Good morning, and welcome to our conference call to discuss September 2022 results. I am Beatriz Izard, Head of Investor Relations. As usual, our CFO, Carlos Rodríguez Ugarte, will first walk you through the slides, and then we will be happy to take any questions you may have. Now, let me turn the call over to Carlos.
Good morning. Thank you, Beatriz, and welcome from my side as well. We start as usual with the highlights for the period in slide number five. Overall, our fundamentals are intact, yet our performance is not immune to inflationary pressures. The unique combination of macro factors has resulted in skyrocketing prices impacting the cost side of the P&L. On the other hand, we are pleased to present a strong performance on the commercial side of the business and on our efficiency metrics. Policyholders grew 3.5% and premiums, 4.1%. By line of businesses, we are displaying very solid development across all segments. Motor grew at 2.9%, with an acceleration in the Q3, reaching a 3.5% increase in that quarter. Combined ratio stood at 92.9%. Expense ratio stood at an excellent 20.1%, a ratio even better than that of 2021.
Solvency ratio as of September was a comfortable 189.1%, and return on equity stood at 24.2%. Moving on, slide seven provides our regular update on the Spanish motor market, clearly affected by a record high inflation and hence a very complex environment. CPI rose to 8.9% in September, with underlying inflation rising to 6.2%. These numbers are directly translated into a sharp increase in the cost of claim for the industry, especially in the second and Q3 of the year. Sector premiums are up 3.2% as of September. Average premiums are clearly on the rise, although its positive impact in terms of P&L will be seen in future quarters as gross premiums convert into earned premiums. Turning to slide number eight. Home continues with a positive development.
Home sales continue at a good pace, although it's slowing down due to the increase in borrowing costs. House sales were up 21% in July. Sector revenues grew 5.7% in September, with prices rising across most of the sector. As with regard to Spanish health market, while the inflow of new customers is slowing, turnover for the industry continues to report significant growth. Premiums reflect higher healthcare costs and hospital tariffs. Let's move on, onto the main figures for the year. In the complex environment I just described, the company performance on the commercial side shows a positive trend. Premiums were up 4.1% on the year, 3.5% in this quarter, and 5% in September. Customer increased by 3.5% together with historical retention rates.
Our technical result is fully explained by the unprecedented increase in the cost of claims in all lines of business, and also by higher frequency in motor and home. Financial results include realized gains of EUR 7.8 million, mainly in mutual funds, with the aim of reducing P&L volatility prior to the entry into force of IFRS 9 in 2023. We also realized capital gains in foreign currencies in the Q3 on the US dollar rally. Excluding such effect, financial results will have grown 4.5%, driven by higher dividends on the equity portfolio. All things considered lead to a solid combined ratio of 92.9% and a profit after taxes of EUR 58 million, down 32.4%. Please turn to page 12, where you see the breakdown of the policyholders and gross written premiums by lines of business.
The portfolio increased by 3.5%, supported, as I explained before, by excellent retention rates. Policyholders reached 3.4 million, which with solid growth across all segments of the company. Company premiums grew 4.1%. Motor displayed positive momentum with premiums up 2.9%. Home and health continued their very positive trend. More specifically, if we turn to next page, the motor segment grew 2.9%. Again, the portfolio recorded a solid growth in a still very competitive environment. Average premiums are clearly on the rise in both new business and the portfolio. This pricing trend will be gradually reflected in the coming quarters. On the technical front, combined ratio stood at a noteworthy 91.9%. Expense ratio, again, was superb, and the performance of the loss ratio was driven by sharp cost inflation, having a strong impact in the second but mainly in the Q3.
With the rise in the unearned premium reserve, premiums are earned at a lower rate as compared to gross written premiums. Combined ratio is well below the sector, 4.5 percentage points. Please bear in mind we are comparing with the sector latest available data as of June, and we expect the market technical margin to deteriorate sharply in the first nine months of the year. Moving to the next slide. Home continues its excellent performance during the first nine months of the year. Premiums keep its very positive trend, up 10.2%, a growth 4.5 percentage points higher than the market. Combined ratio stood at 93.4%, which is 3.1 percentage points above that of 2021. We had a remarkable performance in the expense ratio, which is gradually taking distance from the market average.
On the negative side, loss ratio was affected by higher cost of claims and frequency, especially in the Q3. Moving now to next slide. Health keeps on track. Premiums grew by more than 11%, although we are seeing a slowing growth as economy deteriorates. We continue with a prudent underwriting policy and a careful risk selection, while making the business more efficient quarter by quarter. Please, let's move now to slide number 16, where we break down combined ratio by line of businesses. Motor loss ratio increased by 7.6 percentage points in a very difficult context of cost inflation and, to a lower extent, a rise in frequency. Also, the loss ratio in the home segment increased by 4.9 percentage points.
On the other hand, health is having an excellent performance, improving the loss ratio by almost 8 percentage points. Expense ratio dropped to 20.1%. It is worth mentioning the 17.4% cost ratio achieved in the motor line of business. Overall, these ratios reflects the impact of a strong inflation on the claim side and a robust performance on the company expenses. If we move to slide number 17, consolidated loss ratio was driven by higher inflation and higher frequency, especially in the motor, but also in the home business. 47% of claims expense increase is explained by higher cost of claims for the nine months of the year, and 89% of that increase in the Q3 standalone.
In addition, frequency accounts for 53% of the increase in the first nine months, which is reduced to 11% in the quarter standalone. Loss ratio in home was also impacted by inflation. As of September 2022, 25% of the year-on-year increase is explained by higher average cost of claims. Frequency was also higher as compared to the previous year. On the next slide, we elaborate on expense ratio, which again, and recurrently, was remarkable. We continue with our strategy of efficiency and commitment to technology, together with a strong control of overheads. Acquisition expenses are contained, thanks to higher retention rates. Let's please now move to slide 19. As I mentioned before, in the first six months, we used a window of opportunity to realize gains in equities and mutual funds portfolio with very high average returns.
In the last quarter, we took advantage of the U.S. dollar rally to realize some gains on foreign currencies. Excluding those gains, investment result will have grown by 4.5% on the back of higher dividend incomes. On slide 20, you can see equity mutual funds have fallen from 8% to 7% of the total portfolio composition. As with regards investment returns, the overall return of the portfolio stands at 3.5%, 2.7% excluding realized gains. Moving on to our solvency position. The company solvency margin stands at 189%. The main impact on eligible own funds was the drop in the mark to market of the available-for-sale portfolio, particularly in the fixed income portfolio as a result of rising rates. For its part, SCR was flat in the quarter.
This is largely explained by lower exposure to equities and the symmetric adjustment dropping to -8.1% as compared to -5.3% in June. To wrap up, I will say that inflation clearly affected this quarter results and also might have damaged the entire sector. On the positive side, premiums development is encouraging. We are confident that our strategy of pricing, strict cost control, and high retention rates should and will provide positive performance in the medium and long term. Thank you. I will now hand the call over to Beatriz to begin the Q&A session.
Thank you very much for the presentation, Carlos. First, we'll begin with the questions received from the conference call.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, please press star two. When preparing to ask your question, please ensure that your line is unmuted locally. Our first question comes from Maksym Mishyn at JB Capital. Please go ahead. Your line is open.
Thanks. Good morning. Thank you for the presentation and allowing us asking questions. I have three. The first one is on home insurance. Combined ratio almost reached 100% in the Q3, and I was just wondering if you could give us a little bit more color on what was the reason, and how do you see the outlook, whether it was some one-offs or just something is changing in the trend. The second is on motor insurance. Do you think that there are chances we get another update on Baremo next year? The pension inflation is high, and this could be another headwind for the industry. The last one, there were some news in Spanish press on the appeal made by repair shops and pricing practices for motor insurers.
Do you see any risk to your business from this appeal? Thank you.
Thank you very much, Maks. First of all, regarding the home insurance, as I tried to explain during the presentation, the evolution of the year was very positive until the Q3. The combined ratio reflected that. In the Q3 we have some increase in the frequency, especially due to atmospheric events, you know, and some fires and some rain. My expectation is that, you know, the combined ratio for this business will keep on improving looking forward. I mean, we depend very much on atmospherics, but I think we are doing a great job on the expense side of the combined ratio. That is what we have to do.
Of course, you know, we have increased our combined ratio this quarter, but I think it should be some isolated event. My perception is that we will keep on improving that in the expense ratio and hopefully in the loss ratio as frequency will start to mild or will start to go back to the same numbers in the H1 of the year. Regarding the motor and your question about the Baremo, yes. I think we should not an update on the Baremo itself, but I think the cost will increase due to, you know, the inflation impact on some of the indemnities.
My perception is that the Baremo next year will also have an impact, probably less than this year because it will only affect the new business. My perception is that, yes, the Baremo will increase next year. Regarding the repair shops issue, well, it's true, I have read, you know, the same news that you are telling us. Well, in that case, I mean, we'll see what happens. What I can say is that we are one of the few companies that we own our own repair shops, that they manage close to 20,000 cars a year. We have a lot of cost control there, you know, and that is an advantage for us.
Keep in mind, as I always say, that we buy directly from the suppliers, you know, as we don't allow our repair shops, you know, to buy supplies. So with that, you know, we think even with that news, you know, that we are able to cope with that. Let me say one thing. I mean, even that, even though the loss ratio has increased in the motor insurance and the inflation had really an impact on the evolution of repair costs, looking at the market, I mean, the positive gap on cost, on the repair side of the business of Línea Directa is still there. I mean, what has happened to Línea Directa is the same thing probably happened to the market.
When I look at the numbers of average cost per repair, Línea Directa is still well, well below the market.
Thank you very much.
Thank you for your question, Maksym. Our next question from Francisco Riquel at Alantra. Please go ahead. Your line is open.
Yes, good morning. Thank you for the presentation. Wanted to focus on the relative performance more than the absolute one on the particular motor insurance business. First, the average premium for the sector is up over 2% in the first nine months, as you mentioned in the slide. For Línea Directa is less than 1% up. I wonder if you can elaborate what you are seeing in terms of average premium prices for Línea Directa and for the sector in general, both for the new business and for the retention of the portfolio because it seems to me that you are slower in the adjustments to the higher inflation environment.
Second, on the combined ratio, in motor you are 97%, the sector was 96% in the Q2. I wonder, how do you see the traditional gap that you have maintained in terms of the combined ratio versus the sector? If you feel that you will be able to maintain that this cycle, or not. In particular, how do you feel that your frequency and severity of claims in motor is performing relative to the sector? Thank you.
Thank you very much, Paco. Nice to talk to you. First of all, in terms of average premiums, well, it is true. I mean, in our case, probably the rise in the average premiums has happened more in the H2 of the year than in the H1 of the year, especially in the Q3. I mean, we have seen, you know, our average premiums going up. That should be the trend. I mean, maybe I'm lagging a little bit behind the overall average market, but it's an average. I mean, if we compare to many of the companies, we are raising average premiums above. It is true that Q1 average premiums, they were more or less flat.
I think I explained that in my first call of the year. Q2, you know, they start to increase, but really the hit on the uprise has been on the Q3. You should expect that to keep on going on the Q4. Of course, you should expect that average premiums will keep on rising in 2023. In our case, we started with the new business, but now we are raising also average premiums on the portfolio. So even though we might, we're a little bit slower than some competitors, we are in that trend and that should be positive for the Q4 and for 2023. The second question was in-
Yeah, relates to the combined ratio.
The combined ratio. Well, we'll see what happens. I mean, you will see numbers coming up next week. You will see market numbers coming up on November. My perception is that what has happened to Línea Directa in terms of inflation, which is really the bulk of the hit on the combined ratio motor business, is something that is gonna happen to the market to the same extent or even worse, you know, because I think we manage costs much better. My expectation is that our positive gap in terms of combined ratio will remain with the market. I mean, I remember that in the June numbers of the industry, many companies they were already above 100%, you know. We'll see what happens.
Comparing to the market, I'm very positive that our combined ratio will be very competitive. The third question was on frequency. On frequency on the business. Frequency during summer has not been. Well, it has been very bad, I mean, for the entire industry. Even if you take a look at, you know, the number of people dead in the roads, I mean, it's been the worst July in the history. September frequency came down. You know, my expectation is that the last quarter is gonna be milder. I'm not saying that it's gonna be a frequency similar to COVID periods, but I think Q4 frequency will be milder, you know.
In that regard, I am concerned, you know, but I'm not as concerned as on the cost side of the business. Frequency will tend to stabilize and, you know, our numbers of frequency, we have seen on the last quarter that the weight of the frequency in the cost has been much less than in previous in July and August. My expectation is positive.
Thank you.
Thank you for your question. Our next question comes from Carlos Peixoto at CaixaBank. Please go ahead.
Yes. Hi, good morning. Thanks for taking my call. My question, sorry. The first question would actually be related with the combined ratio evolution and the inflationary pressures you had in the quarter. I guess, at the H1 presentation, you were guiding towards a combined ratio of 91%-92% for the full year. What should be the updated guidance on that front? And my question would be, to what extent did inflation surprise you in the quarter? Because I'm assuming, it rose. Whether there's some specific areas within the repair costs that are hurting you the most and if there are ways to tackle it.
The second question would be a bit of a follow-up on the question on the average premium. My question would be what type of increase should you be aiming for to have on the average premium over the coming quarters, I mean? If you want in another way, how much of the inflationary pressure do you expect to be able to pass through to clients? Thank you very much.
Well, in terms of the combined ratio, Carlos, my forecast is that we are going to be by the end of the year by that 93% that I explained the last time we talked. I mean, still, as Paco was saying, September has not been very good in terms of combined ratio, but I still think that we will reach that number in the neighborhood of 93%, you know. We'll see the evolution of inflation. We'll see the evolution of the frequency business. Again, frequency on September was much better than on summer. So yes, we should be there in that 93%. In terms of average premiums, I don't have a number of how much we're gonna rise, you know, average premiums.
I can explain the strategy of the company, which is, of course, you know, base the increase in average premiums based on the risk premium of the business of each individual, and we will adjust, you know, average premiums. Of course, you know, with inflation hitting so hard the cost side of the business, our intention is not only to increase average premiums in the new business, but also keep on increasing those in the portfolio, you know. The thing is that, you know, the increase in average premiums, the translation of that into the P&L, it takes time, while the translation of the cost side is immediately, you know.
Again, I mean, Q3 increases, they were more than on June, on July and August, and that should be the pace, you know. Yes. I think it's gonna be a market overall intention to rise average premiums, you know. We'll see what happens with combined ratio. My expectation is that the motor sector in Spain is gonna be very close to 100%.
Thank you. We will now move on to our next question from Freya Kong at Bank of America. Please go ahead. Your line is open.
Hi. Good morning. Thanks for taking my questions. I've got three, please. First one, could you provide some rationale for continuing to push for growth in the motor and home insurance markets, given how difficult the backdrop is, and at what point do you think that growth doesn't look sensible anymore for Línea Directa? Second question for home. Could you give us how much atmospheric events contributed to the weakness in Q3? I think you usually provide a call-out for this. The split would be helpful to understand underlying versus one-off. Third question on solvency. You have had a significant drag this quarter from rising interest rates, which is obviously beyond your control. If rates keep going up, this could see your solvency levels dip below 180%.
How should we think about this and the safety of the dividend? Thanks.
Well, the rationale, I mean, the rationale for growth in motor is that, you know, motor represents 85% of our business. I mean, we are a multi insurance company, but of course, we have a lot of focus on the motor, on the motor insurance. What we have to do is to keep on growing. I think when the market is in difficult times, which I think is now in difficult times, the competitive advantage for Línea Directa is clear. You know, we have grown our average premium in 2.9% coming from a flat year in 2021. The number of clients, I think they have increased by 2.4%, you know. Our intention is to keep growing in this business.
Growing with higher average premiums and trying to grow our market share in the business. I think it's the first time this quarter for the last few years that we have increased our market share from 6.7%-6.8%. That's a good indicator. We like the motor insurance business. We know it's a difficult business, especially this year because of inflation, but I think the fundamentals of the company are intact, and our intention is to keep on growing while our competitors will be focusing more on how they manage the costs, their cost side of the business. Regarding the home insurance and the metrics, I think Beatriz has the number. One of...
Before telling you the number of atmospherics really had an impact on September and late August. Before that, the year was very good on frequency. Here atmospherics is not a matter of how much, it's a matter of when it happens, because normally, more or less, it's the same figure every year, you know.
Hi, Freya, this is Beatriz. Loss ratio, excluding atmospheric events would have been 58%. You have three percentage points of atmospheric included in the loss ratio for home insurance.
Thank you.
Finally, on the.
Thank you for Q3.
Finally, on the solvency question, it is true what you're saying. I mean, we depend very much on the evolution of our portfolio and the evolution of interest rates. I mean, the hit this quarter, you know, has been 19%, EUR 90 million. Well, we are close to 180. We work very much on not only on the own funds but also on the SCR. The SCR has been flat, you know, and we manage that by reducing the equity portfolio, but, you know, reducing a little bit the liquidity of the company. Our goal is to be over 180, and I don't see that that number is somewhat jeopardized.
I mean, we maintain that expectation, and we should be above 100%, even if we pay dividends, we should be above 180%. Still today, I don't see a problem there.
Okay, thank you. Just to clarify, that loss ratio for home ex-atmospheric was 58% in Q3?
Yes, that's for the accumulated figures. If you want, Freya, I can give you the standalone figures for the quarter.
Okay. 58% for 9 months.
For nine months.
Okay. Thank you.
Yes.
Perfect. Thank you.
Thank you very much for your question, Freya. Our next question comes from Thomas Bates at Berenberg. Please go ahead.
Hi. Morning, Carlos. Morning, Beatriz. Could you just give us a quick update on any contract renewals that are coming up, particularly in motor, over the rest of the year and maybe early into 2022 that could potentially, I guess, add to the inflationary concerns? And just on the home insurance, thank you for that figure for the loss ratio excluding atmospherics. What's like a normal run rate for Línea Directa across the quarters? Yeah, and final question. Actually, no, third question on motor, please. I guess there's been quite a pickup in inflation and you seem to suggest this is all kind of core underlying inflation with no one-offs. Is that right? Maybe if you could just confirm that.
It seems to be quite a big pickup in the quarter. Finally, just on, you said you benefited from the US dollar rally. Could you just explain a little bit the actions you took on the investment portfolio to mean that you did benefit from that? Thank you.
Well, on the contract renewal, I assume. Hello, Tom. On the contract renewal, I assume you are talking more on the supplier side of the business. Well,
Yes, exactly.
We've been managing that for the entire year. It's true that on the Q1 it was very mild, but of course, I mean, as suppliers, I guess, when they realized that inflation was here to stay, well, they put a lot of pressure on pricing. I mean, we have a very close relationship with providers and with suppliers. But it's true that we have to cope with this situation. Looking forward, this year all the contracts are already renewed. Of course, what we have tried is to increase the average duration of the contracts. I mean, not signing only one-year contract, but also, you know, trying to get a comfortable, you know, contract for the coming years, you know.
Inflation will then hit the company on a continuous basis. Inflation, if it's on the 8% or 6% underlying next year, it is also going to have an impact. My perception is that gonna be milder than this year, you know, because we got a real hit on inflation. Again, I mean, suppliers, you know, if their cost increases, they try to translate that to you. We manage that as we can and my perception is that next year will be better in terms of rising of cost, but it's still there with an underlying inflation of 6%. Regarding the home insurance, I'm not sure about the question.
I think he's asking about the loss ratio. I mean, what can we expect going forward?
Oh, sorry.
With the home, loss ratio.
Okay.
Also, what's the normal run rate for atmospherics across the year?
I mean, if we take a look at the combined ratio of the Home insurance, I'm very happy about the combined ratio, especially on the expense ratio of the business. I mean, we keep on improving that. We are much better, I think, than the market. The market is in 35%, we are in 32%. Happy on that. Then on the loss ratio, again, it was not a very good quarter for us in terms of frequency. My expectation is that we should improve a little bit in the Q4, but probably the loss ratio should be more or less stable by the end of the year.
You should expect a number very similar as the one we have, if we have some atmospherics. If we don't have some atmospherics, I think it will improve, you know. We'll see what happen in autumn, because normally the end of the year is not very good in terms of atmospherics.
Yeah. The next question, Tom was referring to if we have a really a pickup in inflation, particularly in this Q3.
Yes. I think you could say that. I mean, the Q3 really has been the pickup of inflation. Of course, as I explained before, I think at the beginning of the year, everybody was waiting to see whether this inflation uprise was gonna be there for good or it was an extraordinary issue. Once they have seen that it doesn't look any good for the year, you know, we really have the hit on the Q3, you know. We will still have some inflation impact on the Q4, but really the hit was, has been on the Q3. And again, I think frequency on the Q4 will be better. That will mean less repair cost for the business. So hopefully will be there.
In terms of combined ratio being very efficient on the cost side of the business, my expectation is that the combined ratio of the motor insurance by the end of the year should be in the neighborhood of 93%.
Yeah. The fourth question.
The action in the foreign currency. Well, we have a very small position in the foreign currency, sorry, in the fixed portfolio. What we see is that dollar pickup, the rally of the dollar was very good and what we decide is, you know, to make some capital gains on the fixed income portfolio. Nothing fancy. I mean, we are not talking about big numbers, you know, but you know, it's the management of the portfolio. When we see that our position in the dollar was very positive, we decide to realize capital gains.
Anyhow, if you take a look at the investment portfolio and the evolution of it, I mean, I think we posted EUR 26 million in investment income. Normally we move on a yearly basis very close to EUR 30 million, if you take a look back at 2017 to 2022. Normally that is the number. You should expect those numbers by the end of the year. I mean, we are not doing anything, you know, to increase our investment income. We basically take opportunities when we see there is an opportunity. I think with the dollar situation, it was a good opportunity to reduce our dollar position. But again, nothing fancy in the small numbers.
Thank you, Carlos.
Thank you. Our next question comes from Fernando Gil de Santivañes at Bestinver. Please go ahead.
Hello. Thank you for taking my questions. Two follow-up questions please, if I may. First one is on the solvency ratio. I mean, you mentioned the 180 target is still a target and above that you will be paying dividends. What actions are you contemplating in order to protect this target? Because if markets continue this volatility, I've seen that you have marginally increased the equity exposure and we don't know yet what rates will end, but what other actions could be taken by the company to protect this 180 target. So this is one question. The other question is regarding the health insurance. So I've seen the growth rate is very good and the pace is amazing.
I wonder if you could refresh the target growth rate and target market shares that you have for this segment, please. Thank you.
Thank you Fernando and welcome.
Thank you.
On the solvency ratio, well, it is true that Solvency II doesn't give you a lot of tools, you know, to manage your solvency position. I mean, because it is very much regulated. The only thing you can do is of course work with very few tools. One of the things that normally is what we are seeing with volatility is, you know, EIOPA adjustment of the symmetric adjustment, you know. You know that EIOPA, they could manage this adjustment by +10, -10. We are in -8 coming from a -5.
I think that is the way the regulators try to help, you know, you know, the insurance sector in terms of volatility of the solvency ratio. Of course, we do some things, you know, in order to help, you know, to help that. We have reduced a little bit our equity portfolio. We have reduced a little bit our liquidity, you know, in order to help that. But there are very few tools besides, you know, the help of EIOPA. Again, keep in mind that we are in 190 after paying EUR 22 million in dividends by the end of September. If you take our multiples in the sector, I think the solvency ratio is way below that 190.
I'm still comfortable on that. We are always, you know, looking at the evolution of the market. It is true that September was a very bad month in terms of the equity portfolio performance due to the interest rates. But still we are kind of comfortable in the numbers that we are. Again, too, you know, managing a little bit the portfolio, you know, and of course, with this volatility, I expect, you know, EIOPA to keep on maintaining that adjustment in the neighborhood of 8%.
Thank you. On health, please?
On health, we don't have any targets on that. I mean, we are happy with evolution of not only on the premium side of the business, we are also happy on the evolution on the combined ratio. We are really doing an effort there in terms of risk profiling. You can see that on the evolution of the nine months compared to the prior year. In terms of growth.
Mm-hmm.
I mean, I think we posted 7,000 new clients or 8,000 new clients with an increase on 11%. And we wanna keep on track, you know, on that growth. It is true, as I explained during the presentation, that what we are getting the feeling is that the market is not growing as fast as it's used to during COVID times. I think the market is slowing down. It's still growing. I think it's growing 7.7% in gross premiums, but I think it's slowing down. We'll see what happens. Our objective again is to try to break even as soon as possible. Our objective there is to keep on growing on clients and on premiums, and of course, being very careful on the risk side of the business.
Thank you very much.
Thank you for your question. Our next question comes from Patrick Lee at Santander. Please go ahead.
Hi, good morning everyone. It's Patrick Lee from Santander. Thanks for taking my questions. I just have two quick two questions, one on expenses and one on frequency. Firstly, on expenses. Expenses was pretty much flat this quarter and has been flat for many quarters, which is obviously a very strong cost control from your side. With the inflation eventually having an impact, do you think you can still hold that cost flat in the coming quarters? Or so far, have you had to hold back investment costs, IT expenses and advertising costs, things like this to keep that flat expense, which at some point could create some catch up cost pressure. Secondly, just to dig a bit deeper on the frequency point. Looking at the immediate few quarters ahead, there's obviously a seasonality quarter.
The seasonality factors, which after the summer months should be helpful in the Q4. Apart from that, in the context of high inflation, higher fuel prices, are you seeing any observable change in consumer behaviors in terms of, you know, using the car less, driving slower to save costs or using public transport more? Which with these things in mind could help your cost of claims in the coming quarters. Thanks.
Thank you, Patrick. Well, on the expense ratio, the only thing I can tell you is that we are very happy with the evolution of the expense ratio, given the inflation situation, which also affects the general and administrative expenses of the company. I mean, posting at 10.1%. If you compare our expense ratio to that of 2019, it's very similar. 20.1 versus 19.9, I think. Having put into the company more than 300,000 new clients. We are very happy. We are not improving our expense ratio by you know, cutting costs on IT, cutting costs on marketing. The other way around, I mean, we are investing even more on marketing.
I mean, the evolution of the expense ratio of the company is basically due, you know, to the strategy of the company. You know, being very digital, keeping on improving, you know, our digital proposition to clients. My expectation or my goal is to post a full-year numbers even better than the ones you have seen. Very comfortable on the expense ratio. I think we need to even improve that expense ratio. I mean, you should expect that to happen by the end of the year. On the frequency, well, we, you know, we are not seeing the signs on that.
I mean, I think the entire market is expecting that the Q4 in terms of frequency will slow down due to the economic situation, you know, and people taking public transportation with all the subsidies that the government is providing. Still today, we are not seeing that. I mean, October numbers are coming out good, you know, but everybody's expecting that frequency to decline. Of course, frequency is not gonna be the same as all summer because I think this year summer has been crazy in Spain, especially in the month of August. Still today, we don't see that positive evolution on the frequency because people mobility or people choosing public transportation will reduce the frequency. Still, we don't see that.
Great. Thanks for that, Carlos.
Thank you for your question, Patrick. At this time, we have no further telephone questions. I would now like to pass over to Beatriz for any webcast questions.
Okay, thank you. Now we continue with the questions received through the webcast. The first question comes from Jaime Pallarés from GVC Gaesco. Good morning, and thanks for the presentation, Carlos. He has two questions from his side. The first one is related to the Q4 dynamics. What should we expect in terms of cost increase? And how are policyholders assuming the price increases?
Mm-hmm.
The second question is related to cross-selling. How is the current economic situation affecting cross-selling between business lines? Thank you very much.
Well, I will start with the last question. I mean, the cross-selling. I think the evolution of cross-selling is in a very positive trend. I mean, if you take a look at the weight of home insurance in terms of policyholders, it weighs 22% of the entire company, and that is a big number, you know, coming from a 15%, 16% the previous year. So cross-selling is working quite well. Is the economic situation impacting that? Well, we don't see people retrenching from buying home insurance. I mean, the evolution of the home insurance business is very good. In terms of the motor insurance, it's mandatory, so we don't see that.
Even we don't see any still change in the mix of the insurance, in the motor insurance. Still, you know, we have the same numbers on fully comprehensive third parties, you know. I think the market is moving a little bit that mix, but in the case of Línea Directa, we maintain that. Cross-selling in general terms is working quite well for the company. The first question was on the Q4 dynamics on the cost. Well, I think it's gonna be a difficult year on the cost side of the business, especially because of the inflation in the repair side of the business. On the general administrative, you should expect improvements on the last quarter. On the repair cost, we will suffer also in the Q4, I think.