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Barclays hands insurer Admiral a double upgrade as premium cycle turns

Barclays has double upgraded its rating to ‘overweight’ with a price target of 2,300p

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Motor premiums picked up in April and May

Barclays has taken a contrarian view and given a double upgrade to motor and household insurance group Admiral PLC (LON:ADM).

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.

Quick facts: Admiral Group

Price: 2126 GBX

LSE:ADM
Market: LSE
Market Cap: £6.24 billion
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