Admiral Group Shares Slide Following Second Downgrade in Two Days

Admiral Group shares (LON:ADM) fell 0.81% to 2,924p this morning, extending a difficult month for the FTSE 100 insurer as a second consecutive analyst downgrade rattled markets. The decline brings the stock's monthly losses to 8.40%, reflecting mounting concerns over the company's earnings trajectory and dividend sustainability in an increasingly challenging UK motor insurance environment.

RBC Capital Markets delivered the latest blow, downgrading Admiral from Outperform to Sector Perform whilst slashing the price target from 3,600p to 3,100p. The firm cited the need for signs of a cyclical turn and a return to material earnings growth before the shares can outperform the broader market. The downgrade centered on Admiral's revised approach to funding its employee share scheme, with the company opting to repurchase shares from the market rather than issuing new stock.

This strategic shift reduces capital available for special dividends, prompting RBC to lower its total payout ratio assumptions to the mid-80% range from the low-90% range, representing an approximate 10% reduction in total dividend per share before earnings adjustments.

The RBC downgrade followed an even more severe cut from Goldman Sachs just one day earlier, which moved Admiral from Buy to Sell and reduced the price target from 3,954p to 2,920p.

Goldman's reversal proved particularly striking given the firm had upgraded the stock to Buy in July 2025, anticipating a positive inflection in pricing trends based on Office for National Statistics data. That expected turn failed to materialize, forcing the investment bank to slash its 2026 earnings per share estimate by 17%. Goldman highlighted deteriorating burn costs and negative pricing dynamics relative to claims inflation as primary concerns, whilst flagging longer-term structural risks including rising commodity prices, chip shortages exacerbating claims inflation, and the potential disruption from autonomous vehicles.

The recent downgrades form part of a broader pattern of analyst pessimism surrounding Admiral. JPMorgan downgraded the stock from Neutral to Underweight in December 2025, reducing the price target from 3,050p to 3,000p amid concerns over stretched valuations and stalling earnings momentum across the European insurance sector. UBS similarly moved from Buy to Neutral in mid-December, cutting its target from 3,950p to 3,350p due to prolonged weakness in UK motor insurance pricing, with expectations for pricing alignment with claims inflation now pushed back to the first half of 2026. Earlier downgrades from Peel Hunt and Citi in the second half of 2025 further underscored deteriorating sentiment around UK motor underwriting margins.

Price Targets

The cascade of downgrades reflects fundamental concerns about Admiral's ability to navigate a difficult pricing environment in UK motor insurance, where competitive pressures have prevented premiums from keeping pace with rising claims costs. Markets will be watching closely for evidence of pricing discipline returning to the sector and whether Admiral can demonstrate the earnings inflection that analysts now deem necessary for the stock to regain momentum.