Admiral Group Plc (LSE:ADM) shares tumbled 6.6% after analysts at Citi put the Cardiff-based insurer on its 'sell' list.
The broker said that a 'deep dive' into industry loss ratio trends had suggested that consensus estimates for the group are currently an "outlier".
"We downgrade Admiral to sell and issue a negative catalyst watch as we expect an earnings expectation reset and material downside risk into 1H23E numbers," the broker added.
Citi said its new EPS forecasts are 10% below consensus.
The broker also said that industry feedback and detailed modelling suggest claims inflation in Motor remained elevated in the first half of 2023 but with a sharper drop in the third quarter. As a result, Citi sees downside risk for loss ratios in the first half of the year.
In March, Admiral slashed its full-year dividend by 40% as it unveiled a sharp fall in profit hit by a weak showing in its motor division.
Pre-tax profit in the 12 months to 31 December 2022 totalled £469.0mln, down 39% from £769.0mln in 2021, reflecting a heavy fall in UK insurance profit which tumbled 278% to £616mln.