Michael Faulkner on this week's market movers

Motor specialist Admiral was the biggest riser of the week. Its shares stood at 1,047p as Insurance Times went to press, up 11% over the week.

Admiral has been one of the strongest performers among the insurance stocks. Its chief executive Henry Engelhardt said in October that the company was set to product record profits for the year.

Its business model means it only keeps about a quarter of the underwriting risk on its balance sheet, with the rest passed to reinsurers. This low balance sheet risk, coupled with high cash flow generation and projected strong earnings growth, has made it an attractive stock.

Credit Suisse forecasts that the insurer’s earnings will grow 16% in 2010 and 15% in 2011.

One potential drag on the business is Admiral’s ability to generate income from ancillary sales as the economy slows further. Nearly half (43% this year) of Admiral’s income comes from selling policy add-ons to motor insurance customers. This area could come under pressure as consumers rein in spending.