Broker snap: Admiral 'not immune from market forces', says Investec

9th Nov 2011 10:25

Investec says that "dark clouds [are] forming" at insurance giant Admiral, as it reiterates its sell rating and 843p target.Shares plunged on Wednesday morning after the firm's statement which warned 2011 profits would be at the lower end of expectations (just 10% higher than 2010) due to a jump in personal injury claims. By 10:20, the share price had tumbled 29.34% to 843p, from 1,193p at yesterday's close.Admiral said that the frequency and expected cost of new large personal injury claims had remained above historical levels of experience. Admiral said it expected this trend would hit projected ultimate loss ratios for 2010 and 2011, which would in turn affect both overall reserve movements and recognised profit commission. "We see this IMS as an admission that Admiral is not immune from market forces and this will disappoint the market, we believe. It remains our view that significantly out-performing a commoditised market for sustained periods is impossible," said Investec analyst Kevin Ryan.BC