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Barclays has downgraded Admiral Group PLC (LON:ADM) but upgraded rival Direct Line Insurance Group PLC (LON:DLG) as it sees some unevenness in the road ahead. 

Analysts at the bank believe the period of strong outperformance of the UK motor names, up 26% versus the Stoxx Insurance sector in the year to date, “may be coming to an end”. 

Underwriting results for 2021 are likely to be weaker than the 2019 baseline, the analysts said in a note to clients on Friday, reflecting “the already evident price softening along with resilient (and possibly accelerating) claims severity”.

The share price performance reflects expectations that profits for 2020 should be underpinned by a softer levels of claims frequency, which the analysts said may lower combined ratios by 5-6 percentage points.

As a results of the 2021 outlook, Barclays downgraded the best performing share, Admiral, to an ‘equal weight’ rating from the previous ‘overweight’, with a share price target cut to 2,304p from 2,376p.

Share price laggard Direct Line was upgraded to ‘overweight’ from ‘equal weight’ with the price target nudged up to 347p from 341p.

“We believe that DLG is likely to offer superior capital return over the coming 12 months while having only modest exposure to COVID-19 losses,” the number crunchers said. 

They expressed a continued liking for RSA Insurance Group PLC (LON:RSA), as “the cheapest name in the UK retail space”, along with Hastings Group Holding PLC (LON:HSTG), “which is likely to deliver the best EPS growth in 2020 among the companies we cover”.

RSA’s target price was trimmed to 520p from 539p, while Hastings’ was inched up to 211p from 208p.