Good morning to all of you, and thank you for joining the call today. Welcome to Línea Directa 's first half results conference call. Presenting today is Carlos Rodríguez Duarte, our CFO. After the presentation, as usual, we'll open up the call to Q&A. With these words, over to you, Carlos.
Thank you very much, Beatriz, and good morning to everybody on the call. We are very pleased to deliver an excellent set of results for the first half of the year. As always, I would like to start by commenting the key figures on page number five. In a nutshell, we are delivering high organic growth and profitability, excellent return on equity, and a strong balance sheet. Business growth accelerated to 10.8%, with motor at 11%, home at 7.5%, and health at 13.6%. The portfolio of customers grew in more than 241,000 policies to 3.58 million. Combined ratio stood at 92.3%, down 3.2 percentage points. Net income rose to EUR 43.8 million. Return on average equity rose to 23%, and finally, solvency increased to 193.2%. Moving to page number six, here the message I would like to convey is consistent with what we said in 2024.
Further acceleration in the top line and sound retention levels by increasing the loyalty of our customers and attracting new ones to our brand. We posted a better underwriting result from strong revenue growth and sound six months combined ratio, with further improvement in claims and expenses. The evolution of the financial result was remarkable, up 33.9%, with higher income from the bond and equity portfolio and the significant revaluation of investment funds. All things together led us to a profit after taxes of EUR 43.8 million, up 72% over the six months of 2024. As with regard to business volumes and clients, all line of businesses reported significant growth. Worthwhile to mention the motor segment, with 62,000 new clients in the second quarter standalone. In health, our more comprehensive products grew by 13.6%.
Moving to page number eight, the positive evolution on the combined ratio was very solid, from 95.5% in the first half of 2024 to 92.3% as of June 2025, down 3.2 percentage points. Once again, I would like to reinforce key messages: careful subscription and tight cost control. We are continuously working towards automatic processing, streamlined the business in general, as well as improving our digital setup. We consider the expense ratio to be a key competitive advantage. Now, I would like to move to a more detailed explanation by line of businesses. In motor, we further accelerated growth in the second quarter, with premiums up 11% on the back of improved sales and retention. We were able to exceed the market growth in more than two percentage points. The combined ratio stood at an excellent 92%, down 3.6 percentage points as compared to the first half of 2024.
Also, the home line of business posted significant growth, with premiums up 7.5% in the first half of the year. The combined ratio continues to be exceptional at 88.9%. On page number 11, health posted growth of 13.6%. The figures are benefiting from more comprehensive products. Specialists and complete products now account for more than 64% of the portfolio, which compares to 57% as of last year. On the technical side, loss ratio was driven by the increase in hospital scales. Conversely, frequencies are declining. Moving to page number 12, financial result was up 33.9%, driven mainly by the increase in the mark-to-market of mutual funds. We also posted an increase in income in the bond and equity portfolio. Also, let's remind last year we had an impairment of EUR 1.3 million in the corporate bond French company Atos.
As with regard to the composition of the investment portfolio, government bonds gained further weight in the second quarter, with longer duration, which rose to four years. The underlying return on the portfolio stands at 322 basis points. An average reinvestment yield stood at 261 basis points in the quarter. On our solvency position, solvency margin rose to 193.2%, which compares to 180.2% in the first three months of the year. The latter has been already adjusted for the first interim dividend of 2025 of EUR 50 million. Own funds were driven by the result of the quarter, the positive development in the available for sale portfolio, and the best estimate of premiums. SCR increase was a function of market risk on the back of deterioration of the symmetrical adjustment and spread risk. Underwriting risk grew, reflecting business growth. To conclude, June results were strong, we delivered very consistent results.
We are also developing the necessary basis for our future ambitions, and much is expected from us in the upcoming years. I will now hand the call over to Beatriz to begin the Q&A session.
Thank you, Carlos. We'll begin with the questions received from the conference call.
Ladies and gentlemen, we will now begin the Q&A session. If you would like to ask a question, please press *5 on your telephone keypad. If you change your mind, please press star five again. Please ensure that your device is unmuted locally before proceeding with your question. The first question comes from Maksym Mishyn from JB Capital . Now your line is open.
Yeah, hi. Good morning, Carlos and Bea. Thanks for the presentation and taking our questions. I have two. The first one is on the motor insurance. You're capturing new customers strongly, and I was wondering if you could share more color on what type of coverage the new customers choose. Also, are they mainly new car buyers or customers coming from other companies? The second question is on home insurance. Any chance you could walk us through the combined ratio in the quarter? Were there any extraordinary impacts, and what are your expectations for the rest of the year? Thank you.
Thank you very much, Max. Regarding the motor insurance, those 62,000 clients that we gathered in the second half of the year, in the second quarter, and those almost 50,000 that we gathered in the first quarter, they come from competition and they come from new car sales. Línea Directa is a player in the new car sales, but it's a player in the transaction. We are gathering from the market and we are gathering also from the new business. Regarding the type of clients that we are gathering in terms of a mix of portfolio, very similar to what we have. We are a company very much focused on third-party insurance. We have also some fully comprehensive, but basically it's very similar to the mix of products that we have. Gathering from the market, getting new clients that they are buying new cars.
As you know, car sales are increasing in Spain in the neighborhood of 800,000 a year, 900,000. We are gathering there. In terms of a mix of the portfolio, very similar to what we have. Regarding the home business and the combined ratio, the combined ratio is good. It's in the neighborhood of 89%.
The next question comes from David Barma from Bank of America . Now your line is open.
Good morning. Two questions on motor, please. To start with, it seems the average premium growth accelerated a bit in Q2, which is a bit at odds with what we discussed last quarter. Can you talk about new business pricing, please, and how it has evolved since Q1? Staying on motor, the loss ratio ticked up a little bit by 2% compared to Q1. Can you explain what's going on there? Is it frequency or a little bit more of weather? Can you just discuss that, please? Thank you.
Thank you very much. Let me first try to answer Max because we were missing one of the questions in the combined ratio of the home business. The home business, the combined ratio is very healthy, in the neighborhood of 89%, nothing weird there, very much in line with what we have been posting in the last quarter since the end of last year. We'll see the latest rains and how they impact the business. We'll see what happens in the autumn where rain came into place. Very confident that our levels of the combined ratio will be in those grounds throughout the year in the neighborhood of those 90%. On the average premium on the motor insurance, it is true that probably in the last quarter we have increased a little bit our average premium on the business, on the new business.
At the end, as I always said, we try to individualize prices on our clients and try to adjust pricing to risk premiums. At the end, it's a matter of risk premiums and adjusting prices. The market is increasing average premiums above 7%. In our case, I think our new business is still below that. We are taking advantage of that and we are taking advantage of the homework we did in the past. Regarding the loss ratio in the combined ratio of the motor insurance, I think it's very similar. I think there are no major changes. It could be some seasonable impacts, but at the end, very, very happy with the loss ratio of the motor insurance, especially gathering more than 100,000 new clients to the business.
Thank you. Can you just share from your view what the new business pricing was on average in Q1 and Q2, please?
I don't know what you mean by the average. You mean the average pricing of that? I think the average price for the new business is in the neighborhood of an increase of 6%, something like that. That's the evolution of the new business. I mean, average premiums going on the rise, I think, in the neighborhood of that, 5-6%, I mean.
That was lower in Q1, right?
Yeah, it was lower in Q1. Yeah. I mean, we don't have a gear strategy on average premium. We tend to adjust pricing accordingly to how we see the situation and accordingly to the risk premiums of the clients. I think one of the beauties of Línea Directa Aseguradora is that our capacity to change strategies in terms of pricing and in terms of gathering clients is much faster than traditional companies, as they have more difficulties with that. Basically, it's a strategy that is ongoing always, you know.
Thank you.
The next question comes from Carlos Peixoto from CaixaBank . Now your line is open.
Yes. Hi, good morning. A couple of questions from my side as well. On the motor segment, maybe if we could discuss a bit how you expect the evolution of gross premiums throughout the year, what type of growth should we see at year end? Should we expect it to be at double digits and how that breaks down a bit into policy growth and price increases? Still within the motor segment, your expectations on the cost, on the combined ratio evolution for the second half of the year, whether you still expect it to remain at low 90s in the year as a whole. If I may, just a third question on the home insurance business. We've seen this quarter 2% improvement in the combined ratio.
I just wanted to see whether there was here any specific item driving this improvement, whether you see these levels as sustainable or perhaps if you could give us some range on where you think the combined ratio there will be throughout the year. Thank you.
Thank you very much, Carlos. On the motor segment, the evolution of the gross return premium for the company, I think, has been excellent since last year. Almost one year and a half ago, our growth was in the neighborhood of 2%, 3%, and now we are on a standalone basis on the 12%. Our evolution of sales and especially the evolution of retention has been very, very positive throughout the year. My expectation is that we will be able to maintain those levels of extraordinary retention and those levels of sales. I hope that we will be able to be in those levels of double-digit growth. The most important thing is that we have been able to overcome the market growth by far.
Market growth was, as of June, in the neighborhood of 9%, and standalone on the second quarter was on 8.7%, whereas in our case, standalone, the second quarter is 12%. Very, very good news, very good news there. In terms of the combined ratio, we posted 92, which is basically the same as we did on the first quarter. We feel very comfortable on those grounds. Of course, it depends very much on frequency. It depends very much on average cost. We'll see what happens throughout the year. We have summertime now that people go out with a car. We'll see what happens with frequency and severity. Again, being on those levels close to 90s where the company feels comfortable, we should be there in the medium to long term. Regarding the home insurance business, it's a matter of more than frequency than average cost.
Average cost is more difficult to manage in the home business. Evolution of the frequency has been good. It is true that we have some rain and some throughout the semester. Again, frequency is performing quite well. Also the earned premium is performing quite well, which is the other part of the equation. You know, as I said in the previous question, my expectation is that we should be in those grounds, low 90s.
Thank you.
The next question comes from Francisco Riquel from Alantra Equities Sociedad de Valores. Now your line is open.
Yes, hello, and thank you for taking my questions. My first one is if you can please elaborate on the bell for premiums and claims in the second quarter, what is driving the increase in €15 million during the quarter? Connected to this, how can you reassure on the underwriting risk of the new business that you are taking? My second question is the growth in policies is remarkable, but it comes mainly from the motor business, which is the growth engine. You mentioned in the past that you were trying to focus on cross-selling, but home and health insurance, the growth in policies is lagging behind. If you have any plans to reverse this trend and improve cross-selling, thank you.
Thank you very much, Paco. The evolution of the best estimate of premiums throughout the solvency ratio is very similar as other years. It has some seasonality sometimes, and it is true that it posted, I think, EUR 70 million in funds available for solvency. We see the evolution of that. No concerns in terms of the risk profiling of customers that we are gathering. I mean, we follow very much the evolution of these 150,000 new clients that we put into the company. We look at the frequencies on the short term, which means three months, six months, and the evolution of the risk profiling is very good. At the end, it's not a matter of that we are gathering clients with a worse risk profile than the rest of the portfolio. We'll see what happens on the best estimate of premium because it has some seasonality, always that.
Again, it's no concerns of that. On the growth in policies, I think we put 20,000 new clients on the home insurance, which of course is not the 115,000 clients that we put on motor insurance, but we are happy with the evolution. We are gathering clients, which I think is a good signal. We have to keep on working on that, on the home insurance. On the health insurance, we came from our first quarter where we lost around 5,000 clients, and now more or less we are in break-even. What we decided last year after making all the changes in terms of organization on selling distribution is to focus more on more sticky products such as specialists, such as complete. I think it's working. The evolution there, the growth there is 13.6%, which is very good.
We need a little bit more time to see that in the total number of clients of health. Again, very good in motor insurance, very happy with motor insurance and the growth of that. Happy with the home insurance. We need a little bit more, but 20,000 clients are 20,000 clients. In the health insurance, you should expect on the last part of the year that the portfolio will keep on improving.
To add about how we can reassure about the underwriting risk regarding the best estimate for premiums, this is a very positive message. It's on the contrary. I mean, you know, this is in Solvency II, this provision is a margin of future premiums, of premiums that you haven't earned on the P&L. Precisely, we are reassuring about the subscription that we are doing and the pricing that we are doing. This is, on the contrary, very, very reassuring.
Thank you.
There are no further questions at this time. I will now hand back to Beatriz Izard, Head of Investor Relations. Beatriz, now your line is open.
Thank you. We will now proceed with the questions received through the webcast. We have one question coming from Marisa Amato. Buenos días, Marisa. She's asking about other insurance businesses, whether what is the key driver or specific insurance businesses that is driving growth. Why the acquisition costs are so high in the second quarter?
Thank you very much, Marisa. Starting from the last part of your question, why acquisition cost is higher than in the previous quarter is because we have launched our retail insurance business. You know, we put some effort in acquisition cost there. I think the evolution of the new products, we basically are all packing that other caption of the information. I mean, it's performing quite well. Keep in mind that in the last two years, we launched anti-occupancy insurance, we launched the pet insurance, we have launched since April the retail insurance, and all things together, our technical result is already in break-even or almost in break-even, so very happy. Acquisition cost, basically doing some effort in terms of marketing, brand awareness, and so on in the new type of products that we have.
Thank you, Carlos. We have no further questions on our webcast. Thank you, and thanks a lot for joining us today and for your questions. As always, the Investor Relations team is here to help you should you have any further queries.
Thank you very much, and you have a nice summer, all of you.