Admiral's fortunes took a turn for the worse during the first quarter of the year as the cost of insuring cars finally began to fall.
The insurer blamed lower motor insurance premiums as its turnover dipped 9% to £470m. Separate figures from the AA also confirmed that consumers were enjoying some respite after years of personal injury claims inflating costs across the industry.
Henry Engelhardt, Admiral's boss, played down the setback.
"Little has changed since the full-year results and our expectations for 2013 remain positive and unchanged," he said.
"Year-on-year UK car insurance market premiums are down around 10%. Not surprisingly, our turnover has also fallen, but, as we have said before, we continue to be focussed on margin, not volume, and we believe this is not the right time for us to grow our market share in the UK."
The shares fell by about 1%. The FTSE 100 insurer said its overseas business was starting to bear fruit with international revenues up 20% at £48m.
"We are enjoying good growth outside the UK and are happy with the progress we are making in all our international markets," Engelhardt added. "Our financial position remains strong and we continue to focus on delivering returns for our shareholders through our capital-efficient and cash-generative business model."