Admiral's loss ratio rose to 87.5 percent on June 30, from 85.9 percent one year earlier, due to changes in the government's personal injury rate, or 'Ogden' rate, and after the firm held back more for claim payouts, the insurer said.

"Underlying loss ratio was worse than we anticipated, 2 percentage points worse than last year and 4 percentage points worse than our financial consensus," wrote Thomas Seidl, an analyst at Bernstein, which forecast a loss ratio of 83 percent.

"Admiral suggests this is potentially due to prudent reserving for the current year and unchanged impact from Ogden. The market will still see the underlying as disappointing," he wrote in a note.

The company also posted a 1 percent rise in profit before tax for the six months to June 30 as costs from an increase to the government's personal injury rate carried into 2017.

Admiral pretax profits rose to 195 million pounds ($251 million) compared with 193 million pounds in the same period a year ago, with growth held back by the government's changes to the Ogden rate.

"Most of the adverse impact from the increase in the costs of large injury claims, resulting from the change in the Ogden discount rate, was captured in our 2016 second-half result," Chief Executive David Stevens said, adding some costs would carry into 2017.

Revenue grew 15 percent to 1.45 billion pounds, from 1.26 billion pounds last year, helped by an increase in customers to 5.46 million at June 30 from 4.82 million in 2016.

The car insurer also said it would pay an interim dividend of 56 pence.

($1 = 0.7778 pounds)

(Additional reporting by Esha Vaish; Editing by Dasha Afanasieva, Rachel Armstrong and Edmund Blair)

By Maiya Keidan