RBC Capital Markets upgraded Admiral Group Plc (LON:ADML) from sector perform to outperform and raised its 12-month price target to 3,560p from 3,100p following the insurer's FY25 results, according to the broker's note on Friday. The upgrade reflects outperformance across segments outside the UK Motor business that more than compensated for weakness in Admiral's core division.
Analyst Ben Cohen increased the target price-to-earnings multiple to 14x FY2027 earnings from 13x. RBC also published, for the first time, a multi-stage discounted cash flow model that extends the firm's forecasts out to 2030 and cross-references the revised multiple.
"We were particularly encouraged by the company’s willingness to provide a multi-year view of profits and EPS growth, something Admiral has not done in the past," Cohen said in the note.
Admiral shares were quoted at 3,218p as of March 12, 2026, implying a market capitalisation of £9.7 billion. RBC's scenario analysis sets a potential upside to 4,050p and a downside to 2,250p.
FY25 performance and divisional detail
Group profit before tax (PBT) for FY25 was reported at £957.9 million. The UK Motor division produced £1.02 billion in divisional PBT, a result described as slightly below prior forecasts. By contrast, Non-UK Motor returned £95 million in PBT, a figure 27% higher than RBC's previous estimate and driven by a strong outcome in Europe.
Italy in particular moved from a £20 million loss in 2024 to a £3 million profit in 2025 after management implemented revised pricing, tighter risk selection and cost reductions. Those actions coincided with a 16% reduction in the number of vehicles insured in the market.
RBC's updated projections
RBC revised its group PBT forecast to £936 million for FY26, £1.03 billion for FY27 and £1.07 billion for FY28. These adjustments represent changes of 1%, 7% and 8% respectively versus the broker's prior estimates. Corresponding basic EPS forecasts were adjusted to 233.7p for FY26, 259.4p for FY27 and 272.5p for FY28, increases of 3%, 10% and 12% relative to previous forecasts.
The firm flagged UK Motor as the primary near-term drag. RBC expects divisional PBT for UK Motor to decline to £954 million in FY26, and for the core combined ratio to deteriorate to 83% before improving to 81.8% in FY27.
Average premiums per vehicle are modelled at £609 in FY26, a 5.2% decrease, with a recovery to £639 in FY27. Motor premiums per CPI data rose 4% year-on-year in January 2026 but remain roughly 10% below the February 2024 peak.
Growth targets, cost plans and capital allocation
Management has set an objective to more than double Non-UK Motor PBT by 2028 and is pursuing top-three positions in UK Household, Pet and Travel. The company expects efficiencies generated by GenAI to exceed £100 million per annum by 2028. RBC projects the Non-UK Motor segment at £135 million in FY26, £164 million in FY27 and £192 million in FY28.
Admiral has shifted away from special dividends toward share buybacks, scheduling £75 million of buybacks after H1 2026 and £80 million after year-end FY26. At the same time the company reduced total dividends per share to 151p for FY26 from 205p in FY25.
Pending approval of an internal model, management intends to lower the group's solvency ratio toward the top end of its 160-180% target range. RBC notes that this movement implies roughly 30p per share of additional capital return, but this potential amount is not included in RBC's base forecasts.
Takeaway
RBC's upgrade and higher price target follow stronger-than-expected FY25 outcomes outside the UK Motor division, an elevated FY2027 P/E multiple and the introduction of an extended DCF framework. The bank's updated forecasts reflect modest near-term headwinds in UK Motor, anticipated recovery in pricing and premiums, and management's ambitions for international growth supported by material GenAI-driven cost savings.