Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

JPMorgan turns more positive on Direct Line and Admiral

(Sharecast News) - Shares in UK motor insurers Direct Line Group and Admiral were rising on Thursday after positive comments from JPMorgan, which said that a sector recovery is imminent and that investor concerns about regulatory intervention are overdone. The bank resumed coverage of DLG with an 'overweight' rating, having previously been rated 'neutral', and upgraded its stance on Admiral from 'underweight' to 'neutral'.

JPMorgan said that 2022/23 results across the sector were the worst since the financial crisis, as market pricing hadn't caught up with claims inflation which increased more than of recent norms due to underlying economic inflation and supply chain issues.

"At this stage, with pricing holding firm, we expect that on a written basis, pricing has increased sufficiently to meet future claims costs with results from 2H24 onwards likely to show material improvements before we see a 'clean' year of earnings in 2025," JPMorgan said.

Meanwhile, the bank talks down the threat of regulatory intervention from the FCA which has weighed heavily on the sector following the introduction of the Consumer Duty in July 2023. "Despite the market concerns on this source of profits , we actually are less worried given the material levels of price increase that we have seen in UK motor pricing and recent momentum in UK home insurance lines," it said.

DLG shares were up 1.5% at 171.9p in afternoon trade, while Admiral gained 0.3% to 2,509p.

Share this article

Related Sharecast Articles

R&Q Insurance shares plummet on weak guidance
(Sharecast News) - R&Q Insurance, the AIM-listed non-life insurer, lost almost half of its market value on Friday after announcing it would report a "significant pre-tax loss" for last year.
SigmaRoc delivers 'solid' Q1 performance
(Sharecast News) - Limestone group SigmaRoc said on Friday that it had delivered a "solid Q1 performance", with underlying earnings in line with management expectations.
Samsung in line to secure $6bn in US government grants
(Sharecast News) - Electronics giant Samsung will unveil a $44.0bn White House programme aimed at bringing semiconductor production back to America as soon as next week, with the memory chip maker in line to secure up to $6.0bn in government grants.
BAE Systems 'still riding high', says Deutsche Bank
(Sharecast News) - Deutsche Bank has hiked its target price for BAE Systems and maintained a 'buy' rating on the aerospace and defence stock, saying that recent growth momentum is likely to continue.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.