Admiral Group Plc (LSE:ADM) shares were one of the top risers on the FTSE 100 after Citi upgraded the motor insurer, arguing that market forecasts for earnings have become too cautious.
Moving to a 'buy' rating, the US investment bank said Admiral had "drip fed" small inflation-adjusted premium increases during early 2026, with the benefit expected to build from the second half.
Analyst James Shuck compared conditions in UK motor insurance with a "frog boiling slowly", the description once used by Admiral co-founder Henry Engelhardt for the market two decades ago.
Rather than facing one dramatic change, a slow and steady shift in pricing conditions in Admiral's favour means increases in real rates – premiums after allowing for claims inflation – gradually strengthen margins and earnings.
"We see something similar now and expect [real rates] to compound from 2H with Admiral leading the way," Shuck said.
The analyst argued that the modest increases introduced so far could have a larger cumulative impact if maintained, leaving current consensus forecasts underestimating Admiral's earnings potential.
With earnings per share estimates for 2027 and 2028 that are now between 15% and 17% above consensus, Citi opened a "positive catalyst watch" ahead of interim results due on 6 August.
Admiral shares rose 4.5% to 3,750p by late morning on Tuesday.
