Will Admiral's Reserve Releases Prove Fleeting?

We estimate that approximately 71% of Admiral’s (ADM-GB) 1H21 profits are driven directly or indirectly by revisions to prior year loss ratios (a little more than half directly from reserve releases). Based on accelerated release recognition in recent accident years and rising paid loss pattens, we believe that these releases could be lower going forward once Covid-19 impacts subside. 2022 estimates are roughly in line with 2019 results, and it is our view that releases in the future could be below 2019 levels. As a result, we are adding the Company to our Biggest Concerns list.