Good morning everybody, welcome to Admiral 2022 full year results. It's great to be able to see some of you in person after three years of virtual presentation. For those who made it, thank you for making it despite the snow, the heavy snow. Funny enough, the last time we did the results in this auditorium was the Beast from the East, it was very challenging in terms of walking outside the auditorium. Just to stay in the theme with the snow, you may notice this shocking setting of Christmas jumper in the picture. Just to take distance, don't worry, it is not Admiral team. It's just Admiral Group board. There is no doubt that 2022 has been challenging, a challenging year. There is no hiding from that.
In that context, we still deliver a solid set of results, and we believe we are on a strong footing for the future. As usual, the team and I will go through the result in detail. Let me start by giving you a bit of a highlight of 2022. 2022 was another year of macro uncertainty, dominated by high inflation across the market, combined with adverse weather events. The market response varies across geography, but it's clear that price increase lagged inflation, resulting in high combined ratios for the market. As we've done in the past, we increased rates earlier and most than our competitors, perfecting growth in our U.K. insurance business and seeking the right trade-off between margin and growth elsewhere. We took particularly strong actions in the U.S., where the market was even more challenging.
This approach led us to deliver, despite the external challenge, a solid profit of GBP 469 million for the group. This number include a profit of GBP 660 million for our U.K. Insurance business, that is above 2019 pre-pandemic level, and a loss of GBP 49 million for U.S. We also increased group customer by 11%. International motor grew by mid-teens and other product more than that. Our approach to reserving remain prudent, and we finish the year with a strong capital position. Our strategy also remain unchanged, and we continue to make progress, particularly in data, in technology, and in new products. Looking ahead, there is still uncertainty, but the market trends we are observing over the past few months allow us to believe that the insurance cycle in the U.K. market is likely reverting.
With the underwriting discipline we show this year, we are well-positioned for that. Given everything is going on in the broader market, let me share a bit more about the key trend that are impacting our business. Inflation impacted all the geography we operate in, as you can see in the graph on the right of the slides. We don't have comparable data for U.S., but we are observing similar patterns there. Motor claims frequency increased year-on-year, although stabilizing at lower level than pre-pandemic. Market premium did increase, as you see in the graph, almost everywhere, but less and later than inflation. As Cristina will explain, in the second half of the year, we started to see this trend reverting, leading to a slightly more positive outlook for 2023. Another feature of 2022 is a depressed level of premiums.
This was driven mainly by FCA pricing reform in U.K. And by low level of premiums in continental Europe. In this context, as Costi will explain later, our growth in Europe is even more remarkable. Both this dynamic, slightly improved in the second half of the year as well. Beyond motor insurance, we experienced adverse weather events in U.K. and in France. We started the year with storms. We had a record-breaking dry and hot summer, and we finished the year with cold snaps. Volatility in macroeconomic indicators, including interest rate rise, increased uncertainty in the lending market. To conclude on a more positive note, people started to travel again, increasing demand for insurance related product. In this market context, we continue to do what we do best.
We maintain underwriting discipline, as well as a conservative approach to reserving and capital management, and we continue strengthening our platform for sustainable growth. We push through double-digit price increase, which including more than 25% in U.S., and tighten underwriting criteria where appropriate. We prioritize margin over growth in U.K. motor and flex the level of growth in other parts of the business where we're aiming to reach better economy of scale. By design, our business model, to the extent that is possible, has been proven to be resilient to market cycle. We remain a 95th percentile confidence level of U.K. reserving.
We kept a prudent high coverage ratio for our loans business, a prudent look-forwarding view of potential further market trends, a solid capital position that leverage on stronger insurance agreements, and the focus on underwriting margin with conservative investment, and Geraint will expand on this later. More importantly, we remain obsessed with our core competence, pricing and claims management. With a very experienced and talented claims management team led by Lorna and Adam, who is here with us today, and have a strong track record of maintaining our cost advantage versus market and managing inflation. Looking forward, diversification will be another extremely important dimension to add strength to our business model for the long term.
The rollercoaster in terms of motor frequency and inflation of the last two years is a reminder of the importance of that. We continue to make progress on our product diversification in U.K. I will expand on this in the next slide. Internationally, we continue to build good foundations for further growth in Europe with a more diversified distribution. In the U.S., as well as putting in place strong remedies to materially decrease loss in 2023, as Costantino will explain later, we are also actively looking at a broader range of option for the business. In addition, in line with the sale in 2021 of our price comparison platform in Europe, we agreed few days ago to sell Compare.com, our U.S. platform site, to Insurify, another leading price comparison platform.
We will retain a minority stake in the combined entity and continue to focus on what we do best, delivering financial product to our customers. Two months ago, we turned 30. Admiral turned 30. I wish I was turning 30. In the 1st 20 years, we have focused only on motor. 10 years ago, we started our 1st product outside motor and by moving into household. It's worth taking a step back and look at our journey so far. In the last decade, the number of customer we serve increased by almost 2.5 x to over 7 million. This growth, more than half of this growth, was driven by new product that now account for a third of our customer base in U.K. Let's take a look to the 1st new product we launch.
Household, as mentioned, just turned 10 and has a market share of 7%. Loans and travel just turned five last year and have respectively a 5% and 2% market share with a combined customer base among the three product of 2.3 million customers. This growth was achieved in a typical Admiral style, organically and with a low investment of less than GBP 60 million. To put things in context, this is an equivalent of an acquisition cost of less than GBP 2 per customers. Cristina Nestares will expand on household and loans later. It's worth mentioning that our travel business, despite a bumpy journey during the pandemic, is growing fast and is developing strong.
The reason why we're so excited about diversification is not the growth itself, it's not only the growth itself, but it's also the resilience that we are ingraining in our core business, with customer that own more product, have more product with us, showing higher persistency and higher lifetime value than the others. It's also pleased to see that we were able to transfer our core competence into new product and more specifically, in particular, I would say, more sophisticated risk selection. Looking forward, our focus will be to make sure that we have a single view of the customer and for the customer with better joint user experience for our customer and also putting ourself in the position to be able to exploit even more synergies. The business diversification remain a core pillar of our strategy, but it's not the only one.
We'll also continue to stay close to our customer as they change the way they move around. Our priority is mastering the underwriting of electric vehicles and connected car and to continue testing new mobility propositions. At the same time, we continue to upgrade our data, our technology, and also the setup of the organization to increase speed to market whilst maintaining a cost-conscious approach. Now the customer remain at the center but also the destination of our journey and our people, the engine that underpin our success. Let me share now a few example of progress made on our strategy this year. Two exciting piece of news, launch of pet insurance in the U.K. and Admiral Money making its first profit.
It's also great to see doubling the number of customer that are benefit from a lending and an insurance product from us, and as a result of this, showing better loss performance than the other, as Scott will explain later. In the motor revolution space, we grew our electric vehicle base by 60% whilst adding new features as, for example, out of charge cover, and we invested in a car subscription platform, Wagonex, to better understand this emerging trend. It's very exciting to see the continued progress we made on Admiral 2.0, including the launch of a new claim system that will reduce settlement time for many of our customers and the extension of our machine learning models now empower pricing for respectively 13% and 50% of our motor and household sales pricing.
In conclusion, in the last year, we both enhanced internal capabilities and built foundation for future growth. This, combined with the underwriting discipline and agility, put us on a strong footing for the future. Now to Geraint, who will give us more detail on Admiral financial performance.
Thanks, Milena. Hi, everyone. I'll cover the main points from our 2022 financial results. A challenging year it was, as Milena has mentioned. I'll go through what we're seeing on U.K. motor profits, loss ratios, and reserves. I'll give a brief update on a couple of other financial topics, and I'll finish on the healthy capital position and final dividend. Let's get going. This slide shows the main group financial metrics for the year. Similar to half year, I'll remind everyone that 2021 was Admiral's most profitable year. The results were very positively impacted by COVID, of course. As we know, that benefit has now largely disappeared, and instead, we see elevated claims inflation in 2022, leading to higher loss ratios, and the second half also threw some bad weather and property subsidence into the mix as well.
Clearly a challenging comparative year. With one or two exceptions, the 2022 numbers were actually quite reasonable, especially when you compare back to before the pandemic. Pre-tax profits and earnings per share were down around 40% versus 2021, GBP 469 million and 124 pence. Those percentages are actually slightly better than they were at the half year position. Return on equity basically in line with the half year, lower than the past few years, but still a very healthy number. The reduction arises because of the lower profit, but a bigger and a more diverse set of businesses and obviously higher amounts of capital back in those businesses.
The closing solvency ratio remains strong. We're proposing a 91% payout for the second half, which will bring the full year dividend to 112 pence per share. That's 90% of the full year earnings plus, of course, the 45 pence final payout of the Penguin release of capital from the interim. Despite very difficult markets in most places, the group continued to grow. Let's take a look at what's happening to customer numbers and revenue. Key messages for this slide are similar to the 2022 half year position. Strong and pleasing growth in almost all our diversification businesses. While significant price increases in U.K. Motor led to a basically flat portfolio year-on-year. Cristina will explain the mix effect. That means that revenue in the U.K. is also basically flat despite those very significant rate increases.
We'll cover the details throughout the presentation, obviously, but it's nice to note now that just under 50% of our group customers come from non-U.K. Motor diversification businesses. I would point out that practically all of the international growth came in Europe, as we were much more cautious on volume in the U.S. More really good growth from Admiral Money too. Moving on from the top line, let's look at the drivers of the change in the profit year-over-year. This is the group income statement by business segment versus 2021. As you can see, U.K. Insurance was the main driver of the change. More detail on the Motor result very shortly. Common with others in the market, we saw more adverse weather in 2022, especially in the second half, and that led our household business to report a small loss.
We're very happy, though, that the non-weather loss ratio is progressing very nicely and is much better than the pre-pandemic number, and we're very excited by the progress in our household business. The overall European result, as you can see, was a loss of GBP 5 million, GBP 3 million of which relates to new products, and we continue to nicely build those businesses in Europe and lots of confidence in what our teams in Europe are doing. In the U.S., as reported at the half year, there was a very sharp market-wide spike in damage inflation, and despite very substantial price increases from our business, we see a significant loss for the full year. Costantino will explain more later, and Milena has already mentioned our response to the results that we're seeing in the U.S.
Final thing for me to point out here is the excellent, first of many profit from Admiral Money, which is small for the time being, but we are very happy with it, especially given the backdrop. U.K. Motor is the big driver of the change. Let's take a closer look at that result. This shows the income statement versus half year, versus last year, sorry, with notes on the key movements. The main drivers of the change are consistent with the half year position, and there are basically two. Firstly, higher frequency, combined with much higher inflation leads to a higher current period loss ratio. Profit commission, which is very large in absolute terms at GBP 170 million, is lower than 2021's exceptional result. That is due to the different level of profitability in the immediately preceding underwriting year.
We've got the usual charts on releases and Profit Commission by underwriting year with a bit of history in the appendix, which shows you what's happening there. Our Loss Ratios, of course, are the key driver of the profit. Let's take a look at what we're seeing on Loss Ratios. The chart shows the projected Accident Year Loss Ratios and the change in the projection versus six months ago is shown in the brackets. We see continued improvements in the projections, generally related to Large Injury claims. Over the course of 2022 as a whole, the improvements were large. Those improvements come despite us building in a prudent allowance for potential inflation on future injury claim settlements, and Adam will talk more about that shortly. We included some comments here on the high initial projection of the 2022 Accident Year.
Our recent years, as you know, are always cautiously projected, but there is particularly high uncertainty in 2022 as we set out on the slide. All being well, we of course expect that number will improve. The margin in our book reserves is still very prudent, as you can see, as you'd expect, though it's a bit lower than it was at the end of 2021. It's now aligned with the top end of the range that we'll set under IFRS 17 from 2023 onwards. As we would usually say, as long as there are no big adverse shocks in claims development, reserve releases will continue to form an important part of our reported profits. Moving on now to look at the capital position and the final dividend. Solvency is set out at the top.
We continue to report a strong position with a 180% solvency ratio. That's a little lower than the comparative periods, as you can see, mainly due to financial markets. To illustrate, if you back out the impact of spread movements over 2022 as a whole, our closing ratio would be around 190. We show waterfalls from the half year to the full year and the full year to the full year solvency positions in the appendix. On the bottom, we've got the dividend information. We're proposing a final dividend of GBP 0.52 per share. That's 91% of the second half profit, and it brings the total for the year to GBP 1.57, including the final part of the Penguin Portals special dividend.
If you exclude that Penguin part, the full year payout is equal to 90% of earnings, and 90% remains our guidance, obviously subject to the appropriate caveats on dividend. Couple of comments here on financial topics before I wrap up. As I mentioned just now, 2022 was a lively year for financial markets, as we all know. I've set out a few points here on our investments. The investment strategy hasn't changed. We haven't really materially shifted the asset allocation. I'd still call it conservative, and it's well-matched. Clearly it's not immune to rate and spread movements, as you can see. Higher rates will mean higher income. Again, there's more detail in the back of the pack.
Briefly on reinsurance, we haven't notably changed the level of protection in our main motor excess or loss placements that renewed on the first of January. There were cost increases, as we know, but not what I'd call crazy. Nothing particularly new to report on proportional reinsurance or coinsurance. Though, as I noted on an earlier slide, there are some extended agreements which took effect in the U.S. at the start of 2022, which have led to Admiral retaining a bigger share of the loss for 2022. Lastly, despite the protests from my colleagues, I should mention IFRS 17.
Big changes coming from the half year and our fantastic colleagues, Rachel and Katie, along with Marisha, did a fantastic job briefing back in November, that's well worth a look for the key points of IFRS 17, which are set out again on the slide. I'm looking forward to the half year. To summarize, a few key points from the results. 2022 was a difficult year. The backdrop was definitely one of the toughest in my time at Admiral. Overall, I think there's a lot to be proud of. Very nice growth in our diversification businesses. Higher U.K. motor profits than pre-pandemic. Admiral Money's result, just to name a few. I believe the actions that we've taken throughout 2022 leave us very well placed as markets continue to turn as we enter 2023.
Of course, we continue to deliver a very healthy solvency position and a high dividend payout ratio. Speaking of great combinations, I shall pass you now to Cristina and Adam, who will talk to us about the U.K. Cristina.
Thank you, Geraint. Good morning, everybody. I'm gonna cover the key aspects of the results of the motor and household U.K. insurance book. I'm gonna particularly focus on pricing and on the outlook for 2023. The second part of the couple, Adam, is gonna do a deep dive on motor claims. Let's start with a summary of the highlights of the year for the U.K. business. 2022 has been a challenging year. It's been dominated by high inflation. In this environment, during this part of the cycle, Admiral has continued with its prudent and conservative approach. We increased prices ahead of the market, and this has resulted in a decrease in customer numbers in the second half of 4%. Inflation remains high, but there are some early signs of damage inflation easing.
I'm very proud to say that Admiral still has an advantage in terms of claim cost versus the market, and it has continued throughout 2022. In terms of household, strong growth, but results impacted by weather events. Finally, for 2023, we expect a better outlook for both household and motor. Now let's talk about the pricing environment for the motor market. Quite an interesting market. First, I wanna be very clear about the price changes that Admiral has done in 2022. Back at the beginning of the year in January, because of the FCA change, we increased new business prices by double digits and decreased renewals by mid-single digits. These changes were very similar to what the rest of the market did.
Secondly, since March, to take into account the high inflation, we have increased prices by circa 25%. These increases are both for new business and renewals. When looking at the market, we have some public index. We can see the ABI shows an increase of 7% in the premium year on year. Confused Index, which only looks at new business, it's showing an increase of 19%. I believe the graph on the right of the slide is quite interesting. To explain what the graph is, it's based on Pearson Ham. It's data by individual competitors, new business rates on price comparison. The way it's displayed, it's indexed to January 2021. In blue, Admiral. In gray, individual peers.
You can see, Admiral has started putting prices up ahead of the market and has continued putting prices up throughout the rest of the year. I already mentioned, this means we have lost competitiveness to the rest of the market. In the second half of the year, we decreased our total book size by almost 4%. A reminder, in the first half, we increased by 3%, mostly driven by high retention. The combination for the full year, we have reduced our book size by a bit less than 1%. You might be wondering, why is our premium flat given all these strong price increases that I'm talking about? Well, two key reasons. The first one is a very change in mix. Basically, during 2022, the proportion of our renewal book increased versus previous years.
Traditionally, renewal book has a much lower average premium than new business. The second reason is that most of these increases happen after May, so it takes some time until they are fully earning through. Finally, I just want to make clear that given these price increases, we feel very comfortable that the loss ratio of the policies we wrote in Q4 last year are going to be much better than the loss ratio of the policies that we wrote at the beginning of the year. Now I'm going to pass you to Adam to talk more about motor claims, and I'll come back later.
Thank you. Thanks, Cristina. Good morning, everyone. I turned this monitor off somehow. Here we go. It's really good to be here again, and I'll start with an overview on some of the key trends in damage and claim frequency. Looking at frequency first, you'll see that throughout 2022 we've seen a period of increased stability, maintaining a position of 10%-15% below pre-pandemic levels. We're comfortable that some of the increases that we observed in Q4 were most likely due to normal seasonality and reductions of this level of 10%-15% appear to be the new norm. We continue to monitor this area very closely, though. On the same chart, you'll also see market damage severity indexed at the same point in 2019. This is a combination of own damage and third-party damage.
There's clearly still some volatility here, although it does appear that damage inflation is starting to ease at a market level after a period of significant increase. Some more detail now on the primary drivers of damage inflation. The chart on the right of this slide will hopefully be familiar to you by now. It shows U.K. residual vehicle values, which have been a key driver for damage inflation over recent years. Whilst these values are still elevated, they've stabilized over the last six months, which will feed through into overall claims inflation. Increases in new vehicle supply and a potential economic downturn may influence this as well. We do, however, continue to see elevated inflation in vehicle repairs. The drivers for this elevated inflation remain unchanged, but as a recap, they are capacity constraints caused by labor shortages, increased overheads, and challenges in parts availability and distribution.
You'll be aware that in more normal times, we experience damage inflation in the mid-single digits due to advances in vehicle technology. There's no quick fix for some of these market-wide issues, so we anticipate seeing elevated inflation on repair compared to pre-pandemic levels throughout 2023. It's important to remember, though, that the issues detailed above impact both own and third-party damage, and we normally recognize third-party inflation slightly slower than own damage due to payment delays between insurers, which means that inflation on third-party damage could persist for longer than own damage. Moving on now to the next slide. Some more detail on our performance, the outlook for 2023, and some information on key bodily injury trends. Despite the challenging market conditions, we've continued to outperform our competitors when looking at overall cost.
The chart on the left of this slide shows our average spend versus the market indexed at 2020 to cover the period of the highest uncertainty. It demonstrates our ability to manage this tough inflationary environment better than the market. Some key areas supporting this result have been an increase in analytics and digital capabilities as well as enhanced fraud detection. Naturally, though, we believe that to be highly competitive in all areas of claims to maintain this consistent advantage. We also made a change to our repair network in H2, consolidating our existing network into five strategic partners. While it's early days, we're confident this is the right change to make to drive better outcomes in the short and long term. It's a great example of our ability to execute key strategic change at pace. Looking at claims inflation now.
A reminder that at the half year we estimated claims inflation at 11%, we're maintaining this estimate of 11% for 2022 as a whole, given our usual prudent approach and the uncertainty that we still face. The outlook for inflation in 2023 remains challenging. The reduction in residual values points to a likely small decrease in claims inflation for 2023. I wanted to cover some of the key bodily injury trends, starting with the whiplash reforms. You may be aware that the Court of Appeal recently gave a much-awaited decision on multi-site injuries, which we hoped might bring some greater certainty on severity. The insurance industry as a collective, though, has decided to appeal that decision, which unfortunately doesn't move us much further along.
Uncertainty remains around the valuation of these injuries, what we can say is if the Court of Appeal decision were to stand, we'd likely see savings towards the bottom end of the range we've previously given of GBP 15-GBP 25. We don't anticipate material changes to the frequency benefits already derived from the reforms. Moving on to large bodily injury now and starting with care costs. At the half-year results, we talked about the relationship between the ASHE care index and overall wage inflation, and we're pleased that inflation has progressed in line with our expectations on care. The majority of the impact of care inflation is being felt on a small number of claims, almost exclusively above our excess of loss threshold, so not impacting our reserves materially. Some uncertainty remains regarding more general inflation in large bodily injury.
Given the life cycle of these claims, it may take some time to manifest. Due to this uncertainty, we're taking a very cautious approach to development patterns in large bodily injury reserves. On top of this caution, we also continue to hold what we feel are appropriately prudent provisions to cater for potential inflation that we're yet to see. Taking into account our approach to development patterns and our inflation provisions, we're confident that we are very well covered. Lastly, I wanted to comment on the Ogden rate. The current economic climate has clearly created a more positive backdrop. However, significant uncertainty remains, especially as the government has launched a call for evidence on a dual discount rate. We anticipate the new Ogden rate being published at some point at the end of 2024 or the beginning of 2025.
Given the current levels of economic and political uncertainty, and also the complexity of the review, we propose no changes to our current reserves. That's it from me. I'll pass you back to Cristina who will talk about household and wrap up on the U.K.
For household, there are three parts of the story: growth, weather, and underwriting discipline. In terms of growth, we grew 20% with a higher growth in the 1st half of the year. The key drivers of this growth has been above-market retention and also an acceleration in our MultiCover proposition. In terms of weather, 2022 has been a turbulent year. We had storms in Q1. It was followed by a lovely heatwave in the summer that unfortunately resulted in an increase in subsidence claims. In December, we had a cold snap that has meant an increase in burst frozen pipes. With all of this, we have done a prudent estimate impact of GBP 32 million weather cost, reducing the household result to a loss of GBP 6 million.
I'm pleased to say that when looking at the loss ratio non-related to weather or attritional loss ratio, we have actually seen an improvement versus pre-pandemic levels despite inflation. This is mostly down to continuous improvement in our claims handling, especially in how we manage our suppliers. In terms of underwriting discipline, in the second half of the year, we increased prices by around 10% to take into account both inflation in the market and weather events. Beyond our normal pricing discipline, we have continued making investments in our household business in making it stronger, mostly around pricing, analytics, and digital. This has resulted into an increase of our expense ratio. As a reminder, our expense ratio is still well ahead of the market. When I say ahead, I meant well below the market.
Looking at 2023 and beyond, I remain confident that the household business will continue to grow, building on the strong foundations of better than market expense ratio and improving loss ratio. Finally, an outlook for 2023. Let's start with pricing. In terms of motor for 2023, Admiral has already increased prices by mid-single digits. We have also seen very strong increases by some of our competitors. We expect these trends to continue. We expect market and Admiral to continue putting prices up, especially in the first half. Now, for this year, Admiral expects to maintain a pace of rate increases. That means our motor volume are not likely to grow in the first half.
Historically, we have looked to grow at times when the market corrections have overshoot. We need to get more certainty in the underlying inflation before we go back to growth. In terms of household pricing outlook for 2023, we have also increased prices by about low single digits. We're also seeing momentum in the market, and we expect this to continue throughout 2023. In terms of claims for motor, as Adam has said, we expect flat frequency and an improvement in damage inflation. However, there is still uncertainty in many areas like third party, large bodily injury, and whiplash. In terms of household claims, we saw in 2022, building supply cost and repair cost inflation that has impacted inflation in the market. We expect this to continue in 2023.
The supply chain in household is under pressure because of the increase of long-tail claims related to subsidence and freeze. I was saying that in Admiral, we have managed to counterbalance these pressures on inflation by improving our claims management. We expect this to continue throughout 2023. All in itself, during 2023, we will maintain pricing discipline. We will continue prioritizing margin over growth. We do expect the loss ratio of both household and motor to improve for both the market and Admiral. However, it will take time for this improvement in the loss ratio to earn through. This is all for the U.K. insurance results. 2022 has been a challenging year. We have continued with our conservative approach. We think the market was a bit slow to respond to inflationary pressures, which resulted in a reduction in our book.
We are seeing from Q4 and, continuously this year an increase in market prices. Therefore, we think 2022 is the worst year in the cycle, and we expect a better outlook for 2023. Now over to Costi to talk to us about the international results.
Thank you, Cristina. Good morning, everyone. Let me take you through the results and outlook for our international businesses in 2022. In Europe, we have established solid operations, and we are building a portfolio of valuable asset for the group that I'm confident will deliver meaningful profit in the long term. In the U.S., the significant negative impact of inflation has increased losses for the world industry, and Elephant was not immune. We have been taking strong action that should deliver a reduced losses in 2023. Let me start with our European businesses on the next slide. In 2022, we continued to build scale in all our operations and diversify our distribution efforts that have started to pay off, bringing in new customers. The investments in new distribution capabilities are significant.
In fact, if we take them out of our combined results, we would have been profitable this year. In 2022, the market environment remained challenging, and we consciously slowed our run rate and protected the bottom line with significant price increases, raising prices earlier than our competitors, which have continued throughout the year. Given our strategic objective to return meaningful profit to the group, it's important to continue to build scale over time, always assessing the optimal trade-off between margins versus growth. Thanks to these actions, I believe we are in a good position for 2023, where we have seen early signs of market cycles changes.
We've made strong progress in executing the Admiral 2.0 strategy with a portfolio of initiatives that will help us to accelerate time to market of new features and products, as well as the adoption of machine learning and gaining more efficiencies. A couple of weeks ago, our Italian business hit the milestone of 1 million customers. This is a good moment to share more about the business and the solid performance delivered. Moving to the next slide. ConTe.it is a clear example of the deployment of Admiral competitive advantages in another country. Among several good things ConTe.it has achieved, one to note is our risk selection capability, which has enabled a better loss ratio and a higher average premium than the direct market.
These competitive advantages have underpinned a track record of profit and a growing customer base in a direct market that has been very challenging and where the average premium dropped more than 20% over the last five years. ConTe's success has also been dependent on a spirit of continuous innovation. We were the first in the group to implement Scaled Agile. We also focus on digital and automation investments that have paying dividends with an outstanding efficiency ratio. ConTe is also a well-trusted brand, recognized as best in class for customer service and a great place to work for our staff. The ConTe success story reinforces the importance of achieving scale to be sustainable, profitable. This is an important reason to continue to grow in France and in Spain while following a methodical approach and leveraging new commercial opportunities.
For example, in Spain, the partnership with the large retail direct bank ING should offer a meaningful growth opportunity in the long term. Overall, 2022 has been a year of investment and solid progress on our strategy. I remain very confident on the trajectory of the European businesses to generate meaningful value for the group. Moving to the U.S. On the next slide. Results are very disappointing, with the business making a $60 million loss. As mentioned at the half year, we took strong action. We did so to a greater extent in the second half of the year. Unfortunately, it takes some time to feed into results. The majority of the impact will be visible in 2023. An unprecedented level of claims inflation hit the U.S. Motor insurance industry.
No one has been immune from this, including large players that in 2021 posted profits but have reported single to double-digit billions of dollar losses for 2022. You can see from the top right chart that we started from a lower average claims cost, but saw exactly the same 21% market inflation across our claims book. The newer insurance contracts increased year-on-year the share of losses retained by Admiral, though they supported a significant capital relief for the group. Elephant continued to take an actions and to react to the high inflationary environment. In H2, we implemented several strong actions that should produce significant benefit from 2023, where we expect to drastically reduce losses.
For example, we increased rates more than competitors, materially reduced acquisition spending by 40%, cut footprint in non-performing segments, shift towards higher lifetime value customers, and we significantly reduced the fixed costs. We are committing to reducing the losses for the U.S. and are confident that the actions we are taking will deliver better performance in 2023. From a market perspective, we are seeing the first signs of a reduction in the impact of inflation, whilst prices remain strong. In conclusion, there is no doubt that we have lots of work to do. In the U.S., our focus on turning the performance around and unwavering, and the actions we are taking will reduce our losses for 2023. In Europe, we have a solid base that we continue to invest to deliver long-term value for the Group. Thank you.
Now I pass over to Scott to talk about our loans business.
Thank you, Costi. Good morning, everyone. I'm pleased to report a very strong performance for Admiral Money in 2022. We've continued our philosophy of sustainable and efficient growth. The loan book has grown to GBP 888 million. This is up about GBP 100 million on the half year and is in line with the guidance we provided a year ago. In our fifth year from launch, I'm delighted to say we've delivered full year profitability for the first time, an important milestone for the business. We've achieved this whilst retaining appropriate prudence in our credit loss provision with coverage of 7.2%, which includes post-model adjustments of GBP 11.3 million to account for continued cost of living and mortgage rate pressure on our customers.
Our credit performance remains stable and comparable to pre-pandemic levels. I'll cover a bit more on this later. It's also worth updating that we continue to make pleasing progress in our long-term investment in the business. One example of this is despite a relatively small scale, our cost income ratio has now dipped below 50% for the first time. We hope this to be an early demonstration of a likely long-term expense advantage. Despite the external volatility and economic uncertainty, 2022 has been a positive year for Admiral Money. We are now beginning to play an increasingly important role in the consumer lending market. Since launching in 2017, we are proud to have provided more than 250,000 customers with over GBP 2 billion of loans.
As Milena mentioned, our new business in 2022 gave us a market share of around 2%. As you'd expect, U.K. inflation and the subsequent cost of living pressure that it creates has been front of mind since Q3 2021. We made very early decisive moves to increase the hurdles on our affordability models to ensure that after assessing our customers, we continue to lend responsibly and that our customers can sustain the loan through any reasonable stress. To date, I'm pleased to confirm that our customer payment performance remains positive with arrears and defaults in line with expectations. Looking forward, I expect to see continued growth in our loan balances towards the GBP 950 million-GBP 1.1 billion range, combined with a tightly controlled cost base, we should see further improvements in the bottom line in the years to come.
I'd like to move on now to talk about our underlying capabilities. In the past, I've highlighted three areas which we identified as success ingredients for the business: expense advantage, risk selection advantage, and product differentiation. I've already mentioned our pleasing progress on cost income ratio, and I'm also happy to report positive progress in our competence in risk selection. You can see this on the chart on the slide. Over the past five years, we have improved our loss outcomes as we've evolved our credit and pricing capabilities, and importantly now showing multiple years of consistent outcomes. As I said earlier, we see credit performance being stable and similar to pre-pandemic levels. For the first time, we are also showing relative outperformance for our customers who hold Admiral insurance products. You can see this on the green line.
These are the customers where we have more data to inform our decisions. They consistently outperform and in total hold over GBP 35 billion of consumer debt. Engaging with more of them in the future is a key part of our strategy in Admiral Money. In 2022, I'm pleased to report we have increased the percentage of sales to these customers. I'd also like to pull out some customer feedback on our products. We are seeing increasing proof that U.K. customers are showing a preference for a pre-approval guaranteed rate proposition versus the traditional teaser rates offered by many of our competitors. They value the certainty and the transparency it offers, and our NPS score of 72 and Trustpilot score of 4.6 is evidence of this.
It's also a demonstration of economies of scale to come that over 80% of our customer interactions in Admiral Money are already digital. They're going through digital channels. In conclusion, in 2022, we have continued our trajectory of sustainable growth. We've hit the important milestone of profit for the first time. We've done that while remaining conservative on our provision and while continuing to invest in our long-term capabilities. Looking to 2023, we enter with very good momentum and expect to benefit from a strong position in a growing market as we see a continued shift to comparison in credit score marketplaces. I am optimistic for the year ahead and confident in the team's ability to continue to execute on our plans. With that, I'll pass to Milena.
Thanks, Scott, and congratulations again for such a nice milestone. We recognize that 2022 has been a challenging year also for our people and our customers, that have been impacted by cost of living challenges. For majority of our people.
Who are the core of what we do. We provided permanent salary increase through the year, plus a range of benefit and support during the winter month when were most needed. It's great to continue to see excellent engagement score and to be so extensively recognized as a great place to work and as a diversity leader. I can't thank enough Admiral crew for being such an amazing companionship on this journey. I am pleased to note that once again this year we'll award around 10,000 colleagues across the globe with GBP 3,600 through our employee and share scheme. Customer remain our North Star. We look after the most financially vulnerable ones with dedicated team and specific action as well this year.
Helping more people to look after their future is our core purpose, and this doesn't stop with our customer and our colleagues. We continue to do our bit to secure a better future for the next generation. We decrease our carbon footprint this year 32% on Scope 1 and two year-on-year, and we progress in our journey to net zero as pledged last year. Finally, while continuing to support emergency causes, we decided to concentrate our effort to support the broader community around the theme of employability. That is helping people to find jobs also where more challenging to do so. Being a great place to work, it's a very important part of our DNA. Being a great place to work and ideally a greater place to work for more people, is something that's very close to our heart.
Example of initiatives, we're supporting, including supporting girls learning to code or disadvantaged people to find job in developing countries. In conclusion, to wrap up, we have delivered a solid set of results despite challenging market condition. We reacted promptly. Sorry. We reacted promptly to market condition, and we are in a good position for a reverting cycle with some positive sign in the last few months, although uncertainty persist. We grew across most business, and we made good progress on our strategy. We continue to focus on our people and all our stakeholder and our culture that is the key strength of our model. That's all for now. Thank you very much for listening, and we're happy now to take your questions. Are you passing the microphone Freya, please?
Hi. Freya Kong from Bank of America. Thanks for taking my questions. Firstly, you've talked about 2023 looking better than 2022 for motor. Given the pricing discipline that we've seen, do you think we get back to normal levels of profitability by 2023, or is that more of a 2024 story? Secondly, why did the 2022 underwriting year open at a much higher level than we saw at H1? What's driven the slower development in the 2021 underwriting year loss ratio? Thanks.
Okay. Are you going to take the second one or? 2023, it's very early to comment at this point, we normally do not give guidance. What is important to notice is that from an underwriting point of view, we do expect the business to be more profitable than 2023, as Cristina mentioned. There are a few element of uncertainty that persist, more importantly, I would say, how BI inflation is going to develop. We feel we are very prudently and conservatively reserved for account for the development of BI inflation, it is early to comment at this stage. It is important to reminder that there is a time for profit to go through to be earned through our account.
As I said, we start from a conservative assumption on the outlook for the future, but there is uncertainty, and we'll need to see how this is gonna develop. Reserve release, everything being equal, we expect to continue to be an important part of our future. On the second point, Geraint.
Yeah. The 2022 underwriting year book loss ratio increased from the half year to the full year point, as you say. The mechanics are that the ultimate projection of 22 was higher at the end of the year than it was at the middle of the year. Obviously, we didn't disclose the ultimate at the middle of the year, but that's what's happening in the background. We've got an 8 or 9 point gap above the ultimate, I think, at the booked position at the year end. It's not unusual for the year end point ultimate to be higher than the mid-year point. There's a seasonality in it. We've also added a bit more of the inflation loading that Adam talked about onto the most recent year as well. There's a few things that combine there. Re-reminder, the ultimate projection is cautious.
We've got an 8 or 9 point gap above that as well, which we obviously will release over time. There's plenty to come out of that with a fair wind.
Sorry. The 2021 development was a bit...
Yeah. I mean, similar reasons. The 2021 underwriting year obviously is a year of two halves, if you can have such a thing. The year ending of 2021 and 2022 was much more impacted by inflation, I think. The first half of it was earned in 2021, which was impacted by the pandemic and much less inflation. The second half of it was impacted by higher frequency and significantly higher inflation. That's quite an abnormal development pattern for that year. It's at a point now where you'd expect it to start drifting down towards the ultimate. Again, you'd expect the ultimate to drift down as well as we get more certainty in it.
Okay. Thank you.
Hi. Good morning. This is Ivan Bures from Barclays. I've got two Questions, please. One is on U.K. motor, and this is perhaps a bit numbers driven, but what you're talking about is a inflation of 11% and, you know, perhaps going to high single digits, if I interpret it correctly, for next year. The price increases you have applied were over twice that level. I'm just trying to think, if we go into 2023, what could prevent you from showing, you know, an appropriate improvement of margins from the current level? I think in 2022 part of the explanation was the mix, as you have alluded to. Could there be anything else? Changes to reserving, anything on reinsurance or something like that?
You know, similarly from that point, I guess, touching on what Freya just mentioned, the 102% book loss ratio for 2022, is that a fair starting point for this analysis that you know, that I'm asking about? The second question is, I mean, considering how much worse the profitability was for 2022, when we think about the year 2023 and 2024, the profit commission impact, how much lower would it be compared to, let's say, the GBP 170 million that you've booked this year?
Cristina, do you want to take the first one?
Happy to. Yes. What I understand from your question is whether there is anything preventing the loss ratio of 2023 to be much better than 2022. The answer is, our expectation is that there is gonna be a significant improvement. We have taken actions throughout 2022, and we're already taking them in 2023 that should result in a much better loss ratio. The only question mark that remains is uncertainty around areas like large BI inflation. If you think about it, some of these claims take five years to close. You sell business during this year, but actually some of the claims take five years. It's hard to predict what could happen in the future. Everything we know today, including Ogden, makes us believe that it's gonna be a, you know, a good loss ratio year.
If I have to single out causes of uncertainty will be inflation impacting large BI in the next four years.
The question on profit commission outlook for the next couple of years is a slightly difficult one to answer without giving you solid guidance, I think. What we would say is that there is plenty of reserve release to come on years that are currently enormously profitable. 2019 and 2020 underwriting years, for example, will still continue to release, and there is plenty of profit commission to be recognized on those years. This is cyclical business at the end of the day, and 2021 and 2022 underwriting years will be lower profitability underwriting years than the preceding ones, influenced by the pandemic partly. There's less profit commission to be earned on those years because there's less profit commission. difficult to say beyond that really. We've got plenty of reserve releases to come. They will have a profit commission attached to them.
As Cristina says, we would expect 2023 underwriting year to be notably better than 2022, which will be the trough of the cycle, I would imagine. Difficult to comment without giving the solid numbers, I think, Ivan.
Hi. Darius Satkauskas from KBW. Two questions, please. The first one is coming back to that premium versus inflation angle. I suppose, you know, you put on 25% rate increase in U.K. Motor. You talking about 12% inflation potentially coming down. Can you help us understand what's the right base for the current year loss bit to apply some sort of margin expansion, you know, positive jaws going forward, whatever that may be? You know, irrespective of whether you get inflation right going forward, what's the right base for the current year on which we start thinking about the jaws? That's the first question. The second question is, it is slightly broader one.
How much more do you think U.K. Motor average premium needs to increase before the conservatively pricing most insurers can start growing policy counts? Just a broader question. We all know who they are. You know, 'cause I suppose there's a bit of optimism about what's happened in the fourth quarter. You know, my understanding, it's still far below what needs to happen in terms of, you know, catching up with inflation the past few years. Thank you.
Cristina, do you want to comment?
Yes. A couple of things. You have highlighted how to look and compare the 25 price increases versus the 11% inflation. Just to mention a few things around them. First, sorry if I go very basic, but when you think about inflation, even though it's only 11%, it impacts every open claim from any policy you have had sold years ago or the previous year. The impact of inflation, it's right there on that moment and continues to be for a number of years. Whereas price increases take time to feed through. There is a bit of a misalignment in time that can explain why the numbers are very differently. Also just as a reminder, we were starting from a very low base.
It was COVID time, frequency was very strong, favorably, and there was a lot of competition in the market. I think there was a bit of catch up to do. Then, I think you also asked for our expectation of inflation for 2023. If you're okay, I'm gonna pass it to Adam on that one, and then I'll finalize on the expectations about growth.
Of course. It's, I think I mentioned the presentation where we're looking at something slightly lower than the 11% for last year. I think you said mid-high single digits. Maybe that's the right area, but there is some uncertainty around that in terms of pricing.
Yes. I think your question was when should we expect large competitors to start growing again? I don't think we're gonna see that in the first half of the year. What I've been seeing from competitors, and I think the graph on pricing explains it very clearly, it's a very strong acceleration of price increases by key competitors since Q4. We are seeing a continuation in Q1. I do not expect this to revert anytime soon. Not in the first half. Maybe in the second half, you could start seeing some competitors taking growth. Also, there are very different strategies. There are companies owned by big houses, or they have different attitudes toward growth. My answer is not in the first half, but possibly some in the second half.
Hi there. Farooq Hanif from HSBC. Sorry, my questions will come back to some of them have already been asked. Coming back to the point where, you know, premium's up 25%, claims inflation is 11%. Yes, premium takes time to earn through, but just trying to bridge H1 to sort of full year. I understand 25% will earn through, you know, maybe you've got maybe 10% on a earned basis and inflation around 11%. It still feels like a big move from H1 to H2 in terms of the attritional loss ratio development in U.K. motor. If you could help, you know, bridge that and how much of that's prudence. The second question is sort of coming to the profit commission.
I can see the sensitivity is quite low for 2021 and 2022 because I guess it hits a, you know, a less profitable tranche. I guess, you know, that acts as a headwind over the next couple of years, potentially relative to what you've seen in the past. At the same time, you know, you've benefited from fairly benign wage inflation for the last sort of 10 years. Now if you get to a normalized level, what can we expect in terms of reserve releases going forward? The third question is quite a basic question, but you mentioned policy count dropped off by 4%, half and half. From what I remember in the first half, you had van growth being quite strong. If we were to strip that out, what was policy count growth in H2?
If you're okay, I'll take first and third.
Sure.
The first one is how should you look at the loss ratio of H2 versus H1? It's very clear. I was mentioning before, it's very clear to us that the performance, the loss ratio of the policies that we wrote towards the end of the year is very different than the performance of the policies we wrote at the beginning. I don't believe we give guidance or concrete numbers on halves, but they feel to me completely different books and very different set of prices. You should think about 23 almost as a continuation of that. More price increases at the beginning of Q3 and some early signs of a better or an easing in inflation around damage. Sorry, I'm gonna just leave it there if that's okay. In terms of growth of van, we give the numbers together.
The reality is that the van book grew, during the first half, and it has been much more flat in the second half. The impact in our book of van in the second half has not been significant.
I have two questions. One was reserve releases outlook. The second one is profit commission. The reserve release outlook, I think we would say that we're reserved in U.K. motor at 95th percentile is extremely prudent, and there's a lot of prudence that will come out over time as those loss ratios move towards their ultimate positions. We would expect the ultimates to continue to improve. Our expectation is, in the absence of adverse big shocks moving forward, that reserve releases will continue to be material and a really important part of our profitability. I think you've already really hit the nail on the head with the profit commission. The sensitivity of 2021 and 2022 to smallish movements in loss ratios is clearly very small because all we're doing is recognizing our share of the underwriting movement.
The book loss ratios have to move down a fair bit more, particularly on 2022, before we'd see any profit commission. 2021, you can sort of see in the back of the pack that we just about started to recognize a little bit. Those years, as we said, they will be the two worst years of the cycle. 2020 and 2019 were clearly enormously profitable years. 2023, as Cristina's explained, we expect to be much better than 2022. They will deliver less profit commission in the next couple of years just by nature of the cyclicality and the fact they're lower profit years.
Sorry, can I ask another question if that's okay?
Keep hold of it.
You mentioned in your slides that the mixed injury, you know, you expect it to be the bottom end of GBP 15-GBP 25 sort of whiplash reforms. I'm surprised to see that you don't expect a change in frequency. I would have assumed more sort of claims farming if there's an opportunity out there. It sounds almost a little bit optimistic.
Adam.
Shall I take that one? I think the key difference, Farooq, is that regardless of how much the claimant gets in compensation, you have to get the claim over GBP 5,000 for the lawyer to get paid. I think we've previously had a view which we think is pretty solid, that that activity is driven by income to the lawyers and the associated supply chain around that, which I think is a key differentiator versus versus the previous regimes. That's why we think it's GBP 15-GBP 25, the lower end of that.
Hi, good afternoon. Thomas Bateman from Berenberg. You talked about the 95th percentile, and I think you alluded to your IFRS.
To be less totally dominated by U.K. Motor that we would hold a lower level of reserve margin in each line of business as they're more diversified. I would expect us to move down-ish to around the ninetieth-ish percentile level. It'll take a few years to do that. I don't think we'll do that in one go. At this point, we're not disclosing sensitivity to percentile movements. You might expect under IFRS 17 where there's more disclosure that you start to see that kind of sensitivity reported. No information on that right now. We will move down from the 95th, I expect, but there's a gradual movement rather than a, you know, one lump.
Shall I take the cost of care?
Hi, Thomas. Primarily what we're seeing at the moment is inflation in care in a proportion of our most serious accidents, and these are the ones involved in agency care on a 24-hour basis. Given the severity of these claims, they're almost exclusively above our XOL retention level. They're not materially impacting our reserves, but the inflation is there on this proportion of our largest and most severe accidents.
U.S.
Sorry. Last one, U.S. In U.S., to put things in context, the year has been particularly challenging and the cost to explain all the remedies that we're putting in place to ensure that loss for next year are gonna be significantly reduced. That's our utmost priority at the moment, and we're continuing to monitor and take bold action, and we feel confident that we will see the impact of that, of those action coming into place. If we step back for a moment from the current condition channel that are challenge that our market-wide issues, we do recognize that the U.S. has been more challenging than other countries in terms of finding sustainable way of grow and sustainable acquisition cost. We continue look at how we can improve this situation.
We have, we start from a very strong platform in the U.S., strong team, great customer service, good technology, a very efficient operation, and the market opportunity is very large. We need to find, to understand how to address that. At the moment we are early stage exploring very large set of option. Nothing is off the table at this moment, and we'll comment more when we'll have more to share. Will, I think after we will take question from the phone.
Thank you. Will Hardcastle, UBS. The first one's a bit granular, sorry. I guess as there's been a lot of questions on the 102 book loss ratio. I guess if we were to look at it on a slightly more narrower timescale, has the trend started to improve already? You know, if we were thinking about it from a month-on-month type vision or is there still a bit more that it could nudge up before we earn all those premiums over ex-inflation crew? Sorry, just 2nd one, very quick one. On the home side of it, are we getting to a stage where you could perhaps give us a sort of a large weather budget type thing for normal years so we'll understand, you know, how much over and above this was versus normal? Thank you.
I think Cristina summed up the way we think about loss ratios, clearly underwriting year or accident year. We're running budgets all the time on the profitability of the level of business that we are writing currently. Cristina said that the profitability of the business in Q4 was materially better than the business in Q2, for example. The 102% is not going that way. The opposite.
You were asking about whether we use a large weather budget, and it's something that we use internally, but I don't believe we disclose it, this type of outside. Yeah.
Can we take a question from the phone? If there is any question from the phone.
Operator.
Operator?
Yes. We have one question from the phone. We are now taking the question from Ria Shah from Deutsche Bank. Please go ahead.
Hi. Thank you for taking my questions. I've got two. Just going back to U.K. Home, do you have any profit ambitions or growth ambitions or targets for U.K. Home over the medium term? Are there any cross-selling synergies or opportunities that you're seeing across U.K. Home, Motor and also the travel book as well? The second question, going back to motor pricing, I think in slide 21, you're showing in one of the charts that your new business pricing was increasing, but it looks like at a slower rate than the market in Q4. Did you see any volumes start to improve in Q4? Should we start to see volumes improve, new business volumes improve early this year, from that difference between your pricing and the market's pricing?
Great. Cristina, you want to?
Happy to take both. The first question was around our ambition for household. I think I'd say it's a similar ambition for all our products. We first focus on having a good foundation in terms of loss ratio and expense ratio. We take growth from there. On household, we're very, we're very pleased to see that we have a much better expense ratio than the market. I'm talking about a gap of 10 points, including the increase during this year. I'm confident we will continue. We're seeing our loss ratio improving. I'm not gonna say that we are yet the best in the market, but I have lots of data that suggests strong improvements and getting to become, you know, much better than the average.
You were also asking, I think, our ambition beyond, in terms of the different products. Something that we think is a win-win for the customer is that our MultiCover proposition, MultiCar, MultiCover, buying several products for us gives not only very strong discount, but an easier experience and a better overall performance. They get discounts, they get the easy customer journey, and we get better data about the customer and a better ability to serve them. Good expectations for the future. As you know, we don't give a concrete target. I'm an optimistic, and I'll say, we're gonna continue this all these businesses strongly. I mean, just looking at household, it has been growing between 15% and 20% every year, and I see no reason why this shouldn't continue in the future.
There was a final question around the gap of rate increases between Admiral and the market. It's true that during Q4 the gap has reduced. The average of the market has increased prices more than us during Q4. Still they haven't caught up, but there was a deceleration. Yes, we saw in Q4 our market share of new business increase a bit. However, going back into Q1, as I mentioned, we have good, you know, mid-single digits and our share of new business is stable and is not improving too much.
Well, I think, do we have time for more one?
Time is up. I'm sorry. Thank you very much for listening. Thank you for coming, and thank you for your question. That's it for today.