Good morning, I would like to welcome you to the investor presentation of VÍS for full year result 2021. 2021 was an excellent year. The combined ratio was 97.1 for the year, which is in the lower end of our guidance. We have been through an extensive strengthening of the infrastructure for the year. The net profit was ISK 7.7 billion. We had 40.9% return on equity, and this year was the best investment result since listing. We have proposed a dividend of ISK 3.5 billion to shareholders, which is the highest since listing. The outlook for 2022 is good. We have decreased our expected combined ratio in the level of 95%-97%.
We will still have a huge focus on profitable underwriting, and also we will have a focus on our investment in the digital development for the future. It's good to see how fruitful our investment until now have been, especially on Ökuvísir and regarding our live product selling. Going through the highlights of the quarter, we see the premium increased by 6%-7%. We see also the operating expenses is higher now compared to the last quarter, and we will go through that in more detail, which is due to some one-off cost in this quarter. The claims and reinsurance cost ratio is just under 69%, and the combined ratio 95.5%. Return on equity 4.6% in the quarter, and the solvency ratio is strong, 1.76 before dividend.
Looking at the 12-month, we see the development here, the premium's ISK 23 billion, combined ratio 97.1. Return on investment is very good, a strong 80.7%. The profit of ISK 7.7 billion, return on equity 40.9%, and solvency ratio after expected dividend 1.48%. The balance sheet we see here, no big news here. We see the claims provision changed insignificantly, and the equity increased due to the profit. All in all, there's no big news on this balance sheet for the year. We have been going through a lot of work, internal work in the company, and I would like to ask Birkir, our CFO, to go through the points regarding that internal work.
Good morning. It's an honor for me to be here. My name is Birkir Jóhannsson, and I'm the Managing Director of VÍS's Core Operations. During the years 2016 to 2018, we saw significant growth in premiums, some double-digit growth. We can see now that the models we had at the time did not fully capture the underlying risk, which led to the fact that we had to strengthen our reserves by almost ISK 4 billion in 2020, causing significant fluctuations in our combined ratio during the years.
If we look at key ratios for the claims reserves or loss reserves, we can see that during the years 2018 to 2019, we were at levels around just below 80%, while after the strengthening of the reserves, we are at levels around 100%. This shows us the importance of focusing on profitable customers. We have defined the category of customers which we believe are the most profitable for us. Those customers made up 63% of our total premiums during the years 2017 to 2018. During 2021, that ratio was up to 71%. We will continue focusing on that customer segment in all of our acquisitions and retention programs going forward.
VÍS has been investing significantly in its core operations, and we have completely replaced the insurance systems or insurance operating platforms that we are using. It is interesting to see that in amounts our operating cost has not increased since 2018, despite a 20% increase in salary index and inflation of some 15% here in Iceland. We have managed to do so by strengthening our infrastructure and automating processes, which has allowed us not to replace every position that becomes naturally available at the company, so we can see that FTEs during the period has decreased. We believe that this investment in our core platforms is now complete, so we decided to thoroughly go through all of our intangible assets and change the criteria we use for capitalizing costs.
In line with our new criteria, we decided to write down some of our intangible assets of ISK 186 million at the end of last year. The new approach we are using for capitalizing costs and the write-down at the end of last year brings a much better balance into our CapEx and depreciation, and the write-down will have positive effects on our cost ratio in 2022 by some 0.5%. If we just look at our overall underwriting results for 2021, we're seeing increase or growth in premiums in all of our main lines of business. While it's good to see that we are seeing improved combined ratio in all of our lines of business from 2020. The claims and reinsurance ratio for last year was acceptable.
If we only look at the ratio for the claim year 2021, we had a ratio of 71.1%. We had a 1.7% runoff during the year, which is mainly due to changes in inflation expectations at the end of the year, and we also completed the necessary strengthening of our reserves. The claims and reinsurance ratio for our ongoing business was 74%. Our discontinued business is hardly affecting our results for the year, so we, this is the last time we will report specifically on that line of business. The overall claims and reinsurance ratio for the year was 74.1%. Our operating cost ratio was 23.1%, giving us a combined ratio of 97.1%.
However, there were those two exceptional items during the year, the strengthening of the reserve, which negatively affected our results by 1.2%, and the write-down of the intangible assets, which negatively affected the results by 0.8%. If we exclude those exceptional items, the combined ratio for the year would have been 95.1%, bringing us down to our long-term target, which is to have a combined ratio below 95%. That's all from me today. I want to welcome my colleague, Arnór, who will give us an overview of the investment activities for 2021. Thank you.
Well, thank you, Birkir. We start by looking at investment income and return for the fourth quarter. We see that the return was 2.6% during the quarter, ISK 1.2 billion in investment income. The story is similar to Q4 as in the quarter before. The return is mainly driven by listed equities. We had roughly ISK 600 million from that asset class. We have positive return from unlisted equities as well. Rather moderate though, with 4.3% rise in the value. The bond classes gave positive results, around ISK 200 million as well. All in all, quite a strong quarter for the company.
The main changes when we look at the asset allocation, we have been decreasing our position in listed equities during the year and did more so in the fourth quarter, and we see that the ratio goes from 29%-25% during the quarter. All in all, 2.6% in the fourth quarter compared to really strong fourth quarter for 2020. 18.7% return for the year compared to 14% 2020. Going over the years as a whole, we can see that 18.7%, as I mentioned before, ISK 8.3 billion in investment income, which is really strong and the strongest year for the company if we look at the investment results.
The investment results mainly driven through the equity part, roughly ISK 5 billion in listed equities and ISK 2 billion in unlisted equities. If we look at the return of the asset classes, it's really strong with over 53% return on listed equities and 47% return on unlisted equities. All in all, the year was driven by equity return, which came to 18.7% return over the year. The company has been quite successful managing the market risk, and as we can see on the graph on the bottom right side, when we look at the investment income divided by market risk. We can see that we have been utilizing our market risk very handsomely, especially compared to the Icelandic market.
Now, if you look at the portfolio, it's ISK 46 billion at the end of the year. Divide ISK 29 billion in fixed income and ISK 17 billion in equities. We are happy to say that we have been managing our portfolio with quite short duration, and we have been decreasing duration over the year and ended in 3.2 years at the end of the year 2021, which is quite short. The inflation indexation of the fixed income part is 53%. It's looking at the environment we're looking at now, it's higher inflation and higher rates. It's been performing quite nicely.
Look at the equity part, it's mainly listed and unlisted equities, but as I mentioned before, we've been decreasing our investments in the listed part, which you can see on the graph on the right-hand side. Also you can see our five largest unlisted equity holdings on the bottom left side. With that, I'll give it back to Helgi.
Thank you, Arnór and Birkir. Looking at the solvency, it's very strong. As mentioned earlier, it is 1.76 before the expected dividend and 1.48 after. The own funds decrease due to the dividends and increase due to the profit, and it's a very strong solvency ratio. Looking at the shareholders slide, we see the payments to shareholders and the expected payments in 2022, the dividends of ISK 3.5 billion, the highest one since listing. We see here the payments to the shareholders is up to ISK 20 billion from the start of listing. We see the shareholders list where 53% is due to pension funds and there are small activities from domestic funds. Well, the...
As I said earlier, the year 2021 was a great year and it's good to look back to see the achievements we have had, seen in the year. Even though the world is strange and the situation is strange due to COVID and more things, we see the workplace survey on the best level since the beginning of measurements. We have seen a lot of progress on our digital journey, and we have received some international recognition on that. We made a huge change in our motor insurance last year, which we are very proud of. As mentioned already, the return on equity is quite good, and so we can list up a lot of things. We see here that the year 2021 was a great year.
I cannot leave this slide without mentioning the elimination of the gender pay gap, which we see as a huge milestone in the things we are working on internally in the company. Well, to end this, we go through the outlook for the year 2022. We have decreased our expectation on the combined ratio by 2%, and we now look at range of 95%-97%. We still like to point out that our future goal is to have the combined ratio less than 95% and return on equity of at least 15%. With that, I thank you for listening, and I hope you have a good day. Thank you.