General insurance as a sector has underperformed its European peers by 16% this year and 11 out of 19 analysts are sellers
Barclays, though, believes insurance premiums reached an inflection point in the second quarter when they rose by 4% during April and May.
Admiral’s share price historically has been closely linked to movements in premiums (77%), so this rise in premiums is a positive says the bank.
However, this will only become recognised when the mainstream quarterly indices are published in the second half of July.
As a result, Barclays has double upgraded its rating to ‘overweight’ with a price target of 2,300p.
The bank also likes fellow general insurer Hastings, which it says is even more closely co-related to premiums (82%).
Hastings has a target price of 246p with an ‘overweight’ investment rating.
Shares rose 2.9% to 2,173p.