We set a £33.70 target price based on a sum of the parts valuation where we forecast underlying 2024E divisional performance and apply P/E multiples. We put the UK motor operations on a 16x multiple with a 14x multiple on the other operations, with the inclusion of central costs this implies an 18.3x P/E multiple valuation for Admiral. This is a slight discount to its historical average of 16.9x which we believe is justified given motor pricng is now expected to decline.

The key downside risks to Admiral reaching our target price are: 1) higher-than-expected claims inflation; 2) a continued competitive UK motor market for longer than expected and providing further headwinds to NB pricing; and 3) lower-than-expected UK premium growth. Upside risks include: 1) stronger-than-expected reserve releases; and 2) faster-than-expected growth in the international division. If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. However, should they be less than anticipated, the stock could trade above our target price.