stanley also reiterated “Overweight” ratings on Hiscox Ltd, with a price target of 1,878p, and AXA SA, with a target of €44.64.
The bank maintained “Underweight” ratings on Legal & General Group PLC, with a 296p price target, and Gjensidige Forsikring ASA, with a target of NKr 282.20.
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