Several of Admiral's headline numbers came in ahead of forecasts for 2012, but Investec has kept its 'sell' rating and 582p target price for the stock.

The broker said that the most "eye-catching" number in the results was the 20% hike in the dividend to 90.6p per share, up from 75.6p previously.

Meanwhile, profit before tax rose 15% to £345m last year, well ahead of Investec's £305.7m estimate.

Shares were up 4.0% at 1,317.68p on Wednesday morning.

However, the broker said that ancillary income - which accounted for 49% of profit in the first half rising to 59% by year-end - will come under increasing pressure this year as legal referral fees are banned.

"We also suspect that other referral fees such as those from credit hire companies will come under downward pressure," said analyst Kevin Ryan.

Given this and the recent downward turn in UK motor rates, Ryan said that the better-than-expected 2012 results should not divert attention from the fact that earnings will be "squeezed" in 2013.

"The FY12 numbers are very good, in our view, but they do not hide the earnings pressures the company faces this year and in subsequent years," Ryan said.

"As customer growth slows, so will ancillary income, quite apart from any statutory hit, and as this is Admiral's largest source of profit, earnings seem likely to fall. We retain our 'sell'."

BC

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