Good morning and welcome everybody to Admiral Group 2025 results. Once again, we deliver excellent financial performance, growth, and strategic progress across the group. As usual, I will be sharing our main highlights. Geraint will provide us more detail on our financial performance. Alistair will talk to us about the excellent results in U.K. insurance, and Costantino will bring to life for us our progress overseas. In the first six months of the year, we delivered a record profit of GBP 521 million. That is almost a 70% increase year-on-year, while at the same time adding 1 million customers to our book. That is a 10% increase versus last year. The main driver of this profit increase was U.K. Motor Insurance that was also supported by positive claims trends.
It was nice to see a material growing contribution coming from different parts of the business, and in particular, U.K. Household and Admiral Money, who both doubled their profits while at the same time growing and building on their strong track record. As we anticipated, in March, we announced the sale of our U.S. business, Elephant Insurance, due to complete later this year. It will be sad to say goodbye to our colleagues, but we do think that's in the best interest of all our stakeholders. We also made great progress in enhancing our data and technology capability, as well as improved our customer experience, reflected in a strong Net Promoter Score above 50%.
As very typical and usual of Admiral, we maintain pricing discipline in a softening market, and this will put us on a strong footing for further growth when the cycle will turn and the time will be right. We have a strong capital position and strong fundamentals to continue to build on this strong track record. A bit more in detail now. The first six months of 2025 were very much a continuation of the second half of last year. We stayed focused on our strategy and executed well across the board, with progress in all the different parts of the business. In our largest business, U.K. Motor, we remained close and reacted fast to market trends. We decreased prices to reflect improved frequency and reduced claims inflation, but we did so with a measure and less than the market.
Our historical discipline resulted in a three-point improvement of combined ratio and a 5% customer growth year-on-year. Beyond motor, we're extremely pleased with our progress in the U.K.. We continue to deliver strongly on our dual strategic objective to grow at pace other lines of business, with also 30% more customers in Travel Insurance, U.K. Household Insurance, and Pet Insurance versus one year ago, while at the same time delivering good margins with a combined ratio for this area of 88%. In Europe, we also successfully delivered on our two main objectives. First, to turn around Conte, our Italian business, with fast recovery toward profitability, and second, to continue growing profitably in France, where we can leverage on Olivier's strong position in the direct market.
Overall, good continuous progress in our diversification strategy, with the majority of our business increasing contribution to the bottom line and only a few still in the investment phase. A fil rouge across the group is the relentless focus on ensuring that our data and tech capabilities are market-leading to continue to support our key competitive advantage in underwriting and in providing excellent service to our customers. In the last months, we have continued to optimize our machine learning models in production, not only in pricing, where we already had strong foundations and scale, but also beyond pricing and with particular focus on claims, where the strong claims inflation of the last few years increased even more our sense of urgency to deliver innovation and to deliver most cost-effectively for our customers.
We're excited about the potential of generative AI to improve our customer experience, to support our agents, and increase automation. We're setting strong foundations for the adoption of it across the board, with the first models in production and several live pilots with promising initial results. Foundational to data adoption excellence are stronger data platforms, and those have been strengthened both in the U.K. and in Europe. Another pillar of our strategy is to continue growing our EV portfolio with strong financials and stay close to other relevant motor market trends. We're exploring new propositions for young drivers with Veygo and developing new capabilities in commercial motor, also leveraging our partnership with Flock. Beyond financial and strategic progress, there is so much for us to be proud of. Primarily, our customers that are recognizing our effort with strong Net Promoter and feedback scores.
Most importantly, we continue to deliver accessible and affordable products for the majority of the population. Second, our colleagues that continue to rate us as one of the best places to work for, with Admiral ranking top 25 worldwide and number two in the U.K. Our people engagement is also reflected in the high retention of talent and competence. Our commitment to diversity also remains as strong as ever. Finally, it's been pleasing to see our AAA score reaffirmed by MSCI a few days ago, as we continue to progress on our Net Zero transition plan and on our science-based targets. Before closing this section, I would like to take a step back with you and look at Admiral's long-term trajectory.
As you see in this graph, in the last 10 years, we delivered a 9% PBT CAGR and delivered a return to our shareholders that is four times the FTSE 100. This track record is built on five pillars. Number one, strong technical expertise in claims and underwriting, combined with a sharp focus on expenses and continuous innovation, particularly in the use of data. This is what underpins our large combined ratio advantage versus market. Second, an extremely capital-efficient model enabled by strong, long-lasting reinsurance partnerships. This supports our growth and a great return on capital for our shareholders. Third, a disciplined approach to investment and a prudent reserving approach. We always value our shareholder money and are keen to bring resilience in our account, managing the business as it was our own, and maybe that's also because we are all shareholders in Admiral.
Fourth, a proven agility and ability to navigate better than the market, a strong industry cycle, changing regulations, and other external challenges. Last few years have been an example of this. We managed to flex the business trajectory and navigated these changes successfully. Finally, or maybe first, our culture. I'm deeply convinced that this is the most important competitive advantage that we have, as it underpins all the points above. It's our colleagues' commitment to our customers and the business that allowed this strong set of results. I would like to take again this opportunity to thank them for their great work. That's all from me for now, and Geraint will share with us more detail on our financial performance. Picture top left.
It's my weekend outfit. Thanks, Milena. Morning, everyone. I'll cover some of the financial highlights from a quite positive first half of the year. I'll cover the main drivers of the group profit, plus a strong capital position and the much higher interim dividend. Let's get going with some of the highlights. Pre-tax profit was up by 69% to GBP 521 million, and earnings per share was up similarly to GBP 1.325 a share. Excluding the impact of Ogden on H2 last year, those are our highest six-month profit figures ever. U.K. Motor was the key driver, reporting a significantly higher underwriting result. There were also pleasing contributions from around the group, as we'll see. Just to note, all these figures are now continuing operations basis, and so they exclude Elephant Insurance. Return on equity was extremely high, close to 60%, as the big profit increase significantly outweighed the higher equity.
We continue to report a robust and very satisfactory solvency position, net of a very large increase in the interim dividend of over 60% to GBP 1.15 a share, maintaining our usual approach to dividends. Quite a positive set of results. The bottom half of the page shows turnover, customer numbers, and loan balances. Turnover was just over GBP 3 billion and was flat against the first half of last year, although that half was 43% up on the first half of 2023, and so it was a big comparative period. Through the presentation, we'll see that the drivers were reductions in turnover in Italy and U.K. Motor, offset by a large increase in U.K. Household. As Milena has mentioned, we added a million new customers to the group over the last 12 months, seeing growth in every business, with the exception of Conte in Italy.
As you know, the total focus of our team in Italy was on restoring profitability, and a consequence of that right now is a smaller portfolio. Last but definitely not least, Admiral Money's on-balance sheet loans increased by around a quarter to GBP 1.3 billion in a very good first half, and that business also now services around GBP 200 million of off-balance sheet loans as well. Next, onto the components of group profit. These next two pages will show the breakdown of the group pre-tax result by business against last year. Quick comment on the group ratios to start. We report a broadly flat and very positive loss ratio for the group at around 57%, and we saw a decent improvement in expense ratio period on period. U.K. motor, U.K. household, and Europe all delivering better expense ratios in this first half, which is good to see.
U.K. insurance increased overall profit by GBP 221 million, all lines delivering higher results. Home insurance profit was More Th>n double, a really pleasing first half with good growth in revenue and customers, and another very decent combined ratio of 84%. Travel and pet in aggregate broke even, which was positive, and I'll talk about U.K. motor shortly. In Europe, as you can see, the result was flat half on half, just under break even. Within that total, European motor, which is the very large majority of the business, was also flat, but just over break even. Costantino will cover in more detail, but the key points are continued profits and growth in France, good progress in Spain, notably on broker distributed business, and very encouraging signs of profit recovery in Italy. Admiral Money had an extremely positive first half, with profit More Th>n doubling from GBP 7 million- GBP 16 million.
The result did benefit from a GBP 10 million net profit impact from selling around GBP 150 million of previously originated loans from the unsecured loan portfolio, and that won't repeat in H2. Selling newly originated loans will be an ongoing feature of the business, with GBP 90 million of loans sold during H1. As I mentioned earlier, the on-balance sheet loans balance grew by around 25% over the 12 months to GBP 1.3 billion, and that growth contributed to higher interest income in this half. We see promising early signs in terms of car finance volumes following the relaunch of that product last year. Admiral Money continues to see positive credit loss trends, and of course, we retain an appropriate and prudent provision for losses on the balance sheet.
The share scheme costs were higher because of the higher share price this half versus last, and the other items were positively distorted in H1 last year when we realized the profit on the sale of Insurify shares we received when we sold compare.com. There's more analysis of that line in the appendix. Next, let's take a closer look at the really positive U.K. motor result. This is a summarized income statement plus the key ratios with some observations on the key changes. Starting with turnover, that was GBP 2.3 billion in this half versus GBP 2.4 billion last half, and there are two drivers of that small decrease. One is a shift in the sales mix in favor of renewals away from new business, as the new business market was smaller in size and more competitive.
The second was our reduced prices over the last year or so, which leads to lower average premiums at new business and renewal. The main contributor to the much higher overall profit was the big increase in the underwriting result, which was up by GBP 180 million. That was mainly due to much higher premiums from the 2024 underwriting year earning through, and consequently a better combined ratio. As expected, the quota share reinsurance cost was also notably lower this half due to the much lower reinsurance assets on the balance sheet at the start of the period compared to last. That 2024 underwriting year is also the main contributor to the higher profit commission income.
On the key ratios, firstly, we see a better expense ratio, which benefits from the big increase in earned premiums, a slightly better current period loss ratio, positively impacted again by 2024, and slightly lower but still strong reserve releases. Let's dig a bit deeper into U.K. Motor Insurance loss ratios. This chart shows U.K. Motor Insurance booked loss ratios by underwriting year on a discounted basis. Alistair Hargreaves will cover the current claims trends shortly, but on the back years, we see continued good development. As we reported back in March 2023, and in particular, 2024 will be extremely good underwriting years. Our estimate of claims burn cost inflation for 2025 versus 2024 is somewhere in the 5%- 7% range, including a small reduction in frequency versus last H1.
Because of the combination of that inflation and lower prices, 2025 will be a lower margin year than 2024 for Admiral , and we believe the market. We still project a profitable year for Admiral , of course. On the book loss ratios, the first discounted booking of 2025 is at 73% or 79% undiscounted. That's actually in line with 2024 at the same point. Because of the higher ultimate loss ratio we expect for 2025, the book ratio for 2025 is very likely to increase in H2 as the lower premiums start to earn through. In the claims reserved, we've opted to hold the risk adjustment strength in the balance sheet at the maximum level, but we expect that to start moving modestly down within the coming year.
Finally, reserve releases continue to be an important element in the income statement at 13% of earned premiums this half. Don't forget that earned premium was significantly higher in this half compared to last half, partly accounting for that lower percentage. Anyone that's panicking that they don't see the other chart on ultimate loss ratios that we normally show here, please refer to the appendix. Moving now to the capital position and interim dividend, and starting with capital on the left. These are the movements in the solvency ratio from full year to half year. Key points. Firstly, slightly lower capital generation as expected, given the lower underwriting margins in 2025. Second, growth, albeit lower growth in the capital requirement. Thirdly, the interim dividend, which almost offsets the capital generated. Our closing position at 194% is still very satisfactory.
On the internal model, we continue to progress in line with our plan towards full application. The next important piece of news will be when we make that step. On the right-hand side, the interim dividend, as you can see, we're paying GBP 1.15 a share. That's around 60% higher than last year's interim and a nice round 50% CAGR over the past couple of halves. GBP 1.15, just under 90% of the first half earnings. There's no change to report in our approach to dividends, but just to note that we will start buying shares in the market for our share plans either in the fourth quarter of this year or the first half of next year in anticipation of share awards and share vesting in 2026. As we flagged, the special dividend will start to see the impact of that in 2026. A couple of comments just to finish off.
First, these very pleasing set of financials for the first half of 2025, led as usual by our U.K. Motor Insurance business, but with further positive results in other parts of the group, notably U.K. Household Insurance and Admiral Money. In line with that significantly higher profit, we've declared a much bigger interim dividend, but still, of course, maintain a very satisfactory and strong solvency position. On the outlook for the rest of 2025, in terms of top line and customers, we expect to grow in all our operations, obviously subject to how markets play out, and probably with the exception of Italy. Turnover in H2 is likely to be a bit below H1, as was the case last year, and that's due to lower average premiums and some seasonality.
In terms of profit, the group results will be well supported by the continuing earning through of the 2024 underwriting year in U.K. motor. We project continued good results from the businesses highlighted just now: U.K. home insurance, Admiral Money, plus Olivier in France. We expect a much better Italian result for the full year compared to last, subject to the profit recovery there continuing. Over now to Alistair to give us more insight into the U.K. insurance business and market.
Thank you, Geraint. Good morning, everyone. Let's look at our excellent U.K. insurance results. We grew customer numbers by 13% year-on-year, maintained revenue, and reported a 60% increase in profits. In motor, we grew to 5.8 million customers, and in beyond motor, we now insure over 3.5 million homes, holidays, and pets for our customers, all driven by giving customers great value and service, which also resulted in our number one position on Trustpilot. We're very happy with the More Th>n integration, which is nearing completion. 339,000 home and pet customers have renewed with us in the last 12 months. The More Th>n brand is live for pet new business customers, and we expect a positive impact on earnings from H2 2025 onwards.
As a result, we delivered profits of GBP 584 million, mostly driven by motor and contributed to by another record profit for home and continued profit growth for travel. Let's look at what drove our strong results in motor, starting with motor claims trends. There's a continuation of favorable 2024 motor market claims trends, decreasing frequency and severity continuing to moderate. Frequency decreased year-on-year, reflecting vehicle safety features on more vehicles, increased road safety measures, and favorable weather. Severity inflation continues to moderate. We estimate mid to high single-digit inflation. Damage severity benefited from stable second-hand car prices and more normal repair cost inflation. Bodily injury inflation is stable. Together, frequency and severity trends drive claims burn cost, the average claims cost per policy. The resulting better-than-expected claims burn cost since the start of 2024 has contributed to falling market premiums.
Admiral continues to benefit from years of cumulative experience and expertise. We consistently achieve good outcomes and a motor claims MPS of over 55, whilst maintaining claims cost discipline. In line with the FCA Multi-Firm Review, we've completed our analysis of total loss valuations. We will be taking action to rectify some historic cases and have increased our total provision to GBP 50 million. This is around 3% of the total loss claims costs over the relevant period. Moving to motor pricing. Admiral managed margins and volumes well in H1 in the face of continued reductions in market prices. In the first half of 2025, we saw the motor market continue to respond to better-than-expected claims trends by reducing prices, with slightly slower decreases in Q2 than in Q1, as you see on the left-hand side.
The price indices use different data points, but the average reflects market movements this half, and it shows prices down 7%. Admiral times top, which is the percentage of times we are cheapest on price comparison sites, a measure of our competitiveness, is illustrated on the right-hand side. At the start of 2024, we became very competitive when prices and new business volumes were at their peak. Since then, market premiums have fallen in response to improved claims experience. We've also reduced prices, but by slightly less than the market, somewhat reducing our competitiveness. We welcome that the FCA confirmed that motor premium increases in 2023 and 2024 were driven by claims costs, and that their interim update on premium finance recognized that premium finance allows customers to spread costs, helping affordability. We're confident our premium finance product provides fair value.
We have a competitive APR of 15%, and that compares favorably to other sources of finance. A good first half for U.K. Motor. Let's move on to look at another step up for household, where we delivered a combined ratio of 84% and a record first half profit of GBP 25 million. In the first half, household market claims burn costs continued to moderate due to lower frequency and relatively benign weather. As a result, after peaking in Q3 2024, market premiums continued to decrease in the first half of 2025. For Admiral, we're keen to maintain pricing discipline, and our price decreases were more modest than the market. We continue to drive growth through a combination of More Th>n, strong retention, and multi-cover, and we're pleased to see an improved current year loss ratio.
Although H1 weather has been relatively benign, it has been particularly dry, so we've included provision for elevated subsidence risk. This combination of good growth and margins resulted in a record half-year profit for household of GBP 25 million. We're engaging with the FCA on their review into household claims handling. Admiral is well placed to navigate both market and regulatory dynamics with strong pricing, claims, and customer centricity, and a disciplined approach to balancing growth and margin. We're very pleased with our recent household performance. Just a reminder, save the dates. As we mentioned in March, we'll hold a deep dive session on our household business in November. A very strong first half across U.K. insurance overall. Now let's look ahead. Starting with motor, we expect market claims severity inflation in the second half to be similar to the first, although macro volatility causes some uncertainty.
We expect claims frequency to remain stable or gradually decrease due to the long-term trend of improving vehicle technology, with some uncertainty due to weather. More positive than expected claims trends have led to market premium decreases of More Th>n 17% since the start of 2024. Going forward, we expect premiums need to increase in the near future, or we'll see a marked deterioration in the 2026 market combined ratio. A delay in market premium increases will mean larger increases are needed. In household, market claims inflation is broadly stable, but with an increased subsidence risk in H2. Assuming relatively benign weather, we expect to see continued reductions in market prices in the second half. For Admiral, our pricing will remain disciplined, reflecting market claims outlook, weather for home, and our own trends.
Looking beyond trading, we remain confident of driving sustainable, profitable growth over the medium term, driven by three areas of focus. First, our customer centricity, delivering great products and service with strong NPS and very competitive prices. Second, motor operational excellence, balancing continued growth with market-leading combined ratio performance, both benefiting from strong retention. Third, building a strong track record of sustainable, profitable growth in home, travel, and pet, helping 1.5 million customers with two or more products. A great set of results, and we remain confident of driving sustainable, profitable growth over the medium term. Now, over to Costy to talk more about our international results.
Thank you all. Good morning, everyone. To compete with Geraint, I've also put my best picture top right. The story of our European business this half is one of a turnaround and good progress overall on our strategy. The year-on-year result is flat with a small profit, but we recovered this semester from a significant loss reported for the full year 2024, thanks to disciplined execution across our markets. Let's see the highlights. Our focus has been on improving margins, careful risk selection, and increasing efficiency. We have also made good progress on our key strategic initiatives. The turnaround in our bottom line over the past six months was driven by targeted performance across our markets. Our French business has continued its positive track record of profitable growth.
We have made significant strides in our recovery plan for Italy, and we are making good strategic progress with intermediary distribution channels both in Italy and Spain. Underpinning all of this is our continuing investments in analytics and technology to strengthen our pricing capabilities, make our claims processes more effective, and better serve our customers. Indeed, we are maintaining a leading position in the customer service scores across our markets. Let's look at the numbers in more detail. Our French business, Olivier, continues its good performance. For the past several years, the business has delivered double-digit growth with a very good combined ratio, thanks to our solid foundations in risk selection and focus on direct acquisition. This half, we again achieved double-digit top-line growth, increasing our customer base to over half a million, while maintaining an excellent combined ratio.
We expect to continue on this positive trajectory of building more scale and delivering good margins. Moving to Italy, we executed a significant turnaround in Conte. As I mentioned at the full-year results presentation, we faced challenges, but our response was swift and effective. As you can see from the chart, we materially reduced our losses, improving the combined ratio by 13 points. We took strong pricing actions, pruned the portfolio, shifted to lower risk segments, and implemented cost savings. While this necessary discipline led to a planned reduction in our policy count, the benefits are already clear, and I expect them to materialize fully in the coming quarters. Conte has consistently delivered profit for a decade prior to 2024, and I believe the actions taken have put Conte back on a solid footing to return to be profitable and to grow in the near term.
In Spain, our underwriting discipline continues to deliver profitability in the direct business. We are also seeing a promising trajectory in the brokers and ING Bank distribution channels, which have reduced their losses while growing volumes. The groundwork laid by these two more recent initiatives provides a strong foundation, while all signs confirm that we have multiple avenues for profitable growth in the medium term. Next. Let's see. Sometimes it happens. They wait because I don't think people from home see the slides. Keep going. Okay. Now I would like to dive on how we are solving for scale and efficiency, two key strategic challenges to compete successfully in Europe. To scale, we are transitioning to a multi-channel model. We cannot rely solely on the direct market, as most customers still shop offline in Europe. This move expands our market potential.
We began this transition in Italy and Spain, while in France, we continued to focus on the direct market strong momentum. After a learning period, we redesigned our products. This caused a planned temporary drop in policies, as shown in the chart that you cannot see, but you have your presentation. The new products, yes, here we are. The new products launched a year ago were well received by quality intermediaries and their customers, showing good growth in policy counts year-on-year, and also overall loss ratio is improving. These trends confirm our strategy is working and support profitable medium-term growth. Strong execution will be now key to realizing this outlook. Now on the efficiency. To be competitive and achieve good margins, efficiency is imperative, and we are making good progress. Our expense ratios are improving or stable.
This is a strong result for Conte, which held its ratio stable despite lower earned premiums. These improvements are driven by digitalization, automation, and artificial intelligence. Our investments in these areas continue to deliver, and I expect more opportunities ahead. To conclude, our European operations are emerging stronger and more disciplined. Looking ahead, we will continue to execute our plan with precision and underwriting discipline, targeting healthy trading margins to deliver growing profitability over the near future. Thank you. Now I hand over to Milena for the wrap-up.
Thank you, Costy. To summarize, we continue to deliver consistently, year after year, strong financial performance and growth. Beyond the excellent results in U.K. Motor Insurance, there is so much that we delivered across the group in the last six months, from a successful integration of More Th>n to the sale of our U.S. business, strong turnaround in Italy, growth in every other part of the business, the sales I mentioned already, the sales of our U.S. business, our first forward flow deal in Admiral Money, and the list is still long. Looking ahead, we continue to be focused on three strategic objectives: maintaining a leading position with a very substantial combined ratio advantage versus market in U.K. Motor Insurance, and grow when the time is right.
Second, to grow at pace and profitably other lines of business in the U.K. with a more synergic approach and a single view of the customer. Third, scaling our direct business in Europe, while at the same time building larger opportunity for the future through different distribution channels. In addition, we constantly develop our franchise. We continue to focus on our customers, continue to focus on our people, and embrace and embed new data and technology to future-proof our competitive advantage. We remain agile and adapt to changing market conditions and navigate industry cycles with discipline, putting ourselves on a strong footing for further growth. More in general, we remain very confident and excited about the future prospects of the business in the future. Thank you very much. That's all from us for now. I'm very happy to take questions from audience first and then from home.
Please, take the mic and press the button and hold it if it's possible.
Darius Satkauskas, KBW . Two questions, please. Actually, three questions, if I may. First one is, have you noticed any changes in the motor market following the recent wave of consolidation? Obviously, you know, no one knows the future, but are you seeing anything in the market that would lead to belief that, you know, the turn in the cycle is near or, you know, can it continue for quite a few years from here? Lastly, what are you seeing in regards to the claims inflation when it comes to electric vehicles in comparison to the rest of the book? I'm particularly interested in how returns per part costs compare. You know, do you feel you have more pricing power when it comes to these EVs? What is going on with the claims inflation is less challenging. Thank you.
Do you want to take the first two and comment on the third?
Yeah, sure. In terms of consolidation in the U.K. market, I don't think there's anything that we'd call out. We remain very focused on maintaining our core disciplines, pricing claims, and managing the cycle well, and still see plenty of headroom for medium-term growth. In terms of the turn in the cycle, in terms of what we've seen so far, really a continuation of trends that I mentioned in Q2. Prices are still decreasing, but more modestly than we saw prior to Q2. As I said, what we're seeing now is we believe that the market has behaved rationally to this point, passing on the benefit of better-than-expected claims costs back in the form of lower premiums. In the near future, we will need to see price increases in order to keep pace with forward-looking inflation, or else we'll see a marked deterioration in the 2026 combined ratio.
We, for Admiral, remain very happy with the margins that we've written in 2025. They're not as high as the very high margins we saw in 2024, but we're happy with those margins and will continue to maintain pricing discipline. Lastly, in terms of electric vehicles, we put a lot of focus in terms of electric vehicles, both in terms of pricing and claims, making sure they're very joined up. We work very closely with our repair network in order that we're managing those repair costs and understanding the methods for different manufacturers, and we're comfortable with the performance. We see good performance on these electric vehicle segments.
Maybe I will just add to the electric vehicles that for us it's a priority to grow the book, and we are growing on the electric vehicle portfolio More Th>n in the rest of the book. We think we have a strong financial performance, and it's something we can continue to develop in the future.
Carl Lofthagen from Berenberg. Two quick questions. Just on the U.K. motor policy count, which was up 1% in the period, are you able to give a little bit of color on which kind of subsegments of the market you're taking share? Slightly longer, kind of longer-term question, the U.K. government's planning to launch a pilot for autonomous vehicles next year and is planning to change the law in 2027. Has there been any changes, kind of, I guess, to your outlook on AVs and your strategy, I guess, because the government's been pretty clear that it wants to be at the forefront of this. Thank you.
Do you want to take the first and comment on the second?
Growth of 1% over the first half is driven by, and you were asking about mix. I think, first of all, I'd call out increased renewals this half. We grew very strongly in the first half of 2024, and one of the drivers of our growth in the first half has been a bigger renewal book and strong retention on retaining those customers. At new business, you know, we write across the market, but areas that we give particular focus to and we're strong at is the electric vehicles, as we were mentioning there. We've also seen growth in telematics.
I would say more in general, in terms of autonomous vehicles and technology advancement, there's been good progress in the last year. I would say mill in the U.S. is still predominantly a U.S. phenomenon. Europe is quite behind compared to the U.S., but we do see this coming, not really material in the short term. As for us, our strategy is really to concentrate on being good on the rider of some of the components that may change. For example, working with the data from connected vehicles and making sure that we stay very close to market trends. We've done some experiments in the past, and we continue to deliver those skills that we think are going to be relevant in the future. I think it's one, two, and three.
Thank you. Andreas from Peel Hunt. I just have a question about your pricing power. I mean, rationally, if you're projecting 5%- 7% claims inflation going forward, that means you would be increasing rates at least in that range. Is that something you can do in the U.K., or do you need competitors to follow your lead? That's my first question. The second question is on your initial loss mix. I think you were alluding to the second half of the year you would need to increase the initial loss mix, the booked undiscounted one, even further. You booked it at 79, I believe, at the end of H1. I just wondered, by how much more do you think you would need to increase that sort of initial loss mix? Are we going back to 2023 levels or somewhere between 2024 and 2023? Thank you.
On the first one, I would say that our approach has always been historically to price based on our own claims trends. Independently of what the market does and competitors do, we look at the trend. We have large scale and try to be very close and react very fast. There have been instances in the past in which we increase price substantially or decrease substantially as we see fit, depending on how the claims evolve. We will continue to do what is needed. In that particular circumstance, I think Alistair already mentioned there is a bit of a stabilization of severity inflation, and frequency is a bit lower than last year, but we will continue to do what we think is right for the price.
On how 2025 developed, I think it would be a bit early to give a penny answer to that. We certainly expect that the book loss ratio in H2 will increase probably by at least a few points, but it'll depend on how things develop in the second half. What you saw with 2024, its 12-month booking was lower than its six-month booking, as that underwriting year obviously got better as higher average premiums earned through. For 2025, we'd expect to see slightly the opposite effect, and you'll see those two underwriting years diverge at the 12-month point. We'll talk to you in six months about how exactly that develops, but it's certainly a few points at least.
I think we're there.
Thank you. Vash Gosalia, Goldman Sachs Group Inc. I have two questions. One, just continuing on the EV point. Could you help unbox that a little bit more and tell us what is the differential in average prices between an ICE versus EV, and even a little bit on the margins front, on the combined ratio, if they are different, in which direction? The other question was a bit on your customer base, or basically policy count. Just trying to think around what in your opinion would be a driver of that policy count, which is exogenous to Admiral . In what sort of environment would you expect you to just basically get more customers versus less? Thank you.
I think on EV, what I would say is that we're very happy with financial performance, the lifetime value of our EV portfolio. We also think it's very important for us to continue to get scale and learn about pricing and underwriting and claims, as Alistair was saying, as well as evolving our proposition. We add new features to cover battery charge and so forth. In terms of average premium, I think it's difficult to unpack because the reality is that the portfolio of customers that adopt electric vehicles is slightly different from the rest of the portfolio. You have a bit more presence in urban areas, for example, versus a more area, a bit more affluent customer. There are some of those differences that play in terms of average premium.
The way we price is really based on the lifetime value, the combined ratio, and we're very pleased with the performance. It's a part of the book we want to continue to grow and faster than the rest. The second question, do you want to, was the policy count drivers outside the, you mean outside the claims inflation?
Basically, I'm just trying to understand what sort of impact will the general market environment have on your policy count. I'm sure you will try to grow your policy count either through pricing or just basically through doing what you do already very well. What can change in the market which will help you, any tailwinds or headwinds?
In terms of the market, as Milena's also alluded to, we start by looking at claims costs and making sure that we're taking that into account in our pricing. We look over the medium term and we'll say, what's the right balance of margin and growth? If you look at 2024, in the first half, when prices were high and we saw good margins, we became very competitive and reduced our prices, and we grew by 15% in 2024. In the first half of 2025, we've reduced our prices less than the market because we thought that was the right thing to do for claims costs, and we've grown more modestly. I think over the medium term, we think that managing our growth according to first and forward claims dynamics and then the market dynamics is the best way for sustainable long-term growth.
In parallel with that, we're investing in pricing, claims capabilities, and customer experience and efficiencies in order to ensure that we have as much firepower for growth over the longer term as possible.
Morning everyone. Youdish Chicooree from Bernstein Autonomous LLP. My first question is on U.K. Motor Insurance claims frequency. I think there was almost like a 10% decline last year, which took the claims frequency almost 20% below pre-pandemic levels. I think earlier in the year with your full-year results, you said that was somewhat unexpected and you guided to a potential rise this year. This has not materialized. I was just wondering whether you've changed your view of claims frequency and we are now at a different level and what factors have driven that. That's my first question. My second question is just a technical question on capital. There was a 14 percentage point drop from a higher combined ratio due to growth in beyond U.K. Motor Insurance.
Can you provide some details around that, whether that's due to the More Th>n portfolio and whether we should probably incorporate higher combined ratio going forward? Thank you.
Thanks. Do you like the first?
Yeah, on claims frequency, in terms of the market trends, we saw it come down quite a bit in 2024, as you say. In 2025, we're really seeing it down year-on-year, so versus the first half of 2024, and broadly similar to what it was in the second half of 2024. That decrease, we mentioned at the full year that we'd seen quite a decrease, and some of that could be weather. That's really how we look at claims. We're always slightly on the conservative side, and we don't want to bank things until we've got a bit more longer-term experience. In terms of the longer-term trends, the trends that we see driving that frequency have been in place for a number of years. Vehicle technology improves frequency, road safety measures, things like speed limits have helped. That's been a sort of a long-term trend.
What you also see on the other side of the vehicle technology is more of that technology in vehicles can mean collisions cost a little bit more. It has a sort of a slight counter on severity over the longer term as well.
Capital.
Capital requirements. It did increase by about GBP 70 million, I think, half year on half year. Growth is a factor in that. A couple of the key drivers are expected growth in premiums written over the next 12 months, not necessarily written in the last 6 or 12 months. That's part of it. The other part of it is increased balance sheet size, so bigger reserves, bigger reserve risk. Over time, if the business is bigger in terms of premiums written and balance sheet size, then you should expect it to increase. Yeah.
Thanks. Will.
Thank you, Will Hardcastle, UBS. First one, I'll go away from U.K. Motor Insurance. Just thinking about the U.K. Household Insurance, is that mid-80% now a fairly good representation for the business in the medium term? I recognize there was some subsidence claim put into that, but then there was lighter weather. I'm just sort of thinking more medium term there. In U.K. Motor Insurance, the average premium, is there any seasonality on it, H2 on H1? Irrespective of sort of where industry pricing goes, all else equal. I'm trying to understand moving parts, perhaps this year on the new business versus renewal mix, but also perhaps any normal seasonality that might be there, half and half. Thank you.
Great. In terms of household combined ratio, we're very happy with the household performance. We think it's showing our strong pricing and claims capabilities come through. We've had relatively benign weather in the first half of 2025, not quite as much as in the first half of 2024, and that weather will always have an impact on combined ratio. We don't give explicit guidance. Really, we take a very similar approach to household as we do to motor, where we're looking over the medium term and making sure we're making the right choices in terms of balancing growth and margin. In terms of motor seasonality, from a market dynamic point of view, we'll see our results will have been impacted partly by the much faster growth we saw in the first half of 2024.
It slightly changes the mix of our business in terms of age of renewals and things like that, and that can have an impact on average premium. On top of the market dynamic, I'm not sure there's anything else I'd call out on the turnover.
Maybe sometimes in January, you have a small impact on price because just pragmatically, the car becomes one year older. Some of the tariff factors come to the year, but there's a very small impact and usually it's in January.
Thank you. Just one really quick follow-up on the home point. It feels like because with the motor in that discussion on combined ratio and balancing growth with efficiency, essentially, we sort of know where we are. I guess with home here, are we getting to that point where you'd be willing to reduce growth a bit more, or are we still at really attractive levels that you'll continue to grow?
We're still in the home market. We're at 9% market share. We've got plenty of headroom for growth. I think when you're looking at the last 12 months, we need to take into account what was the driver of growth. We had the More Th>n renewal migration as well as underlying growth driven by our organic growth, which has contributed to things like multi and retention. The More Th>n we won't see going forward.
I think of the growth that we've seen over the last 12 months, around two-thirds of it came from More Th>n.
Hi. Sorry. Ben Cohen at RBC . I had two questions, please. Firstly, on the expense ratio in the U.K., I think you called out how good it was and there was a big year-over-year improvement. I just wonder, particularly in a U.K. motor context, maybe of softer premiums, how sustainable that is, and maybe you could have a comment as to how that improvement has been, how much that's been driven by technology versus some of the cost-saving programs that you've put forward. The second question was on Europe. Could you just remind us the sort of medium-term targets that you're looking to get to in terms of profitability for the European business and again, how you weigh kind of growth in some markets versus margin?
Thank you.
Yeah. On the expense ratio, of course, the impact of much higher earned premium is important on the expense ratio. If you look at the cost per risk, we have seen in the past increase mainly driven by data and technology expenditure. We have a lot of program in place now to make sure that we counterbalance inflation on data and technology costs, and we try to keep it relatively stable or growing very mildly. We're quite pleased, actually, with some of this plan, and there's more that we're working on in terms of potential implementation of additional automation and so forth. I think we're looking at a quite interesting period in which we can continue to work very effectively on cost per risk. I would say that if you look back, the majority of the increase were related to data technology and governance.
On Europe, do you want us to take this question?
If we step back, let's say the main objective for us in Europe is to contribute meaningfully to the group profit. To make this happen, we need to continue building scale, but also improving the trading margins with very discipline. As I said, I'm pleased with the progress we are making towards these targets. Let me caveat that to materialize good profitability, there are a few components that would contribute to this target. The first one is the margins coming from direct business. At the moment, if we caveat Italy in 2024, we are targeting and we are trading at high single-digit margin. This is what we are targeting because this margin will also allow us to capture good and healthy growth. Brokers have to improve towards a similar direction. We are not yet there because we are still in the investment phase, but we're making good progress.
I expect this target to be reached in the short to medium term, and we are on track for this. There are a couple of financial aspects also that we need to consider. Reinsurance arrangements will also become more mature and should benefit from this improvement in trading margins and should start to contribute in the short to medium term to profitability, plus the investment income. I think that these are the four directions, the four dimensions that will contribute to profitability. Overall, our objective is to contribute significantly to group profitability, and we are on track for this.
Thank you.
Hi, it's Shanti from BofA Securities. I just have two questions. One is on the profit commission, so maybe Geraint, you can take this. I noticed that you've taken a cautious stance on recognizing the profit commission for the first half of this year. I'm just curious to understand what's really driving you holding that caution. Given that the ultimate loss ratio is due to uptick in the second half of this year, could we still expect that to roll off favorably? Is that the right way to think about it? The second one is just on Admiral Money. You had that GBP 90 million forward flow deal that you captured in the first half of this year. That seems like a good start to the arrangement.
I'm just curious to know what you expect the cadence to be of the forward flow deals in the next sort of year or so. Thank you.
Profit commission. The 2025 underwriting year at the half-year point has earned very little premium. Even if the mechanical calculation did kick out a positive number, it would be extremely small. At this point, even if the maths kicks out a positive number, we would hold it back. 2025, we do expect to be a profitable year. It should, based on everything we see today, recognize profit commission in time. Partly with one eye on how that loss ratio develops in H2, we've just chosen to constrain that for now down to zero. Did that fully answer that? We'll see how that develops in the next six months or so. 2025 will be a profitable year, caveat, and should recognize profit commission.
The second one was on Admiral Money, the cadence of future forward flow deals.
Forward flow. Yes, it's a good question. In the first half, we sold GBP 150 million of loans from the backbook and then sold GBP 90 million in additional newly originated loans as well. There's quite a big move, obviously, from on-balance sheet to off in the first half. We'd expect that use of third-party capital to be an important feature of the business moving forward. Like we said in the past, we want that to be an important part of the business, not least because at some point, Admiral will reach a cap in terms of its ability to finance Admiral Money through the junior funding. That's roughly GBP 2 billion on-balance sheet size. We won't hit that this year, potentially next year, depending on how things go. We'll be trying to optimize the loans that we keep on and off-balance sheet to maximize the returns ultimately.
That's something we obviously do all the time. The on-balance sheet will grow for a couple more periods, and then it'll kind of stabilize. We'll obviously use forward flow and loan sales to manage that position.
Thanks.
Shall we see if any questions from on? Good. Okay.
We are going to take our question from the phone line.
Sure.
The question comes to the line of Ivan Bokhmat from Barclays. Lane, is it open to ask your question?
Hi, good morning. Thank you very much. I've got three, please. First one, big picture. We're looking at the reinsurance market that sees increasing capacity. I think more competition for the business from the reinsurers. I was just wondering if maybe you can give some thoughts about where you guys can optimize your use of reinsurance capital, whether that could be in the structures, it could be in some specific products that you buy, and overall if that leverage of the more affordable reinsurance cost can somewhat upset the dynamics that we see in U.K. Motor where pricing is probably not covering claims inflation more broadly. Secondly, I think I wanted to follow up on one of the comments that Geraint made about the reserve confidence at 95th percentile and expect it to be down later.
Would that be something that would result in stronger reserve releases as a percentage or in absolute terms in 2025 and later years? Maybe the final question, I think you mentioned that you expect to grow this year in every line of business. Maybe you could talk about the July-August trends related to U.K. Motor. Are we on track to hit there? What growth trends are you observing? Thank you.
First of all, one was an optimization of reinsurance capital for you, Geraint. The second one, I'm sorry, but I didn't really capture it. The third one is on trends in pricing June and July.
Yeah, reinsurance. We are having good discussions with our kind of panel of reinsurers on a couple of different markets. A couple of our contracts are coming up for renewal at the end of this year. The discussions are positive. I don't expect to see radical change in our use of reinsurance in the short term. Maybe post the model approval, we'll take a look at which types of reinsurance we should be using and whether that changes things or not. We'll obviously take a view at that point. In the short term, I would expect no radical change in terms, usage, or cost. The second question, I think, was about risk adjustment percentile and the impact on reserve releases moving forward. Across the group, we've basically held at the maximum level at this point, obviously partly with an eye on the kind of profitability trends.
We guide for 10%- 15% reserve releases as a percentage of premiums in U.K. Motor , and that guidance holds. In the short term, that does include some impact from reducing that risk adjustment percentile. It won't move radically in individual increments, of course. We'd expect movements to be slow and gradual rather than big, if that makes any sense.
Al, anything you want to comment on market trends June-July?
On market trends, we're seeing a continuation of what we saw in Q2, which is there's still some modest price decreases. As I mentioned, we think the market will need to turn in the not-too-distant future. In terms of our approach, disciplined approach, looking at claims costs, and at this point in the cycle, we'd expect a continuation of our modest growth as we've seen in the first half.
Thanks. Was another one from home, right?
We are going to take up the next question. The question comes to you from Thomas Bateman from Mediobanca . Your line is open. Please ask your question.
Oh, hi there. Good morning. Thanks for taking my questions. Just another comment on reserving. I guess you just reiterated the 10%- 15% guidance, but the reserving position just looks great. That you're probably running out of places to stuff the reserves. Is there any other data point that you'd point to apart from the 95th that we could get comfortable in terms of the reserving position? It just seems really good at the moment. Any other details there would be really helpful. Secondly, just coming back to AI, can you give us an idea of how much you're spending every year and what areas of the business specifically you're targeting? I guess the kind of thought that I have on this business is that Admiral was one of the first to adapt to PCWs and you always maintained and probably extended your competitive advantage over peers.
I'm just wondering if we could think about a similar trend in AI here. Finally, just on the government task force or review of motoring, I'm just wondering what you made of their actions on more frequent eye tests, etc., and how that could potentially feed into your price. Thank you.
Go ahead. A bit more color on reserves.
Yeah, I don't think I've got too much to add to that. Our reserves across the group are either at or very close to the maximum.
That's allowed under our accounting policy, and we think that's an appropriate place to be right now. I'll take your compliment, Tom, on the strength of our reserves, so thank you for that. In terms of other information I'd point to, I don't think there is a lot to point at. We try and keep the strength of our best estimates consistent. They tend to be on the prudent side, as you know, because they tend to develop positively over time, and we've continued in that fashion. Maybe in the household reserves, as Alistair commented, we built in an allowance for expected increased subsidence claims in the second half of the year, and we believe that to be an appropriate position. We'll see how that develops in the second half. I generally agree with your comments, Tom. Nothing else to add.
Good. On AI, I was commenting before that we did increase our data and technology investment in the past, and now it's stabilizing. We did a lot of foundational work, and now we're really working on optimization and realization of some of these benefits and more value-creating use cases. If you think about AI as predictive AI and generative AI, I think in predictive AI, it's a very strong competence for us, something we've been doing for More Th>n 10 years. We have a lot of machine learning models in production. We're working to optimize the use of them. We think they deploy, they help, and they're a big part of us developing and deploying such a strong advantage in pricing. What we've been concentrating recently has been more to extend machine learning beyond pricing and to a commercial purpose, propensity model, anti-fraud claims, and so forth.
We worked into making even more efficient our machine to deliver models in production. We reduced the time to production by 40% in the last six months. We're very confident and will continue to be a very important feature of Admiral . If you think about generative AI, I would say investment at this stage is still relatively limited because there is a lot of test learning phase, but we do see this potentially growing. As I said before, we've done a lot of heavy lifting in terms of the infrastructure so we can concentrate on this. We have a few live models, and we have some pilots that are quite interesting. The areas of application tend to be usually tech development, tech delivery.
We have some pilots, for example, in agentic development, deploy of tech, as well as the focus on customer insights, sentiment analysis, call management, call summarization. I would say I'm particularly excited about the application in the space of claims because you can not only improve productivity and efficiency, but also speed of settlement. That is great for the customers because you can settle claims faster for them. That's one of the most important things we aim to achieve in terms of customer experience, and it usually has a positive effect on cost if you manage to settle claims faster. A lot of great stuff. We see this supporting our people to do an even better job going forward.
The last one on multi-task force, I don't think it's really for us to comment on the government initiatives, but we are engaging and we try to engage and to contribute to identify initiatives that can reduce claims costs that have been identified and recognized as the main driver of the price increase in the past couple of years. Things like, I don't know, road safety, for example, uninsured vehicle, and so forth, are all initiatives. We're engaging with the market to provide our contribution. Good. I think that's it for now. Thank you very much for your time. Thank you for listening. Wish you a great day.