Good. Welcome, everybody. Good morning and welcome to Admiral Group year-end 2023 results. Once again, we deliver strong financial performance, growth, and strategic progress despite challenging market conditions. After sharing with you the main highlight, Geraint will give us more detail on our financial performance, and Cristina, Costantino, and Scott will tell us more about the progress of the business units, respectively U.K. Insurance, International Insurance, and Admiral Money. You can see in this picture that 2023 was a special year for us. We celebrated our 30th anniversary in a different way, including the first edition of Admiral Games. I will come to our 30s later. So in a nutshell, 2023 was a good year with more than 30% increase in turnover and GBP 443 million of pre-tax profit. It did not start in the easiest possible way.
At the beginning of the year, we were experiencing pressure on supply chain, severe weather events, and more importantly, record level of inflation. As very typical of Admiral, we reacted fast to respond to market trends, increasing price earlier than the market. This is the main driver of our strong turnover growth. This disciplined response put us on a strong footing for the latter part of the year, particularly in U.K. Motor Insurance, where we were able to recover the policy loss in the first half as competitors started to catch up on prices. Across the group, our customer count grew 6% as we continued our diversification journey and added 500,000 customers between Europe and other lines of business in the U.K. 2023 has always been extremely satisfying in terms of strategic progress.
We're particularly proud of the smooth delivery of some of our larger technology and data projects that benefit our customers. Our capital position is very strong with a 200% solvency ratio. Although uncertainty persists, we remain strongly positioned for more growth and an improvement in underwriting results as the benefit of price increase is fully earned through. Before diving into the detail of last year, let me indulge a couple of minutes on our journey so far. It has been nice, in occasion of our 30s, to step back and reflect together about what we built in this time, from a Welsh startup to a GBP 4.8 billion turnover company, not too far from the 10 million mark in terms of customers, a story of constant growth in our U.K. Motor Insurance market and more recently beyond. No, sorry.
That's not there yet. While growing, we deliver almost GBP 7 billion profits. Since floating in 2004, we shared GBP 4.4 billion of dividends with our shareholders, with a total return of 2,900%. That is 12 times the FTSE 100 return in the same period. Thanks to this long track record of underwriting performance, we could leverage on beneficial reinsurance agreements that support our capital light model, delivering an ROE of around 50%. So what underpinned this performance? It's a constant focus on operational excellence with an average combined ratio advantage versus the market of over 20 points.
The main ingredients of Admiral's success so far have been a mix of strong technical competence in pricing and underwriting and discipline across the cycle, a unique culture that drives performance and customer outcomes and attracts and retains strong talent, and finally, the ability to innovate, for example, on emerging product propositions such as telematics or MultiCar or more recently electric vehicles or even at times disrupt the market as with the invention of car insurance comparison site that reshaped completely the digital distribution in the U.K. In the last years, we embarked on a journey to diversify our business, expanding in new products in other countries that now account for around half of our customer base. We did that in typical Admiral fashion with a test-and-learn approach, taking our time but also with limited investment. We remain primarily focused anyhow to strengthen our core business.
One of the questions I'm asked often is if I believe we can continue to gain market share in U.K. Motor. The short answer is yes. This is a market where scale matters. More data results in strong underwriting. We are in a competitive position developing a further economy of scale and synergies across different products. To conclude, a great journey. There is more to go for. Let's now revert back to the last 12 months. Undoubtedly, another year with strong market challenge that we face again in typical Admiral fashion, reacting fast and boldly where needed as we already anticipated at half year. Elevated claim inflation had a major impact on the market. As you can see in the graph on the top left of this page, it has been particularly pronounced in the U.S. and in the U.K.
That is where we reacted with stronger price increases as you can see in the graph on the bottom left. You can also observe in this graph an estimate of the average premium increase of the market, the red lines. These are not exactly like-for-like as rate increases do not translate one-to-one into average premium increase but give you a good indication of how we reacted stronger than market everywhere. The benefit of these rate increases started to emerge with improved loss ratio and should lead to further improvements. It also led to growth in the volumes of new business across all countries.
Something else you can observe in the graph of the top left is that inflation is easing in the second half of 2023, particularly in the U.K., where indeed we were able to recover competitiveness and close the year flat in customer base as you see in the graph on the right side of the slide. And as Cristina will explain better later, in Europe, claims inflation was more muted and picked up a bit later. So we continued to grow in 2023 but at a lower pace in the second half. Our customer Beyond U.K. Motor grew 18% while turnover remained flat, mainly as a reflection of a different portfolio mix and the reduction of U.S. customer base. It has been very pleasing to see that despite difficult market conditions, we had an improvement of results of all our business, excluding startups less than two years old.
L'Olivier and Travel were also profitable for the first time alongside the more mature Italy, U.K. Household business, and Admiral Money. In the U.S., we reduced materially our losses. We are observing strong positive underlying trends. As mentioned last time, we are assessing strategic options. We made progress. We did not reach a conclusion yet. We'll update you as soon as we can. As I mentioned, we're very satisfied with the progress on our strategic initiatives as well. I already touched on diversification. We're particularly proud of double-digit millions of profit in Admiral Money and the growth in a newer line of business like Pet and Travel in the U.K. But more importantly, we are enhancing our ability to generate commercial synergy across different products in the U.K. with our multi-proposition, for example, as a strong driver of our household growth.
In addition, we are in the process of acquiring renewal rights for MORE THAN the direct household and pet insurance business of RSA. We're very excited about the prospect of accelerating our diversification into an attractive market for us where post-transaction, we could reach a share of around 10% for household and high single-digit for pet. We're also happy to welcome our new colleagues from RSA and the capability and the experience they bring with them, especially on pet insurance where our business is less mature. The size of the deal, the straightforward structure seems spot-on for us. It's a perfect fit with our diversification strategy as we believe we can replicate commercial and operational synergies. We also continue to evolve our model to be well-equipped for change in mobility.
We remain a market leader in electric vehicles, learning fast in this growing segment where we are observing encouraging underwriting results and growing double-digit. We also continue to experiment new propositions with connected data through Ford Insure and with Veygo that, for the third consecutive year, is growing its turnover by more than 40%. The third and foundational pillar of our strategy is Admiral 2.0. That is about strengthening our capability to deliver faster and better for our customer and remaining competitive over time. Something that made us proud this year has been the smooth delivery of some large IT and data projects as, for example, Guidewire 10 in the U.K. and U.S., a new origination platform for Admiral Money, enhanced machine learning, and AI capabilities across the organization. More generally, we're getting better at managing change.
The key component of this has been the completion of the transition to Scaled Agile. That is also reducing materially for us the cost of change. Finally, beyond the financial and strategic progress, we are continuing to focus on our mission to positively impact all our shareholders, stakeholders, starting with our customer that rewarded our efforts with a high [guess] Fitch best score in all countries. It has been a very special year of recognition also for our culture. We have been named Best Big Company to Work For in the U.K. and 13th best place to work worldwide. That is our highest ranking so far. I would like also to take this opportunity to thank our great colleagues for their incredible commitment to our customer during these challenging years.
We also step up in our efforts to support climate change with an improved CDP Score from D to B and the submission of our science-based target now awaiting validation. While in the meantime, we reduce again substantially our carbon emissions. That's all from me for now. Geraint will share with us a bit more detail about our financial performance.
Thank you very much. Good morning, everyone. OK, so I'll cover some of the detail behind this positive set of results for 2023. I'll talk through the strong solvency position. I'll cover the final dividend. Before we get into all that, though, I just wanted to make a couple of comments to start with on IFRS 17. This is our first full set of results under IFRS 17. So lots of the 2022 numbers that you'll see in the presentation and in the accounts are restated. When we reported our half-year results back in August last year, I talked through our approach to the restatement, which resulted in lower profits under IFRS 17. It's important to have that in mind when you're looking at the comparatives throughout the presentation today.
When we look at the group profit breakdown, I'll show 2022 on IFRS 4 and IFRS 17 basis. Otherwise, the comparatives will be to IFRS 17 restated only. A slide which sets out our approach to the transition is included in the appendix. There's lots of other material there to help with the new formats in the accounting and discounting and so on. Right, these are the highlights. Pre-tax profit for the year was GBP 443 million, earnings per share GBP 111. Those are both higher than the restated 2022 numbers but a little lower than the IFRS 4 numbers as the impact of the lower margin in 2021 and 2022 underwriting years continues to earn through. Although we are seeing significant improvements in underwriting margin in 2023, this is not yet materially impacting the results. We report very strong closing solvency position at 200%.
ROE was higher than the original and the restated figures for 2022. The full-year dividend is GBP 103 per share. That includes a GBP 0.52 per share final dividend. On the bottom, we show customer and turnover numbers. Here you see quite a big difference in the growth percentages between those two metrics. Customer numbers continue to move up, heading towards that 10 million milestone across the group. But the growth in turnover was clearly much larger, over 30%, as 18 months or so of continued price increases feeds through. In U.K. Motor, you see the reduction in customer numbers that we reported at the half year had been recovered at the year-end while turnover increased by more than a third. We'll cover the rest of these metrics in more detail throughout the presentation. Moving now to look at the group profit breakdown.
This slide shows the results across the group versus last year. As I mentioned, on the right-hand side, we have the IFRS 4 numbers for reference. The main theme in the insurance businesses is largely, as we reported at the half year, there is still higher claims inflation than usual, though with some more positive signs in the second half. Although there are generally much improved written combined ratios on 2023 business, as I mentioned earlier, it's predominantly earlier years that contribute to 2023's profits, including the lower margin 2022 year. Investment income, as expected, was strongly up year-on-year. We've included details on assets and income in the appendix. U.K. insurance profit was just under GBP 600 million. That's higher than the restated number, as you can see, just a touch below IFRS 4. The Motor results comprise the majority. I'll cover that next.
Home insurance profit was GBP 8 million, improved versus a loss in 2022. That year, you remember, was heavily impacted by weather. 2023 wasn't exactly immune from it, though. Then the second half was particularly stormy, as you might remember. As mentioned at the half year, that result benefits from a one-off profit commission recognition on commutation of some older year reinsurance. Internationally, we report strong improvements in the bottom line. Starting in Europe, the overall result was a small profit, improved from a loss last year. We see the Italian and French businesses reporting sustainable profits now. In Spain, we continue to invest in new distribution, which is impacting the results. Strong rate increases, particularly in Italy and Spain, give good momentum as we move into 2024.
In America, as we said at the half year, our top priority for 2023 was to materially improve the bottom line. While the market in the U.S. remains tough, we're satisfied with the improvement and more so in the underwriting year results. Barring anything unexpected, that result should continue to improve in 2024. The GBP 10 million Admiral Money profit is a very nice highlight, which Scott will talk us through later. The Admiral Pioneer result was a little worse than the restated 2022 and basically in line with the IFRS 4 2022. Then the Veygo business within Pioneer grew very nicely again, as Milena mentioned, and is making good progress. Though the bottom line there was impacted by a particularly big claim in the year. The share scheme cost was slightly higher year-on-year due to a higher share price at the end of 2023.
And finally, there was quite a big increase in group costs and overheads. Now I know that "other" isn't a particularly descriptive term for that line. But it includes things like debt interest, new business development costs. And we include a full breakdown of that or fuller breakdown of that in the appendix. Some of the drivers of the increase are listed here on the page. And we would say that just under GBP 30 million of that number is non-recurring. Next up, this is the U.K. Motor income statement summarized versus the restated 2022 numbers with some observations on the main changes. Firstly, the 7% reduction in year-on-year customer numbers that we reported at the half year was recovered in H2 with decent annualized growth. And as I mentioned, turnover was up by over a third as the impact of rate increases particularly is seen.
Secondly, as at the end of the first half, higher interest rates have a few impacts on the accounts, higher investment income, and higher discounting on the current year claims, but also an increasing discount unwound through the finance expense line. As I said, on investments, there's more detail in the appendix. But there are no changes to report in our approach and no notable changes in credit quality or asset allocation. And then onto the ratios. We see a nearly 9-point improvement in the current year loss ratio as the impact of higher premiums starts to earn through. Reserve releases were basically in line in percentage terms at around 20%. Though as the premiums were much higher in 2023, the pounds amount is much larger.
The reported expense ratio is slightly lower year on year after being slightly higher at the half year, again reflecting the impact of higher premiums. We see quite a material improvement in the written basis expense ratio to around 18%. All in all, we would say a positive earned result with good momentum moving into 2024. Let's look at how the U.K. Motor loss ratios have developed. We show the usual 2 charts here. On the left, the ultimate loss ratios. On the right, the booked. Both are discounted and underwriting year basis. Some key observations. The charts clearly show an improving picture in 2023. On an ultimate basis, we show an 8-point improvement versus the first estimate of 2022. The booked ratio for 2023 is around 11 points better than the first booking of 2022.
Our estimate for inflation in average claim size is flat at around 10%, no change since the half year. Cristina will talk more about what we're seeing on claims trends shortly. The ultimate loss ratios for the recent years are likely to be prudent, as usual. They continue to include conservative allowance for potentially higher inflation on large injury claims, again, which we don't see strong evidence of to date. We continue to set our reserves at the actual -0.25% 0.25% Ogden discount rate. Though as we quickly approach the setting of a new rate, we've included profit sensitivities in the presentation and in the accounts. Book reserves remain in the upper part of our accounting policy range at the 93rd percentile. That's lower than the end of 2022 as we flagged, but still a really prudent position.
As we saw on the previous page, reserve releases are still an important contributor to profit. We expect this to continue absent any major shocks. Next up is the capital position. Then on the top, we show the solvency ratios. On the bottom, we show the H2 solvency ratio bridge. Here you clearly see the improving economic capital generation. The closing ratio of 200% is obviously really strong. There's a modest increase in the capital requirement year-on-year, mainly due to growth in the premiums. But the increase in the surplus is much larger. That leads to the improved ratio. The waterfall at the bottom shows the moving parts in the second half. That clearly illustrates the strong improvements that we're seeing in underlying profitability. On the internal model, work is obviously being continuing on its development and the updated scope.
We're hopeful of entering pre-application with a regulator soon. The feedback from that should hopefully mean we'll have a good path to full application and approval in due course. Then finally, just a few comments on MORE THAN . We'll fund the purchase price out of free cash. Because it's an acquisition of intangibles, there will be a circa 10-point adverse impact on the group solvency position when that completes in the second quarter. Given the strong position, that's comfortably absorbed. Remember, at H1, we'd accounted for the refinance of the Tier 2 bond. I'm not going to cover that again today. Moving on now to dividends. We're proposing a final dividend of GBP 0.52 per share, which is nearly all, 97% of the second half profit after tax.
That higher payout ratio than we've seen over the past few years is supported by the strong solvency ratio and improved capital generation that we're seeing. The 2022 dividends were based off of the IFRS 4 results for that year, which were higher than the result for 2023, hence the larger total dividend for that year. One change I wanted to comment briefly on, as set out in the slide, relates to the way that we provide shares to the trusts that run our employee share schemes. From this year, we will no longer dilute existing shareholders to run those schemes. For 2024 and probably 2025 too, we'll use existing shares that are already in the trusts. And thereafter, we'll buy shares in the market to fund those share plans.
And that'll be funded through a reduction in the special dividend, which I'll comment more on closer to the time. To finish up, I'll leave you with a few of the key points from the financials. While claims inflation continued to run high in 2023, there are signs of things easing. We expect that to continue into 2024. Our prices, and definitely our competitors' prices, continued to move up in 2023 in response to that inflation. Notably, in the main business in the second half of the year, we saw good growth of much more normal margins, setting the group well up for 2024. Finally, the capital position started the year strong, ended the year even stronger, reflecting that improved underlying profitability. The very healthy solvency position supported the higher payout ratio for the final and the full year dividends.
I'll pass you to Cristina now to talk to us about the U.K.
Thank you, Jones. Good morning, everybody. I'm going to talk about the U.K. insurance results, starting with the highlights. A key feature of these results has been the return to growth in Motor customers in the second half while we maintain increasing prices throughout the year. For our household book, we continue the growth, but results were impacted by weather and inflation. We're looking forward to the completion of the acquisition of the MORE THAN renewal rights for pet and household. For the rest of the year, we expect a more stable environment in Motor and a continuation of price increases in household. Let's get started reviewing the Motor pricing. For the market, prices started to increase in the second half of 2022. This accelerated in the first half of last year. In the second half of 2023, we continue seeing in the market price increases.
But in the last part of the year, we saw some signs of the pace of these increases slowing down. On the graph on the right, you have our Admiral top time. We have shown this graph a number of times. But just as a reminder, this shows the percentage of times we're top on aggregators and is indexed to January 2022. We reacted early to inflation. And from the Q2 of 2022, we started increasing prices. And that meant that we became less competitive. Last year, as there were more increases in the market, we became more competitive. And we grew by 4% in the second half of the year, helped also by retention, which was above market levels. Moving on to Motor claims, I want to start by talking about the different aspects of damage. Unfortunately, repair times continue to be high. But they have improved.
They have been helped by better parts availability. However, labor continues to be a challenge. We're pleased with our new network because it allows us to ensure good capacity for our customers. In terms of frequency, road usage was stable last year, of course, with some seasonal changes. In terms of claims frequency, we continue to be within the range that we have given you previously of around 10%-15% below pre-COVID levels. Moving to bodily injury on the Whiplash Reform, we still await the outcome of the Supreme Court case. Hard to know what is going to be the outcome. We feel we're well prepared. In terms of Ogden, nothing major to update since last time. We still expect to know more at the end of this year.
For BI, or bodily injury, the most important feature in terms of inflation is the commercial care inflation, which tends to impact mostly our large BI claims, which are covered under excess of loss. Overall, we're confident that we're well provisioned for inflation. Our reserving remains prudent. Moving on to the household markets, I found that 2023 was a particularly interesting year. The tone was set in 2022. Two things that happened during that year. First, there was a number of weather events, and in particular, December freeze, that put pressure on the supply chain, triggering an increase in inflation. The second feature of 2022 in the household market was the implementation of the pricing reform that meant that premiums in the market were overall reduced. 2023 started with lower premiums, high inflation.
We saw in the market for the first time in about 10 years a very strong increase in prices of around 35%. At Admiral, we follow a similar strategy. We increase prices a bit more than the market. And despite this, we managed to grow by 12% our customer numbers, helped by our MultiCover proposition and our retention, which, similar to Motor, it was higher than the average of the market. In terms of profits, the profits last year were better than 2022 but lower than we have liked. I want to talk a bit about the RSA deal. I'm quite excited about it. I know it's not very big. But it fits very well with our diversification strategy in the U.K. insurance business. It allows us to offer more products to our customers. It means an increase in the scale of our household and pet book.
In particular, for pet, which is a relatively small and young line of business for us, it's going to bring scale, expertise, and more data capabilities. Moving on to the regulatory landscape, I want to focus on a key development last year, which was the implementation of Consumer Duty. It was a very important regulatory update. It's closely in line with our group purpose of helping more people by delivering good outcomes to all our customers. We were well prepared for this reform. It was an opportunity to review our processes. It meant that we implemented a number of changes. We improved how we serve our vulnerable customers. We strengthened customer communications. Also, we improved our online features to support well-informed decision-making. It also meant that we review and improve our customer data, which will help us to continue improving our processes and services.
Regarding the pricing reforms that we're implementing in 2022, the high inflation environment and high prices that we have seen in 2022 and 2023 have somewhat overshadowed this reform. Moving on to premium finance, it has received a lot of attention recently. I want to emphasize that we're confident that our premium finance product offers good value to our customers. We review this product regularly. We perform fair value assessments. We charge all our customers a single rate, which is equivalent to around a 21% APR, which compares well with other sources of financing. Now, to give you more context, we have shown you in the graph on the bottom a comparison of the APRs charged by top U.K. insurance brand for Motor quotes. As you can see, the APR charged by Admiral is one of the lowest in the market.
Overall, just to emphasize, the customer is at the heart of what we do and the reason we operate. We're committed to delivering good outcomes and fair value to all our customers. To conclude, I want to talk more about the outlook for the rest of the year. Let's start with Motor pricing. We expect market increases to continue to slow down. We're seeing, since the year started, very different strategies by our competitors, with some increasing and some decreasing rates. In Admiral, we had made a small decrease in rates at the beginning of the year to reflect some good signs we were seeing in claims inflation. For the next few months, we don't expect significant changes to our rates.
But as always, we will have a flexible pricing strategy adapting our rates to our own claims development, claims inflation that we see, and overall market trends. We believe we remain well positioned to continue to grow. But it's hard to know by how much, as our growth depends also on what competitors do. For household pricing, we expect market and Admiral prices to continue to increase throughout the first half. In respect to claims, in the world of Motor, we expect high damage inflation to continue but to be lower than the previous two years. We estimate that claims inflation this year will be around the high single digit. For household claims, we also expect claims inflation to remain elevated but to soften in the second half as rebuilding material and labor costs stabilize and supply chain pressure ease. So overall, our outlook for 2024 is more positive.
As always, we will continue to ensure that profitability is a priority for us and that we maintain our disciplined approach. Now over to Costi to talk us more about international results.
Thank you, Cristina. Good morning, everyone. 2023 has been a year of good progress in international businesses, where we have navigated very challenging market environments, responding stronger than competitors to inflationary pressure, and have, therefore, demonstrated good resilience. Moving on to the next slide, let's see the key highlights. We told this audience last year that the European markets are characterized by competitiveness and inflationary challenges. We would have remained committed to preserving margins, leveraging our competitive advantage in loss ratio in direct business, and implementing operational and expenses optimizations. These efforts have yielded positive results, contributing to our pursuit of long-term sustainable value, laying a solid foundation for future growth, and delivering a profit on a combined basis. In the U.S., despite very challenging market conditions continuing throughout 2023, we were able to reduce our losses significantly compared to last year.
Moving on to the next slide, let's start with Europe. We have been focusing on safeguarding margins by capitalizing on our loss ratio competitive advantage. We have increased prices more than the market in all the geographies. We have accelerated in H2 2023, meaning that the actions are not yet fully earned through. We anticipate more positive impacts to come. This has resulted in a significant improvement in our combined ratio, reflecting the resilience and adaptability of our businesses. Moving on to the next slide, we have achieved a notable improvement in our combined expense ratio over the past few years, despite facing shrinking average premiums, strong inflation, and substantial investments in diversification, data, and technology.
We managed to reduce both the fixed and variable costs, the latter thanks to our investments in digital, where we have been able to move a significant portion to our customers to self-manage their policy online. This has also had the benefit of being recognized by the consumers as one of the best digital insurers in the market, as we are the number one in Trustpilot in Spain and Italy, as well as number one on Opinion Assurances for both our Motor and household products in France. Moving on to the next slide, our unwavering focus on long-term sustainable value has been crucial in navigating the difficult market cycle. Our disciplined approach to prioritize margin protection and adopt a cautious approach to customer growth has laid the groundwork for the profit achieved.
This is a mixed set of results from the three countries, with Italy and France profitable and Spain still in loss. Italy has been steadily profitable for a long time now. The distribution channel expansion should give us more opportunities to achieve profitable growth. France reported a profit. It is well posed to continue its sustainable growth journey, focusing on developing a multi-product proposition investing in the household business. Spain is actually a mix of three business segments: direct, intermediaries, and bancas surance. Direct has been profitable for a few years now. The positive result is more than offset by the investments in brokers and bancas surance distribution opportunities, which require more time to pay dividends. The Spanish market in 2023 has also faced the negative peak of the market cycle, which has been the most complicated of the last 20 years.
We expect it to recover from 2024. The three European countries are at a different stage of maturity. They have different challenges and opportunities ahead of them. We acknowledge that you want to learn more about them. We will deep dive on Europe in a dedicated session in the next 12 months. As we look ahead to 2024, we will continue to prioritize profitability and maintain a disciplined approach in growth. Diversification remains a key strategic focus, both in terms of distribution channels in Italy and Spain and product offerings in France, as greater scale will contribute to enlarge the profit pool. Moving on to the next slide and to the health and business. In the U.S., we were able to reduce our losses by almost half compared to last year due to strong rate increases and cost reductions.
Our loss ratio improved by 4 points in 2023, driven by a cumulative 70% increase in rating actions since early 2022. We also achieved a 5-point reduction in our expense ratio by reducing operational costs. The benefits of our underwriting actions have yet to be fully realized. We expect further improvements in 2024, as it is clearly visible in the underwriting analysis shown on the top right of the slide. We are also pleased that our combined ratio was below 96% in December 2023 and January 2024. However, the claims inflation remains high. We will continue taking actions to improve the bottom line results. Let me take a minute to comment on the charts exposed in the bottom of the slide, where you can see that on a year-on-year basis, the turnover grew by 2% while our vehicles in force shrank by 18%.
This gap is explained by our rate actions drastically increasing average premiums while having a negative impact on customer attrition rates, as well as a deliberate slowdown on new business growth to safeguard loss ratio. We continue to remain focused on profitability as we assess long-term options for the business. We have made good progress on that front. We are deep diving in a selected short list of them. We will give an update in due course. Thanks. I'll leave the floor to Scott to present our loans business.
Thank you, Costi. Good morning, everyone. A relatively short update from me this time. I'll start with a few highlights. Firstly, I'm pleased to say that it's been a positive 2023 for Admiral Money. Through the year, we have continued to focus on what we believe is a long-term formula for success, high-quality risk selection, and a controlled and conservative approach to growth. Our loan book at the end of December stands at GBP 957 million. That's an 8% growth year-on-year. Our net income has grown 49% over the same period, which reflects the higher average balances through the year, as well as margin improvements to provide extra risk resiliency. I'm absolutely delighted with our first double-digit profit of GBP 10 million. As you'd expect from an Admiral business, we've achieved this while retaining appropriate prudence in our credit loss provision, with coverage remaining high at 8.5%.
It's also worth updating that we continue to make pleasing progress in our long-term investment in the business and remain focused on being the go-to lender for Admiral customers. I highlighted last year we were committed to increasing the proportion. And I'm pleased to confirm that in 2023, 56% of loan balances were either to active or recent Admiral insurance customers. Coming into the year, we knew there would be continued uncertainty with higher interest rates impacting on the cost of living. We had a philosophy of protecting our net interest margin and ensuring strong risk resiliency in our pricing. Where loss experiences vary from our expectation, in true Admiral fashion, we have adapted our approach quickly and decisively and have remained well below our IFRS 9 credit loss reserve throughout the year.
Our NPS score of 68 and Trustpilot score of 4.5 provide continued evidence that our commitment to being an efficient, prime-focused lender and providing certainty and transparency to U.K. customers on their lending needs is a formula for success. I also draw particular attention to our cost-income ratio, which is below 40% for the first time and which represents growing evidence of a likely long-term competitive advantage. I should also confirm at this time that we have no exposure to the current motor finance investigation into discretionary commissions. 2023 has also been a year of significant progress in our capabilities, particularly in technology and data. As I mentioned, 56% of our new customer flows in 2023 came from either current or recent Admiral insurance customers. We achieved this by working closely with Cristina's team to deliver several key enablers.
Our goal to be the lender of choice for Admiral insurance customers is a key pillar of our strategy. We're expanding our competitive advantage for them through greater insight and tailoring our offering, making us increasingly irresistible compared to other lenders. In addition to this, we also delivered our new origination platform. This new technology gives us far more flexibility in creating bespoke journeys for our customers. And in doing so, making it easier to consume a wider volume of data at different points of the journey to enhance our customer understanding and, therefore, enhance our risk selection. In conclusion, in 2023, we have continued our trajectory of controlled and efficient growth. We've hit the important milestone of a double-digit profit for the first time while remaining prudent on our provision and while continuing to invest in our long-term capabilities.
Looking to 2024, we enter the year with good momentum. We expect to benefit from our strong position in a growing market as we see a continued shift to price comparison and also to credit score marketplaces. I'd expect to see continued growth this year, with loan balances moving towards the range of GBP 1 billion-GBP 1.2 billion. Thank you very much. With that, I'll pass to Milena.
Thank you, Scott. To summarize from me, performance improved across the board. We delivered strong profit, strong turnover growth, and we are in a strong capital position. These results were underpinned by strong underwriting discipline in all our business that put us on a strong footing as we enter in 2024. But market conditions remain challenging, with elevated albeit reducing inflation. So we'll continue to monitor trends and price accordingly. We made progress on our strategy, on our diversification journey, and on our commitment to deliver positive outcomes for our customers and our community. We remain well positioned for further growth in improving market condition. And improving underwriting performance has the full benefit of early response continuing to be earned through. Thank you very much. That's all for now from us. Now, we'll be very happy now to take your questions, starting with the audience.
Please, when asking your question, press and hold the button on your microphone. And then from home. I will limit questions to two, please, to make sure that everybody has the opportunity. Great. So I'm not sure I grabbed the order. But I think you were first.
Hi. Hi. Darius Satkauskas from KBW. I've got three questions. But I'll ask you, I think. So the first question is, given that there's been a lot of news flow about potential M&A in the U.K. market, I'm interested in hearing your views about the potential for further concentration of the U.K. motor market. And what would that mean for the likes of Admiral and discipline in the market? And would regulators allow the market to get much more concentrated than it currently is? That's the first question. The second question is on the APRs. Again, just more on the outlook. So how do you think this will play out? Are there any signs, from your perspective, talking to a regulator, that there's going to be tougher action on the players in practice?
Do you think that will be passed on to the consumers, i.e., leading to further rate increases? Or what should you expect on that front? Thank you.
Thank you. On your first question, there has been more consolidation recently. There is a trend of consolidation in the market. That's true. We will not comment on specific deals. Generally speaking, I would say that for us, it's very important to have a market that acts rationally, particularly given the strength of the cycle in the U.K. and have continuity. I wouldn't go further than that at this stage.
On APRs, let me start by Admiral and then move to the market. Our APRs, our premium finance, reflects the cost of operational cost and the cost of funding. So if there are changes to these costs, we will change what we charge to the customer. At the moment, we don't expect significant changes. But anything can happen. In terms of the market and what the FCA will do, it's harder to comment. From what they have been discussing, I think they are doing, like they do with any other product, constant reviews of the fair value assessments of the different companies, which might lead or not to reviews of individual players. From what I have heard and discussed with them, I don't expect a full market review. But again, it's very hard for us to comment.
Hi. Good morning. Thomas Bateman from Berenberg. I was interested in the slide where you talk about no further issuance of new shares. So I think these are your employees. And it almost feels like a quite small change in your capital allocation approach because you're not doing special dividends. And now you're doing maybe it's too strong a word, but a share buyback at 1%. Could you just talk a little bit around that? And the second is just on the sensitivity to the risk adjustment. I think there's about GBP 24 million or so as it comes down towards the 90th percentile. But I'm just wondering if that will change at all as the 2023 and 2024 margins kind of earn through there. And maybe a small follow-up to that, is that reduction in the risk adjustment baked into the 20 points PYD guidance?
Geraint.
Yes. On dilution, we've thought regularly over the past about how best to return capital to shareholders. As you know, we've favored special dividends up to now. We've discussed this with shareholders quite a lot. Over the past couple of years, we've got a bit more feedback on a slightly different approach, and particularly some shareholders not loving being diluted. This approach is to effectively just offset the dilution and run those share schemes either through using shares that are in the trusts for the next couple of years, probably, and then we'll buy shares in the market and reduce, not cancel, the special dividend. Obviously, it'll partly depend on the share price. It's very unlikely to wipe out the special dividend. It'll just reduce it.
I think also important to caveat for any of our staff who might be listening, this is not signaling a change in approach on employee share schemes. They're still a really important part of employee engagement and a really important part of our culture. So we'll certainly fully intend to keep that moving forward, just a slightly different way of funding the schemes. And the operation of it is sort of as you described at the end. Sensitivity to risk adjustment, the answer to the last question is reducing the risk adjustment baked into the guidance on PYD? I think the answer to that is probably yes. The guidance on reserve releases is similar. So around about 20 if things develop as we expect them. And I think the middle question was about how the sensitivity changes in the next couple of years as we get better underwriting is.
You're right. The sensitivity increases. We get more profit flowing from moves down in the risk adjustment as 2023 and then probably 2024 start to become more important. The answer to that is yes.
Thanks. I think Freya.
Thanks. Freya Kong from Bank of America. I'm just trying to think of the margins that you're writing at in U.K. motor at the moment. You said the year to date, you've adjusted rates down slightly while claims inflation is still expected to be in the high single digits. Does that reflect a view that maybe prices might have overshot a little last year? And what sort of progress do you expect to see on average written premiums this year? And secondly, just on the run rate of growth that you saw in H2, do you think this is achievable into 2024 because of what's happening in the market and the disruption? And how long do you expect this good opportunity to last? Thanks.
OK. Cristina, do you want to take?
Yeah. Happy to take both. In order to answer margin today, I just want to go back a couple of years. When you look at 2022, it was possibly the worst year in our history, highest loss ratios. So it's been a time of adjustment. The margins that we believe because it takes some time to develop that we're right in business at the moment is basically going back to more normalized margin levels, pre-COVID levels. We're constantly adjusting rates. I mean, so when I talk about a small decrease at the beginning of the year, it's because we saw some better claims conditions and made a small adjustment. But it hasn't fundamentally changed our margins. We're still looking to more standardized margins. You talk about progress on average premium. Of course, on earned basis, there is a bit more premium increase to flow through throughout the year.
In terms of growth, I think this is a very important question. I'm going to try to do my best to answer because there is uncertainty. We control some of it. Some of what I believe is the advantage of Admiral is that we don't have a growth target. We have a lot of flexibility. I can give you the impressions of today. What I can definitely tell you is that we will do our best to adapt our prices to whatever changes, whatever we see in the market, and of course, our own claims development. At the moment, small decrease in rates at the beginning of the year. In the next few months, I don't expect significant changes.
What we're seeing in the market, I'm going to call it a bit of noise, if I may, in the sense that it's been quite a few rate changes up and down by different players, different strategies. I'll give you a couple of data points. I can use for January, it was -2.4%. But January is always a very tricky month because systems get updated on the 1st of January. But February was -0.4%. Overall, I think, as you can see, slowing down in rate increases. Do I believe the market is ready to completely turn and decrease strongly? I think it's too early to say. I don't believe that's going to be the case. So we're well positioned to grow. But it's hard to tell today by how much.
Hey. James Pearse, Jefferies. So the first one's just on your underwriting year loss ratio for 2023. So that looks to have gone up from 92% in your half-year presentation to 94% at year-end. I guess just given rates have continued to increase, I was kind of expecting that to trend down. So could you help me understand what the drivers were behind that increase? Second one, so you chose not to commute your 2021 reinsurance. Presumably, there's a strong likelihood of you doing the same on your 2022 reinsurance in 2024, just given that's still being booked at a loss-making margin. Just wondering if that presents any risk to your 20% reserve release guidance in the near term or if that's kind of already baked into your expectation.
Geraint.
Yeah. So 92%-94%. So this is the change in the undiscounted underwriting year booked loss ratio from half-year to full-year. So I would really strongly advise people focus on the 12-month position and not too much on the six-month position, where we've seen much less than 20% of the premium for that underwriting year being earned. It's not an important driver of profit. And it's not really a signal at that point of how we feel about an underwriting year, which is so undeveloped. So I'd really encourage people to focus on the 12-month position versus the comparative number for the preceding underwriting year. And there, obviously, we see quite strong improvement underwriting year on underwriting year. I would tell you to ignore a six-month number. It's maybe a bit strong. But I would put much more weight on the 12-month number than the six-month number.
2023 is just going into full cliché mode. 2023 might be a bit of a year of two halves in the sense that the unearned bit of 2023 is much more positive than the earned bit of 2023 because of the continuing impact of rate increases on that year. On commutations, 2021, we are just in the process of doing those right now. So we'll commute 2021. 2022 is a year that, as you say, is currently booked over 100%. And even on the ultimate position, it's pretty close to 100%. So I think we'll take a call on that one over the next 12 months, 24 months. The outlook on reserve releases doesn't change that. The reserve releases are based on the gross number, excluding the reinsurance stuff. And what we expect to see on commutations is effectively baked into that. That's your question. But yeah, it's baked in.
Good. Will.
Thank you. Will Hardcastle, UBS. Just following on, so I mean, I know you don't give up exit margins, et cetera. But it sounds like it's improved as the years go on. I guess to think about exit IFP quarter-on-quarter growth, I guess, is that timestamp chart the one to be thinking about, which is showing sort of an acceleration at least? And just trying to perhaps simplify some of those comments made about year to date and competitiveness, are we thinking that you've increased competitiveness Q1 so far versus Q4, let's say? And then just thinking about the it looks like the 2022 underwriting year margin improvement was 9 percentage points. If I saw that slide, I haven't got my glasses on. Correct me. I guess, how much of that is reserve percentiles reduction or just good news?
Is the reserve percentile reduction coming in the years? Or is it all in the current year? Thanks.
Thank you, Will. So Cristina, you want to take the first and Geraint the second?
Yes. I think your question was, are we more competitive now than we were at the end of the year? And should you look at that graph and almost draw a continuation line with the same trend, more or less? Yes and no. So yes, because we did a small decrease in rates at the beginning of the year, we are a bit more competitive. It was a small decrease. Sorry, just to put things into context, the past two years have been crazy with rate increases of 25%. We're not in that world, yes? So when I say a small decrease, I'm talking about, yeah, very low single digits. When you look at that graph, please do not make it like a straight line of acceleration. What has happened in 2023 is that our price increases, Admiral price increases, were more weighted to the first half of the year.
Market price increases, as you see on the graph in the same page on the other side, have been more weighted to the second half. That makes that shape. I wouldn't say that that is going to continue. I just gave you the February number, -0.4%. I'll say our timestamp won't continue with that trend. It's a bit better today than it was. But uncertainty remains. Again, sorry that I say uncertainty. But you all have to understand, we're a small part of the market. We depend on what the other 85% is going to do with prices.
Can I just add that we're operating still on a high elevated inflation, I mean, not as 2023. And it was already slightly reduced versus 2022. So if you market act completely rationally, you will still expect to some extent some price increase, probably less than that. I wouldn't say that I wouldn't exclude it's going to be the case for us. We'll adjust based on claims development. We may see some change in competitiveness and distribution of new business during the year in both directions. A lot will depend on what competitor will do this year.
There was another part of the question, which is about the change in the book loss ratios. So you are right to say that the change in the risk adjustment does contribute a small number of percentage points to those reductions in book loss ratios. But the rest of it is just kind of normal trend. And if you look at the kind of usual waterfall loss ratio book chart in the back, you can see that kind of trend over a number of years. So a small number of percentage points of that reduction, sorry, will be changed in risk adjustment. And the reduced risk adjustment is spread over a number of years, not just on the current year.
Hi there. Faizan Lakhani from HSBC. Just trying to tie back a few of the points that you've made around the fact that claims inflation still remains elevated but you're potentially decreasing prices potentially as well. Would that suggest that the 94% underwriting year book loss ratio is sort of peak levels, I guess? And you should expect a deterioration from here? Or is there something else going on there that I need to think about? The second one is that when we were sitting here six months ago, there was discussion around the U.S. being under strategic review. This time around, you've talked about no capital injection. It's operating at a better level. The book loss ratios are getting better. Does that mean that you still plan to keep and operate that U.S. insurance business?
The third one, just very quickly, when I look at slide 54, there's greater reserve releases from 2019 and the 2021 underwriting year and less so from the really old years. Is that a case of you expect or you had left marginal buffers on those underwriting years that you've deployed now? So just maybe some clarity on that. Thank you.
Geraint, do you want to do a clarification on the first question? And then you continue with the margin.
I'd be very grateful for you to do that.
Sorry if I sound pedantic. I hope I don't. But I think you said we were decreasing prices. Could I just say we made a small decrease in prices in January? I just wouldn't interpret that as we're planning to continue decreasing prices. At the moment, based on what we know, we're planning to keep prices very similar to what they are today. So sorry, I don't want to sound pedantic. But we're not decreasing prices as a continuous activity for the rest of the year. We did a small adjustment. We do constant adjustments, yeah? Sorry. And then I'll leave it to you to go into the margin of the 94%.
Yeah.
So in a perfect world, you continue to adjust price through the year. You don't do it and there is still inflation, as I mentioned, that is more elevated than normal CPI at this stage. We expect this to go down. So in a normal world, it will continue. Having said that, there is a lot of positive signs as well that can counterbalance that. And also, there is some of the benefit that needs to be earned through from the previous year. So we're not suggesting anything specific in terms of our own pricing for the rest of the year. But we'll continue to adjust based on what we observe. Maybe more direction. Geraint, do you want to take the second one?
Yeah. The 2023 book loss ratio. So we'd expect that to start to improve now down towards its ultimate position over the next few years. So, well, subject to things behaving as we would expect them to, that will start to improve now and decrease towards its ultimate level.
Sorry. It's more around if we sit here next year at this point, look at the 2024 underwriting year, inflation is 5%-6%. If you keep rates flat, is 94% the peak? And you should expect deteriorations from here. That's what I was trying to sort of get at.
Yeah. So I understand. Sorry. It's a bit tough to sit sort of two months and a couple of days into the underwriting year and think to comment fully on what happens to 2024. 2023, as I mentioned, is kind of this year is split into two parts. The earned bit is going to be higher than the unearned bit. We'd expect quite a big improvement in the unearned element of 2023, which will obviously come through in 2024. What happens to 2024 depends on what we see in claims inflation, what we do on rates, which will obviously play out over the year. We'd expect 2024 to be a decent year based on where we sit today. And maybe you can kind of construct those comments to see what you think we might do with the first book in the 2024.
But that's a long way down the line, I think. On the final question, which is on page 54 and the breakdown of reserve releases, I think the fact there's a bigger GBP number coming from a number of different years partly reflects that risk adjustment change. So we're taking margin off of years that we think, obviously, don't need as big a margin anymore because of that slight reduction in risk adjustment. There's nothing more to that, I don't think.
Sorry.
The Elephant Insurance, sorry.
Can I have a question on the U.S.? Should I take that one?
Yes, please.
Yeah. So our focus and commitment is unchanged since the last time we met. We said that our main priority is to reduce losses while assessing strategic options. And we believe that we have done good progress on both fronts. But also, I think it's important to caveat that we are continuing to operate in a very challenging market. So 2022, combined ratio for the U.S. was 112 with over $30 billion losses. We don't have yet data for 2023. But early indication says that it sits in the range between 106%-110% with over $20 billion losses. So this is creating tough conditions. But I think our actions are now paying dividends on the results while we are continuing to assess the options that also can be slightly impacted by the general economic microenvironment. And this may require a bit more time to deep dive.
As I said, we are selecting a few of them. We are doing a deep dive in this period. We will give an update as soon as we can, hopefully shortly.
I would just add that as for the U.K., with very strong price increases you've seen in the slides, and part of it still needs to be heard through.
Thanks. Alex Evans from Citi. Firstly, just on the FCA, thanks for touching on premium finance. But just beyond that, we've seen other peers have practices that maybe the FCA haven't agreed with or perhaps don't meet fair value for the customer. What discussions are you having there? And are you concerned at all about what the FCA is looking into? And then secondly, just on whiplash, is it possible to give sort of what your assumptions are going in, what your positioning is, and how you think the market is treating that?
Cristina? Cristina, do you want?
Yes. The FCA conducts a number of reviews in any given year. They look at a number of things. We engage with them. We have regular conversations. For example, at the beginning of the year, they did an interesting review into GAP insurance. We don't have it. But it gave us an understanding of how they can use Consumer Duty, fair value assessments to look at the different products. From where we sit today, we're comfortable that our products offer fair value. There is not a particular area of concern. But we continue to work with them and review everything we do. In terms of whiplash, for a number of years now, we have given a range of savings between 15%-25%. The potential outcomes that we look from the Supreme Court case, all the rational potential outcomes, are still within that range.
We are still prudently reserved. We don't expect a very strong, significant change at the back of it. I think you asked about competitors, whether they're pricing from a particular outcome or not. For me, it's very hard to say. What is happening in the market is that small value claims are taking longer, that there are a number of cases waiting. When the case or the ruling comes out, I think you're going to see a lot of settlements. Depending on the outcome, strengthening or increasing of reserves. But at the moment, from the potential risk outcomes, I don't believe it's going to change our range.
My hand. Go for it.
Hi. Thank you for taking my questions. It's Anthony from Goldman Sachs. The first question is more a clarification. I appreciate all the comments on the pricing and claims inflation. But should we expect a normal margin in 2025 or 2024? And then the second question, just more on the solvency II internal model transition, could you give any color? What's the time frame on that? And say if that's approved, how should we think about the potential access capital from that? Thank you.
Yeah. On the first point, just saying it's very difficult to comment so early on 2024. I think the market suffered very big loss 2022 and 2023. So we do expect, in general, better results for 2024. And as for our own results, Geraint commented before, it's going to be mainly impacted by the evolution of '23 and previous year. '23, second half, was better than the first half. There is more that is earned in 2024. So I think you can draw a conclusion from that. But we expect this to be more normal. We're still coming from a very tough part and probably going back to what it was pre-pandemic.
I hope that when you're asking about normalized margins 2024 or 2025, we hope that we're already seeing pre-COVID type of margins towards the end of 2023. So we hope that is when we already got into what we call normalized levels. So we are rating, believing, that these more normal margins will continue into 2024. 2025, too far.
The other point on margins is our revenue base is obviously quite drastically higher than it was a couple of years ago. So the same margin means more profit. It would be very bold of us, I think, to comment on 2025 margins. On internal model, so the timing of that, we hope to get into what regulator calls a pre-application stage, where they take a look at our application and give a view on whether it's satisfactory for, obviously, the full application. We've commented before on timing. And we're obviously a bit reluctant to do that again. So we expect to get into pre-application soon. And the results of that process will give us, hopefully, a clearer path then to full application and approval.
On the kind of financial outcome of it, we've said in the past that people shouldn't expect a radically different outcome from the capital position post-model approval. We'd clearly be disappointed if it was worse. But it's too early to comment on what the financial outcome would be. And we'll do that closer to the time.
Hey. It's Derald Goh from RBC. Two questions, please. So it sounds as though that the market has still both catching up to do in terms of rates. Can you maybe give a sense of how much more rates and over what kind of time frame is that? And then secondly, on your claims inflation assumption, you said high single digits. Can you maybe give a sense of the split between damage and BI? And as to whether this high single digit is a prudent kind of estimate given all the uncertainties there still is?
Sure. Cristina, do you want to?
Yes. Let me start with the second question. High single digits compares to it's still high, a bit lower than the previous two years. But the split is similar. The biggest change from 2022 has been a much higher damage inflation, yeah? Labor parts, all the pressure on garages, yeah? And the availability of second-hand cars. So that's the biggest inflation has been on there. I prefer not to give you concrete splits. But just to say it was much higher. BI has been impacted by commercial care inflation, wages. But also, there has been the Whiplash Reform. So it has almost counterbalanced, yeah? So lower inflation. And for this year, it's the same trend as the past two years. Higher inflation or much higher inflation on damage, lower, although higher than in the past, on BI. Now, this year is interesting because we're talking about inflation in general.
But, just, we don't know the outcome of the Whiplash Reform. We don't know the outcome of Ogden. So if we look at BI inflation for the year, those two things could also have a significant impact. Your first question was around.
On expectation for a rate in the market, right?
Oh, yes.
I think we comment a bit already on this. It's very difficult to say. What we see is some player increasing rates more, some player increasing rate less or decreasing. But in general, what you see is that it's a year with still elevated inflation. So I would suspect we're still price increase, although less strong than last year. Very difficult to say more than that at this stage. I'm just looking for a new yeah. And then I think we're going to go home. Go home, I mean, sorry. Ask questions from home after yeah.
I'm glad I got the last question then. It's Abid Hussain from Panmure Gordon. Two questions, I think. Just coming back to the policy growth versus the pricing that you're pushing through last year, really, you were able to grow policy count and prices above the market. I think you touched upon it. It might be the 1H versus 2H point that you mentioned. But I'm just wondering, is there something else going on as well in terms of the brand sort of pull factor? Are you able to actually push through prices above a peer or competitor and still win business? So I just wonder if you can just sort of just come back to that point, please. And then the second question is on the premium finance and the APR.
If you can imagine a scenario for a minute, if the FCA were to come out and say, "We are going to set a maximum bar for the APR for the market at, say, 10%," for example, what does that mean for your earnings on a standalone basis? And then do you think you and the market would look to recover that simply by just increasing pricing?
Yes. So on the first one, when you were saying what else is happening, this is a very elastic market. Consumers really focus on pricing. So that's a big part of the question. We offer very strong products. We're constantly improving our customer journeys. We have stronger digital journeys than in the past. And that has definitely helped. But I will highlight retention. We're quite proud. This is something that we monitor a lot, which is how does our retention compare to the average of the market? And I'm very pleased to say that in the second half of the year, retention for Admiral was much higher than the market average. And this is quite important because we acquire business mostly through price comparison, very sensitive. But also, it's people that like our service.
So retention is, to me, one of the biggest reasons of the growth in the second half. Your question on APRs, the insurance industry tends to be very rational. It might take more time or less time. But every time there's been a regulatory change or a market change, the previous change in Ogden, the Whiplash Reform, every time there is a change, we price on it. So if the FCA was considering or the CMA or others considered that there needs to be a cut, I believe that as a market, there might be some changes to rates. I believe that because we are charging less than other competitors, we will need to pass less to customers. So I think we will be in a good position, actually, because we're less exposed than other players.
Ask people that didn't ask the question before.
Hi. It's Ivan Bokhmat from Barclays. I've got two questions, please. One is on the written expense ratio. I think you've suggested it drop down to 18%. Just wondering how quickly you think that could be earned over the next year or two. The second one, just on home business in the U.K., I was just wondering whether you think the MORE THAN transaction will be accretive to your earnings from year one. What kind of earnings progression should we expect from that business in a normal loss environment?
Do you want to take the first time or?
You want me to do the first one? Thanks. 12 months?
I think, yeah. We write the expenses off in the first year. So it doesn't take very long for expenses to feed through. So that's effectively there already.
On the MORE THAN, I would say that it's a bit early to comment. We didn't complete yet. That's happening in Q2. But in general, we do believe we have strength in those markets. We have a very strong expense ratio advantage, if you remember, in a household that's materially below the market. And we can definitely develop some good synergies there. But we'll comment more after completion on those. I'm just going to yeah.
Rhea Shah, Deutsche Bank. Just two questions. Going back to motor volumes again, could you comment on how the volumes developed between the third quarter and the fourth quarter? Was it more coming through in the fourth quarter? And then also, what did you actually see in January and February? Did you see a big tick-up in volume growth in January when you pushed through the one-month price reduction? And then secondly, slightly different, but around technology and digital innovation that you've been pushing through, should we expect to see any benefits of this come through in the loss ratio or the expense ratio? And over what period should this be?
Cristina, do you want to take the first?
Yes. In the graph on timestamp , you see a difference between Q3 and Q4. So that is a good reflection of growth in those periods. And then you were talking about January. I just think there is so much noise in the market that it's a bit hard to comment. So I would use Confused, so slightly bigger decrease in January, partly reflecting our own change and a more stable environment in February. And that's what I will keep it. Innovation? Definitely both.
On the tech, I would say we have been through a journey of increasing our tech spend in the last few years because we had a lot of investment to do to renew our technology stack and to make sure we were advancing in terms of technology and tools. And that was on our main business, main systems, but on our core systems, but also on the foundation for better use of data. So this came with an increase in cost. I think now we're in a phase in which we're stabilizing. And we're actually working on making it more efficient, having a leaner machine. So we're working on things like decommissioning, simplification of the tech stack, and also way of working, Scaled Agile, software automation.
So to make sure that basically, with an amount of spending that still is going to have some cost inflation but doesn't grow absolutely at the same pace than in the past, we can really deliver more. And deliver more, what we're going to deliver is going to be a mix of customer journey. But a lot of this is also going to be benefit and loss ratio. So it's going to fit into pricing and loss ratio ability. Part of this benefit, of course, is just to remain updated with the market because everybody's working on similar agenda items. But we believe that we are in a very good stage now to accelerate some of this improvement, to deliver a bit faster. And this will come with some productivity benefit, but also with some mainly customer benefit and ability to underwrite better through machine learning and more sophisticated models.
Well, I think it's more or less time now for me to say thank you very much for coming here and for listening to us. And I think some of us will stay around a few minutes. But thank you for coming. Good. I didn't take a question from home. But I think we're out of time. Yeah. OK. Thanks.