Good morning, everyone, and welcome, and thank you for joining us as we review Admiral 2025 year-end results. Today we'll be announcing another remarkable year of financial results and strategic progress. I will start with the key highlight before handing over to Geraint on the financials and to Alistair on U.K. Insurance and Costi on Europe. I will come back to reflect on what we have achieved over the last five years, and finally explain how the evolution of our strategy position us to create even more value in the years ahead. Let's start with the main achievement for 2025. We deliver record profit of GBP 958 million. This was up 16% YoY , reflecting disciplined execution and growth across the group.
2025 also marked exciting progress across data, technology, and AI and the evolution of our motor proposition, including the acquisition of Flock, subject to regulatory approval. Today, we'll also outline the evolution of our group strategy. This strategy builds on very strong platform and more diversified customer base and the competitive advantage we already have to deliver higher long-term value for all our stakeholders. We will also cover our new capital distribution framework, including share buybacks. Geraint will take you through that later. Some more in detail, as already mentioned, 2025 was a year of records. Our customer base increased 7% while we continue delivering strong customer outcomes with the group net promoter score over 50. Group profit reached a new high, driven by record U.K. Motor profit, passing now the bar of GBP 1 billion, following another record year in 2024.
This was achieved in a challenging market environment, thanks to positive evolution of recent years and continued underwriter discipline across the cycle. Importantly, this was not just a U.K. Motor story. All parts of the group contributed. In the U.K., other personal lines, Admiral Money combined deliver a profit of GBP 88 million. Europe also performed strongly with a fast return to profitability in Italy and great results in France, which Costi will cover shortly. 2025 was also a year of strong shareholder returns, supported by 7% increase in dividend per share, a very strong capital position with a solvency ratio of 193%, and another stellar return on equity of 53%. Beyond the financial results, 2025 marked an acceleration in our strategic progress.
We are pleased with our rapid advancement on artificial intelligence, particularly with the value delivered by machine learning models and the new GenAI Center of Excellence to scale priority use case, train our people, and provide them with the right tools. We are managing more than 150 GenAI initiative across the group, including support to over 4,000 colleagues, some agentic models with promising initial results and more potential to come. Selling more product to our existing customers remains a key growth driver, with our multi-risk customer now exceeding GBP 1.6 million. Across Europe, we continue to evolve our broker propositions with stronger segmentation and more customized offering, driving better margin, as Costi will explain later. We also continue to innovate in motor.
An example is our partnership with Octopus that positions us well in the fast-growing salary sacrifice scheme for electric vehicles with a tailored risk-based proposition aligned with our ambition to support customer in making greener choices. In Admiral Money, completing our first forward flow deal was an important milestone as it opened up a more capital efficient growth path and support higher returns and lower volatility. On M&A, the integration of More Than is now fully completed and contributed positively. Elephant disposal is also completed. Finally, early this year, we announced our intention to acquire Flock, a company we had invested in since 2024. Flock offers a telemetry-based fleet proposition with an effective feedback loop to improve safety and performance.
It's an excellent strategic fit with our U.K. Motor expertise, with promising underwriting and claim synergies, it closely aligned with our joint ambition to improve safety on the roads. By combining Admiral data ambition to Admiral strengths with Flock technology, we see an opportunity to develop a differentiated fleet business in an underserved market. In summary, 2025 was a record year for Admiral, with strong profits, customer growth, and progress in technology and strategy. Now, before handing over to Geraint, I want to take a moment because this will be the last time that he join me on stage to present results. I think it's fair to say that the strength and discipline of the performance you're about to hear are a good reflection of his leadership, his judgment, and his consistency over the last 12 years as CFO.
A period during which Admiral tripled its turnover and grew profit from GBP 350 million to almost GBP 1 billion. Please join me to congratulate Rachel, who is here with us today and will succeed to Geraint, bringing deep knowledge of Admiral, a strong track record within the group, and a great skill set for the role. Thank you, Geraint, and congratulations, Rachel.
Thank you. Good morning, everyone. 12 years of not being conduct. One last time, let me talk you through the main drivers of an excellent 2025 result. Lots of positives, lots of good milestones. I'll cover the U.K. motor loss ratios, the dividend, strong capital position. As Milena mentioned, I'll talk you through the change in the approach to capital return that we've announced today. To start with, though, let's look at the component parts of the group profits and the main ratios. The group combined ratio was very positive again, at 80%. That was three points higher than 2024, though the impact of Ogden accounted for around two points of that difference. In reality, only a very small change.
That in turn is made up of a slightly improved expense ratio and a slightly higher loss ratio, the latter as expected, due to the higher loss ratio of 2025 underwriting year in the U.K. motor having an impact. On to the results. In U.K. Insurance, overall profit was GBP 1.1 billion. That's GBP 110 million higher than 2024, including Ogden, or GBP 180 million higher if Ogden is excluded. Very big increase. The U.K. Motor results I'll cover shortly, but the result there was a record profit just over GBP 1 billion. We're very pleased with a really strong year for the U.K. other personal lines, home insurance, travel and pet insurance, all profitable, strong growth, and the combined profit there of GBP 62 million was nearly treble 2024's result.
In Europe, we're reporting a much better result, improving by nearly EUR 30 million versus 2024. We see growth and higher profits in France, small loss in Spain, impacted by new reinsurance arrangements and a recovery to profit in Italy. Good to see that happen so swiftly. Worth reminding that we continue to hold prudent booked reserves in Europe in the upper end of our range, and the best estimates are also conservative. Admiral Money had a great year. Profit was double 2024's, benefiting firstly from good growth in the balance sheet, but also, as we talked about at the 2025 half year, from profit generated from selling some back book loans in the first half and selling newly originated loans which don't hit Admiral's balance sheet. That will be a continuing, we think, attractive feature of the Admiral Money business model.
We continue to see good margins on the unsecured loans business, which makes up the big majority of the balances, but the results from car finance, which was relaunched in late 2024, are also encouraging. Credit loss experience remains very solid, and we hold an appropriately prudent provision for losses. There are some other comments on the page which cover the movement in the share scheme costs on the other line, and you've got the usual extra information in the back of the pack. All in all, group profit was up 16% or 28% if you exclude the impact of Ogden on both years. Let's take a look at the very impressive U.K. Motor results. This is a summarized income statement, plus some of the key ratios and some commentary. Both years include the impact of the Ogden discount rate change.
Some of those YoY comparisons you see look a little less strong than they really are. We show the pounds and the percentage impacts of Ogden in the table. Starting with the top line. Customer numbers increased by 2% YoY , 50,000 added in the first half and around 80,000 in the second half. One percent increases half-on-half. As Alistair will talk a bit more about later, we reduced our prices in H1 last year and hence average premiums have fallen. Despite our bigger portfolio, turnover was down by 7% as the team took a disciplined approach in the competitive U.K. market and reflecting the claims trends that we were seeing. As a result of the reduced premiums and continued claims inflation, the current year loss ratio for 2025 is three points higher than 2024.
We also don't see quite the same positive impact of Ogden in 25 than we did last year. Those two items are the main drivers of the higher combined ratio you see at the bottom, which is as we expected. The underwriting results improved by around GBP 40 million, with higher end premiums and a much lower reinsurance charge offsetting the higher net claims cost. You'll remember that we had much more limited quota share recovery assets coming into 2025, and we see a similar picture as we exit 2025 too. Net investment income was higher, up to a record level, due mainly to higher invested assets at a similar rate of return. Profit commission was notably higher as we started now to recognize income on the high profitability 2024 underwriting year.
We still haven't yet recognized income on 21- 23 or on 2025. We do expect to see revenue coming through on 21 and 25 very soon. I already mentioned the main drivers of the higher combined ratio we see at the bottom, within that mix, reserve releases were at 10% YoY, basically the same like for like. Next up, we'll take a quick look at the main U.K. Motor loss ratios, which as always are a key driver of this result. The chart shows the U.K. Motor discounted book loss ratios, there are generally positive and consistent messages to report here. We see continued strong improvements in 23 and especially on 24 over the last year. 2024 is clearly a very good margin year on a very large premium base.
In 2025, we see burn cost inflation around mid-single digits level, and that's a small improvement in HQ versus where we saw things at the half-year point. The first discounted booked loss ratio for 25 is at 78. That's seven points up versus 24 its equivalent point. That's again, basically in line with our expectation. On an undiscounted basis, 25, 2025 is 85% compared to 77% for 24. We expect 25 will be a good profitable year. You can see it looks healthy on the chart at the 12-month point, and it should develop positively from here. Obviously won't end as profitably as 2024. We maintained very high reserve strength. It's very close to the maximum percentile, and we expect that will reduce a bit further in 2026 towards the middle of our range.
Overall, on claims, positive experience in line with our expectations, usual trends, and there's more information in the back of the document. Moving now to look at the capital position. This is the bridge of the solvency ratio from half year to full year 2025. Just a couple of observations. Firstly, the capital generation in the second half is largely offset by the final dividend. Secondly, you may need a pretty flat revenue in 2025 versus 2024. You see a much smaller change in the capital requirement in 2025 than we did in 2024, and particularly in the second half. The change in the capital requirements in the other items in the middle almost cancel each other out, leaving the group with a healthy, very healthy, almost flat ratio of 193%. Short update on the internal model.
Lots of hard work by our team, as usual, over the past few months since we last updated you. We now expect to make our application for approval shortly. Post-approval, we'll target solvency coverage in the 150%-170% range, probably at the upper end, in part to give us flexibility for smaller M&A opportunities. We'll give more information on the post-model approval capital position at the appropriate time. Speaking of M&A briefly, Milena mentioned earlier the Flock acquisition. As we said in the press release, if that gets regulatory approval and completes in the second quarter, we estimate the impact on solvency will be a bit less than 10 percentage points, and is therefore largely absorbed by the strong position. Next up is the dividend.
These are the details of the dividends split between interim and final, and for 2024th, we call out the impact of the Ogden change, which was obviously significant on the dividend for last year. The proposed final dividend is 90p per share. That brings the total for the year to 205p, over GBP 620 million, and that's 7% higher than 2024's. The difference in the payout ratios year on year is due to us starting to use capital to purchase shares for the share schemes, which we said back in August would start in the second half of 2025. You'll remember that historically, we issued new shares each year for those share schemes rather than purchase in the market, but we haven't done that since 2023.
In the fourth quarter of last year, the trusts bought about one million shares, just over GBP 30 million. The capital that we use for dividends and the share scheme purchases equated to basically the same percentage of earnings across both years, close to the 90% level. In 2026, we expect the trusts will buy around three million shares. Next up, we'll cover the change in the capital return approach. On the left, we show a summary of our capital allocation framework. Milena will talk a bit more about point one later, which covers how we allocate capital to our businesses. We're generally comfortable that around 10% of earnings is a fair guide of what we need to retain to fund and invest in growth. That's meant an average dividend payout over the last five or six years of 90%.
Step two, we know the importance of strong cash returns to our shareholders, the ordinary dividend remains at 65% of earnings. Step three, as Justin mentioned, we purchase shares for the share plans. Step four, not final, using some surplus capital is an option for funding M&A. That leaves the surplus capital, and that's what's changing today. Historically, as you know, we've returned this to shareholders in the form of special dividends. From the interim 2026 dividend, we'll change that step five to be either buy back and cancel shares or pay a special dividend, depending on what the board believes is the best option. For 2026, subject to regulatory approval, we expect to buy shares at the interim and final dividend dates.
The 90% guidance we've given out over the past few years to cover the ordinary plus the special or buyback, plus the share schemes purchase should generally hold moving forward. Then one final slide from me to sum up. Looking back on 2025, clearly it was a really strong year. Record profits, record returns to shareholders, lots of positive results and developments across the group. For U.K., the personal lines and Admiral Money, great results. Strong and swift turnaround in Europe. Progress on the internal model. Very pleasing stuff. Looking ahead, a few comments on what we might expect in 2026. On growth, in summary, we plan to grow everywhere. That's obviously subject to how the markets develop, in particular, when prices in U.K. motor start to increase. For turnover, I'd expect a bit more growth in 26 than we saw in 25.
In general, of course, we expect faster growth from the newer businesses, U.K., the personal lines, Admiral Money, and Europe. A few comments in respect to the group profit. Firstly, obviously, we will see more of an impact of the less profitable 25 underwriting year feeding into the 2026 results. We will still benefit from good releases and profit commission coming through on 2024 and 23 and some of the earlier years too. Secondly, we project continued improvements in the results in aggregate for the newer businesses that we've talked about. Finally, we expect group profit in 26 to be quite flat versus 25 after a really very strong last couple of years, where profits have more than doubled. All those comments, of course, subject to the usual caveats on markets, geopolitics, war, and weather. That's it from me.
I shall hand you to Alistair now to talk to us about U.K. Insurance.
Thank you. Thank you, Geraint. Good morning. I'm very pleased to take you through an excellent set of U.K. Insurance results. 2025 has been a record year across all our lines of business, underpinned by disciplined execution, customer centricity, and strong operational delivery. Starting with the headlines, customer numbers reached 9.6 million, up 9% YoY , with strong contributions from motor, household, travel, and pet. We delivered GBP 5 billion of turnover and GBP 1.1 billion of profit, passing the GBP 1 billion profit milestone for the first time. We continue to deliver competitive prices, great service, and good customer outcomes, which is recognized in customer feedback. We remain number one in Trustpilot and achieve an NPS over 55. Importantly, 1.6 million customers now hold two or more products with us, a 14% increase YoY .
Customers buying more products gives us better data to improve risk selection for all products, is a driver of our retention advantage in motor, and growth in new lines of business. Overall, an efficient source of growth that contributes to improved expense ratios. Recent announcements are leading to a more predictable regulatory landscape. Outcomes from the Motor Insurance Task Force and Premium Finance Review were in line with expectations, and the Home and Travel Claims Handling Review is now complete, and we have no significant concerns. Let's turn to the motor market. Starting with claims trends, frequency was largely flat following the marked decline we saw in 2024, and severity has returned to more normal mid-single-digit levels. Our expectation is that these trends continue, but the current macro environment introduces some uncertainty. The graph on the left shows a dark line for claims burn costs.
Claims burn costs increased steeply through 2022 and then continued to increase, but more modestly. The light line for market average premiums shows a lagging response to claims costs, increasing rapidly in 2023, outpacing claims costs, and then declining. Both lines are indexed to 2021, and you see they cross in 2025 as increases in claims costs now exceed increases in premiums over the period. Let's focus on recent market prices. On the right, you see prices continued to decline through the second half of 2025, though at a slower rate than in the first half. We estimate average premiums declined by around 10% in 2025, broadly in line with movements reflected in ABI data. Since the start of 2026, market prices are relatively flat, with some differences in strategy between market participants. Market prices need to increase imminently.
EY forecasts the motor market combined ratio of 111% for 2026. This is on an earned basis. EY assume price increases through 2026. Delays in market price increases will put more pressure on this 2026 market combined ratio. Turning to Admiral U.K. Motor. In 2025, we focused on disciplined cycle management and maintaining our strong advantage in pricing, claims, and customer retention. In 2025, we reduced rates by around half as much as the market. All the decreases were in H1. In H2, our prices were broadly flat. The left-hand graph shows that this led to a decline in new business market share in the second half of 2025. Lower new business was more than offset by strong retention, resulting in modest policy growth, though lower average premiums resulted in a drop in turnover.
In 2026, we started increasing premiums with low single-digit increases at the start of the year to reflect the claims outlook and maintain good written margins. Taking a longer view, our disciplined approach results in varying growth through the cycle, maximizes value and growth over the medium term. The graph on the right shows our YoY vehicle growth rate in blue. In yellow is our written loss ratio. Our loss ratio is consistently better than the market, still fluctuates within a range due to the cycle. We respond quickly to claims trends, even if it results in slower growth in the short term. It then enables us to grow quickly when loss ratios are low, for example, by 15% in 2024.
Since the start of 2020, our vehicles covered has grown at a CAGR of 5%, and with an average combined ratio advantage of around 20% versus the market. We continue to invest in strengthening our pricing and claims capabilities, including embracing predictive AI and Gen AI, which Milena will talk more about. Electric vehicles is a great example of our pricing and claims focus. We lead in this growing segment. We are very competitive while delivering comparable loss ratios to high levels of repairability. Our overall approach is to be disciplined and grow when the time is right, while focusing on driving advantage in pricing, claims, and customer retention. We're confident this will result in growth and maximizing value over the medium term.
Let's move to our other U.K. Insurance lines, where we've had an outstanding year. We welcomed 650,000 new customers, YoY growth of 21% and trebled profits across household travel and pet. In household, market premiums softened further and subsidence claims were elevated in the second half of the year. Our own pricing remained more disciplined than the market, and weather adjusted loss ratios improved by about two percentage points. This, combined with top line growth, meant that although prior year reserve releases normalize from the 2024 exceptional levels, we still delivered a record household profit. The More Than integration is complete, with around 380,000 home and pet customers transferred successfully. This has accelerated growth and enhanced capability, particularly in pet. Travel grew customers by 29% and continued its positive profit trajectory.
Pet grew even faster and reached breakeven just three years after launch. All three lines are now profitable, with clear momentum and strong positions across their markets. I'm going on too fast. In summary, in 2025, we've delivered record profits. In addition, motor remains disciplined and well-positioned ahead of the market, pricing increases expected in 2026. Household, travel, and pet are performing extremely well with growing scale and margin. Customer satisfaction and retention are excellent, with more customers choosing to buy more products from us. We enter 2026 with confidence that we'll continue to deliver sustainable, profitable growth over the medium term. Milena will talk more about this shortly. I'll hand over to Costi for Europe.
Thank you all, good morning, everyone. For our European operations, 2025 has been a year of consolidation. We have directed our efforts towards strengthening the operational core across our three markets, focusing on the fundamentals of discipline and optimization. It has been a positive period where we have made good progress on our strategy, providing a positive contribution to the Group's ongoing diversification efforts. Moving to the financial results. The headline for the year is a return to combined profitability across the region. The business delivered EUR 39 million motor profit on a wall account basis, of which EUR 11 million is the Admiral share. Going back to the business performance, we closed 2025 with a co-good combined ratio of 94%. While this represents a significant YoY improvement of over 10 points, it is important to look at the individual market dynamics.
In Italy, with ConTe.it, we have reached a small profit, which is a EUR 30 million recovery from the previous year. This significant recovery was driven by strong actions taken on the expenses and a deliberate and disciplined pruning of the portfolio. We made the conscious decision to prioritize technical margins over volumes, leading to an expected vehicle in force reduction. With the business now on a more stable footing, we are in a position to look toward growth, always keeping the focus on its underwriting quality. Moving to Spain, where Admiral Seguros reported results includes about EUR 8 million of one-off accounting impact related to a change in the reinsurance structure. Going forward, we have established new multi-year and large reinsurance arrangements at a European level with our historical partners. Effective from 2026, these agreements aim to improve capital efficiency and provide greater stability to our results.
Excluding this specific item, the Spanish business is nearing breakeven. This is supported by the direct business, which provides a positive contribution to the results, while our diversification initiatives with iEngine, Bank, and Brokers are showing very encouraging improvements while scaling up. Sorry. Closing with France, where L'olivier has had a very strong year. We achieved double-digit growth in both turnover and profit, with results reaching EUR 16 million profit, we surpassed half million customers. This performance demonstrates that L'olivier is successfully applying the Admiral model, maintaining a strong combined ratio advantage versus the market while driving growth through digital channels. Let's move to review our strategic progress, starting from the shift in distribution. We have focused heavily on our new brokers proposition in Italy and Spain.
As the business mix indicates, we have moved away from an initial test and learn proposition towards this new one, which focuses on building long-term relationships with the intermediaries and also targets better risk segments and higher margin business in line with our expectations. The early metric from this shift are positive and provide a solid foundation. We are seeing solid improvement compared to our older book across all the key metrics, like higher income per policy, lower frequency, and lower cost per claim. These improved fundamentals have contributed to a nine-point reduction in the overall loss ratio. While there is still more work to do, we expect these benefits to continue as more growth will come and the new proposition mature. In France, we are continuing to diversify through our household insurance product.
We now cover over 100,000 risks, a 25% increase versus last year, which provides a meaningful second pillar to our French operation. Regarding efficiency, we have managed to steadily reduce the European motor expense ratio by seven points since 2022. This has been a necessary step to remain competitive. Even in Italy, despite the reduction in turnover, we improved the expense ratio by one point through automation and more streamlined digital customer experience. These operational improvements are also supported by our new common data platform, which is now operational across the three countries. This asset allows us to deploy data features and machine learning models across border with greater technical agility and quality, which is essential for maintaining our edge in a rapidly evolving market. To wrap up, we're very pleased by the progress made this year.
Our European operations have reached combined profitability, giving us confidence in their future contribution to Group's broader diversification strategy. Our objective moving forward is to leverage this stability to increase our scale and enhance our earnings. We have the right expertise, a solid data and technological framework, and a disciplined path ahead. Thank you. Now hand over to Milena to talk more about the Group strategy.
Thank you, Costi. As you just heard, 2025 was an excellent year across the group. Now I would like to take a moment and a step back with you and see what we have accomplished over the last five years. In 2020, we announced our five-year group strategy based on three pillar: business diversification, Admiral 2.0, and Motor evolution. Today, we're extremely proud of what we achieved in this timeframe. First, remarkable growth. With turnover up nearly 90% and group risk and profit almost 60%. We return overall GBP 3.2 billion to our shareholders. Second, we diversify the group with more than 50% of customer now coming from other lines of business or geographies and contributing close to GBP 100 million of profit.
In addition, we develop new business such as pet insurance in the U.K., commercial insurance in the U.K. also, household insurance in France, and we extend our addressable target market with U.K. Commercial Insurance, as just mentioned in B2B2C, in B2B, and B2B2C in Europe by opening up the broker distribution channel. Third, we refocus our portfolio. We exit all of our price comparison site and the U.S. insurance business to concentrate on the growth great opportunities we have in U.K. and in Continental Europe. The acquisition of More Than and Flock are instrumental to strengthen our product diversification in the U.K.. Fourth, we overachieve our Admiral 2.0 ambition. With cloud migration, new data platform, tech stack renewal, hybrid working, Scaled Agile delivery, predictive AI excellence at scale, and enhancement of our multiproduct offer.
Fifth, we made further progress in our motor proposition, including market leadership in EV, as Alistair mentioned, growing telematics product, fast growing subscription model, and short-term insurance with our brand for the youngest, Veygo. Last but most important, throughout this period, we maintain our historical and quite unique strengths. More than 20-point combined ratio advantage versus market in our core business. A unique 30-point delta return on equity versus market. A group NPS above 50, and the legendary Great Place to Work status. Back to nowadays, where this leave us. Our current market present very significant growth opportunities. They are large, attractive, growing, with a combined size of around GBP 130 billion. Today, our market share across many of these market remains relatively modest, and this leave us substantial headroom to grow. We're continuing evolving our offering to unlock further opportunity.
In lending, with the first forward flow deal and a new car finance product in Europe, extending our distribution and product lines. Commercial insurance and SME are also good opportunity to provide strong proposition to a large underserved market, experiencing similar trends to personal lines 20 years ago, with more digitalization, pricing sophistication, and automation where we can deploy our competitive advantage. Organic growth in all this segment will be driven by market leading expertise in price comparison site and digital distribution, channel that are growing, faster than the rest of the market, cross-selling and higher retention, and increasing economy of scale, and fourth, automation and synergies across the group. Our plan is based on organic growth, but we will consider opportunities for selective accretive acquisitions to accelerate diversification.
Importantly, this, the diversification also reduce over time our exposure to any single market cycle, making Admiral more resilient in time. Having delivered on our strategy, we now look forward, starting with the market context that is fast evolving, but also presenting very interesting opportunities and tailwinds. The U.K. market cycle in motor is expected to turn, and the regulatory environment is expected to be more predictable, as Alistair commented before. Market consolidation could create more rational dynamics overall. More importantly, the rapid evolution of AI and GenAI represents a major opportunity for us. Predictive AI is becoming the key driver of underwriting differentiation, and we already have full point of loss ratio advantage versus market, and this is a big driver of it.
GenAI and automation offer efficiency potential of up to 30% in the long term for customer service area, and may also disrupt distribution and proposition in the long run. What is interesting to us is also the potential to accelerate the transition to direct distribution in markets where direct has more room to grow. Another major trend is the advancement of car technology, another key pillar of our strategy since 2020, Motor Revolution. In the short to medium term, the most impactful change will be the shift to electric vehicles, expected to reach around 80% of new car sales by 2030, where we already have underwriting and market share leadership, as Alistair commented before. This is followed by an increased penetration of advanced safety systems. These technologies has a positive impact on collision frequency, but it has been so far more than offset by an increase in severity.
As for EV, our scale and sophisticated prices approach results in a competitive advantage. In the long run, we expect autonomous vehicles, now in their infancy, to grow in share and reach a point where frequency decrease will not be any more offset by severity. For this to happen, we need to see technology, customer appetite, regulation, infrastructure, all to further develop across countries. It will take anyhow a long time to scale, with higher level autonomy expected to represent around 4% of the car park by 2035, and the overall market premiums expected to be continuing to grow for at least 20 years, supported by number of cars on the road and the mix. We remain very close to this evolution, having, for example, underwritten Wayve, an autonomous vehicles player in the U.K. Since 2018.
As AI and mobility trends evolve, our view is that the key winning factor will remain sophisticated data-driven decision making, scale, and a lot of good quality data at scale, an entrepreneurial mindset, consistently looking for opportunity to innovate, and cost efficiency. Those are all areas where Admiral has a structural advantage, including eight-point expense ratio delta versus market. Overall, we are strongly positioned to leverage those key trends. Now, let me introduce our evolved strategy framework. First of all, this is not a discontinuity in our strategy. It's an inflection point where we start compounding what we have already built, a more diversified business, stronger platforms, and proven competitive advantage. The focus is now making those trends reinforce each other and more deliberately over time. I think about this strategy with a set of reinforcing layers.
Each layer supports the next, and within each layer, the benefit compound as the business grows. The outer layer of our strategy is where we compound performance. Our first pillar is scale selectively and profitably, and this is about translating diversification into sustainable growth and accelerate margin in our newer lines of business as they mature. The middle layer is where we compound capabilities. Our second pillar is future-proof our competitive advantage, and it is about leveraging on the strong capability we have built in data and technology and the multi-product benefit to improve customer lifetime value and our structural edge. At the core, at the center, we're compounding our foundations. Our third pillar is amplify the Admiral DNA, and this is to ensure that our culture, our talent, the innovation and the impact continue to evolve, providing stability and long-term direction and resilience as we grow.
The pillars are interconnected. Stronger foundation are a driver of stronger capability, and in turn, these are enabler of stronger performance. Let me now walk you through each of these pillar in more detail and explain what we intend to prioritize and what we aim to deliver for each. First pillar, scaling selectively and profitably. We have a clear ambition to continue to scale all our business while increasing margins in our newer lines. In U.K. Motor, we'll continue to grow as we have done in every cycle since Admiral was founded, with discipline and at the right time, as Alistair illustrated earlier. We'll continue to invest to maintain our market leading margins.
In other lines of business, U.K. Personal Lines, Admiral Money, in Europe, we will continue to grow and at a faster pace of Motor on average, generating greater economy of scale and higher margins. A key focus will be transferring our underwriting and claims strengths from U.K. Motor into other products and geography, as well as creating more cost synergies across the group and leverage the benefit of multi-risk ownership. Overall, we expect to deliver strong revenue growth everywhere, including reaching top three Position in other insurance personal lines in the U.K. and substantially higher margin for those business combined, more than doubling profit by 2028 and more profitable growth thereafter.
Finally, we'll continue to develop our new and still small U.K. commercial insurance business, building a stronger SME proposition and growing commercial motor, starting with the integration of Flock. Let's move to the capabilities that are the key enabler of the Grow ambition that we just discussed. It's a virtual circle that start from our structural strength in data, customer focus, and speed, with the objective to increase customer lifetime value. With higher customer lifetime value, we create optionality, the flexibility to invest in these capabilities or to invest in growth or to retain margins. On the left side of the slide, we see how this focus translate into better underwriting results and efficiency. We'll continue to extend our advanced predictive AI capability, increasing both the quality and the velocity of pricing across all the lines of business and geography beyond motor.
We're also increasing leverage, increasingly leverage on connected vehicle data and predictive AI beyond underwriting into customer base management. This model, this predictive AI model already deliver over GBP 100 million of incremental loss ratio value, and we expect this to continue over time. At the same time, we see good potential from generative AI to improve customer engagement, to increase productivity in technology and service area, and in particular to improve speed of settlement that is great for customer and in addition correlates with lower cost of claims. It's a win-win. Combined with further automation and continued cost discipline, we expect more than GBP 100 million of annual efficiency benefit by 2028 that, as I said before, we may decide to reinvest in existing capability. On the right side of the slide, we look at our customers.
We are strengthening a mobile first digital end-to-end experience, multi-product ownership and retention, which is already above market and will further benefit from multi-product customers retaining around five points better than the rest. Lower expense ratio, our retention and multi-product ownership are key driver of higher customer lifetime value. As mentioned, this creates optionality but also a more resilience to long-term market trends, margin pressures and volatility. moving to the third pillar, amplifying Admiral DNA. This is what make Admiral Admiral and different. It's our culture, it's our approach, and it's something we are deeply proud of. As the environment evolve, we are focused on ensuring that our DNA evolves, too. Starting with our people through reskilling, developing internal talent, and strengthening diversity and mobility across the Group.
We had this year so many example of senior leader moving across different area and geography, including the new CEO of Wayve, new head of claims, new group data officer, new head of data and tech, data and tech in Europe. This internal mobility allow us to get different perspective and cross-fertilization from one side, but also continuity and cultural fit from the other. Another strong feature of Admiral culture is relentless curiosity and innovation. We'll continue to evolve our products and innovate for our customers. We focus on offering competitive price, inclusive product, affordable product, including for non-standard risks. Safety and sustainability are central in our product proposition, whether through fleet safety proposition like Flock or through EV, electric vehicle leadership or initiatives around flood prevention.
We also want to increase our positive impact on communities, investing around 1% of profit into community initiatives with focus on employability and climate resilience. We are proud of the 45,000 volunteer hours delivered by our colleague in 2025, and remain committed to our net zero ambition by 2040. That was the third pillar of our strategy. Our strategy is also supported by a simple and disciplined capital management framework that is designed to increase value over time. How we allocate capital to our operation? In U.K. Insurance, we focus on optimizing returns over the medium term, as we've always done, targeting consistently high return on equity with no structural capital constraints. In other lines, we invest to support growth and margin expansions where financial hurdles are met or expected to be met in the near term.
In newer hires, like commercial for example, we allocate capital to R&D and early stage investment while requiring a clear right to win and scalability in the medium to long term. A key structural advantage is our capital efficient reinsurance model, this is a competitive advantage that is quite difficult to replicate as is stand, as it is built over more than 20 years of strong track record. Geraint already talked you through the other steps of our framework, including the introduction of buyback as additional way to return surplus to our shareholders. Selective M&A remain an opportunistic tool to accelerate growth, especially on other personal lines in U.K. and in Europe, only where our financial hurdles are met. In this slide, next slide, we bring all of it together, our strategy and capital management framework designed to deliver strong value for our customer and shareholders.
We already deliver strong earnings growth, exceptional return, and resilience through the cycle with a 7.6 EPS figure over the last five years. Looking forward, our ambition is to sustain and build on that performance by scaling what already works, discipline growth in U.K. Motor, faster growth and margin expansions in other lines, and continued optionality from capability improvements. Our model is quite unique in the sector, delivering at the same time strong returns, growth, and exceptional capital efficiency. Importantly, this is about quality of growth as much as quantity, retaining our competitive advantage, our capital discipline, and our culture that underpins them. In short, we believe we can continue to deliver higher returns sustainably whilst staying true to what makes Admiral different. Conclusion, to sum up, 2025 was record year for Admiral.
Record profits, record dividends and strong customer growth delivered through discipline in U.K. Motor and increasingly diversified contribution across the group. Second, we have fully delivered our 2020-2025 strategy. Admiral today is resilient and more diversified with proven competitive advantage that are difficult to replicate. Third, looking ahead to 2026, while U.K. Motor market remains competitive, we expect price to increase. Admiral is well positioned to perform strongly and remain disciplined and resilient through the cycle. Fourth, we have evolved our strategy to compound those trends. No change of direction, but raising ambition while staying disciplined. We have strengthened our capital management framework, adding buybacks alongside dividends while maintaining a very strong balance sheet and flexibility to invest.
We remain confident on our trajectory, on our ability to leverage market trends and continue to deliver even greater value to our customer and to our shareholders for the long term. Thank you very much for listening. Now we're here ready to take questions. Please try to limit to one or two each and press the button when you speak. I think first one I saw is.
Hi. Thank you for taking my questions. Darius Satkauskas of KBW. The first question is, sort of a statement and a question. I appreciate the update to the capital return policy, introduction of opportunistic buyback. I think one of the challenges with having an opportunistic buyback rather than the program is that when you do it's great. When you don't, it sort of signals to the market that management's saying the shares may be expensive. How are you gonna deal with that challenge? Are there any hurdle rates you'd like us, you'd like to point to for us to sort of gauge, you know, how you think about when we should expect buyback and when not?
The second question is, your Flock acquisition, where do you think you are in positioning for the potential liability shifts to commercial from personal among your competitors? Who do you think is gonna determine the win in the future? You know, Is there a risk that a company like Allianz with a huge balance sheet simply takes the entire market in commercial insurance? Do you think Admiral can appropriately compete, you know, 10 years down the line, 20 years down the line? Thank you.
You take the first one, I take the second?
Buybacks, it will be based on what the board assesses is the right thing to do to try and deliver the max return for shareholders over the medium to long term. I don't, certainly for the foreseeable future, expect it to be dip in, dip out. We expect to be doing it for 2026 and the company will give an update on that at least annually, I suspect, as we move forward. I hear your point on opportunistic versus steady.
Your second question is about Flock and commercial insurance. There are a few reasons why we're interested in this market. It's attractive, it's in the low market, but it's also a market where we see we can deploy a lot of our strengths. Fleet market is very competitive, so you do need to be a very good underwriter. Our claims and pricing strength can be transferred across nicely. We also think it's a market that is, it will be disrupted. That's why we didn't want to really enter in the traditional way, but just focus on a proposition that we think is fit for the future, is the type of business that's gonna grow in the future. It's telemetry based.
There's a lot of data from a lot of driving data, a sector in which we already have developed strong competence through a very large and growing telematic portfolio in personal lines. It's an interesting proposition because there is a strong feedback loop to driver that to increase safety, to increase performance. I would say it's also a building block for car of the future. The more the car become embed safety features and become autonomous, the more this type of skill set, data-driven pricing and underwriting and a feedback loop is important. For us, it's a very interesting way to create and to develop a business that is interesting per se, but is also a way into the future. I think it's a competitive market.
We need to do it in the right way and in a, with a proposition that is future fit. That's our ambition there. We think the mix of Flock's scale, technology and proposition and Admiral amount of data, strength in pricing, data-driven pricing, sophisticated telematic, and also very strong claims management really can create something unique. I'm sorry, I'm gonna go in order. One, two, three.
Hi, thank you. It's Ivan Bokhmat from Barclays. My first question would be on the strategy into 2030. I just want to clarify perhaps that I interpret it correctly. The slide that shows your 8% CAGR in the past five years, you're saying that you're trying to achieve that same growth into 2030? As a statement, maybe you could just confirm that. Secondly, on the trajectory of those earnings, as far as I understand for 2026, you're talking about flattish numbers, then it would imply more of a hockey stick trajectory in later years.
Perhaps you could just talk a little bit about how this trajectory might look like, where the acceleration will come, and maybe specifically on the U.K. Motor, you know, that cyclical target where you would grow 5% through the cycle over time. When will that timeframe apply in this particular case? Maybe one final small question. The partial and total model, if you apply imminently, do you think you will get the regulatory approval by year end? What does it mean for some extra capital decisions? Thanks.
I think what we're saying here is three things. As you know, we normally don't give very precise guidance on long-term or medium-term earnings. What we're saying is that there are two very clear avenue for growth and profitable growth in the future. Our core market, that is U.K. Motor, is a market where we have a market leading business. We expect to continue to grow across the cycle. We'll continue to do at the right time and with the right choice and the discipline around pricing. We will continue, as we've done in every single cycle since Admiral was founded, we'll continue to grow our U.K. business from a larger base and retaining very, very strong margin.
We also have another leg that is our other lines of business, personal lines in U.K. Insurance, Europe and Money, and we're planning to grow across all of them indistinctively and also increase margin for those business combined. If you take those two things together, we expect to increase shareholders' returns over time without having necessarily put a specific date, because there will still be some cyclicality. The other observation is with increased contribution from other lines, although there will still be market model cyclicality to impact our results, we think we are gradually, over time, reducing the dependence on a single cycle. That's the key message.
Internal model. On the internal model, we do expect to submit our application for approval very soon. The timeline for re-review of that is not fixed. As you can imagine, it's not a short read. I think we'd update on the outcome of that at the appropriate time, rather than comment on how long we expect it to take. If and when it's approved, you can be sure we'll be trying to use it around the business to optimize and things like that. Again, we'll talk about that at the right time.
Sorry, you mentioned something also about the shape. As I was saying, there is still CAGR in the market. As Geraint suggested, we do see a different path across the next few years. We'll grow through the cycle, but next year may have a different impact on our growth ambition than the year after that. That's that. That's very normal. That's what we have done in the past, as you see in the slide that Alistair projected. We tend to grow when it's the right time, when the underwriting margin are healthier and will continue to do so. Sorry. I think go to Will. Yeah.
Thank you. Ben Cohen at RBC. I just wanted to ask a few things on the U.K. Motor business. Firstly, would your central assumption be that you would be able to match claims inflation through the course of 2026? Could you make a comment as to what you've seen in the market reaction as you've tried to put through, or you have put through, some price increases at the beginning of the year? The third element, could you just remind us what happened to claims inflation in motor kind of post the Ukraine, Russia invasion, just to maybe give some sort of comparison with maybe where we are now in terms of the situation in the Middle East? Thank you.
Yeah. Take it first and Alistair .
Yeah, sure. So in terms of managing through the cycle in 2026, we're expecting claims inflation, as I mentioned, to be towards more normal levels, so mid-single digits. We'll be looking at that. We'll be looking at elasticity within the market. We'll be thinking about average premiums and continuing to price with discipline. As you saw in 2025, we did that and we've as Geraint said, we're very happy with the profitability on that year. It's not as strong as 2024, but it's still strong. That will be the same approach that we'll take into 2026. As Milena said, reiterated, we think that's the right approach to optimizing both value and growth over the medium term.
Far, in terms of market at the start of this year, we're seeing different strategies from different players, but broadly speaking, I'd say that market premiums have been relatively flat. As I say, we've started to increase our prices at the start of the year. In terms of claims inflation post the Russia invasion, there was a lot of disruption to the supply chain, that was one of the impacts that caused higher parts, vehicle inflation, as well as supply chain constraints. We don't think it's a direct parallel to what we're seeing at the moment. In terms of the disruption that we're seeing at the moment is more about oil and fuel prices not directly related.
I think as you're referring, it increases supply chain or the geopolitical instability increases the risk of that. That's something we'll be watching very carefully through our supply chain.
Next, Will.
Thank you. Will Hardcastle, UBS. First of all, I'm gonna embarrass you, Geraint. Thanks very much for all the help over the years. You know, it's been some journey in the current role. I've always really enjoyed our interactions, some of them quite lively. You've always been really helpful. Good luck for future endeavors, including the Admiral roles. Next, on to the questions. I'll ask you the tough ones now. You booked 2025 under undiscounted book loss ratio at the 78 or 85 undiscounted. That's an average number. I'm assuming the exit was slightly worse given the shape of the pricing last year. I guess pre-pricing and excessive inflation, pre-percentage shifts, how roughly where's the starting point essentially for that 2026? You know, how much worse than the 85 should we be thinking?
Moving on to something a bit bigger picture, doubling of the non-UK motor business. It's quite non-Admiral to give a target like this. I'm sort of intrigued as to.
The logic, the thinking behind being, you know, it must imply a lot of confidence behind it. Does it imply any slowdown at all at top line and sort of extraction of the benefits you put through? Is this just a better hope and a direction of travel from here? Thank you.
I'll take the first one. The first one was about the exit rate, exit loss ratio. As you pointed out, the undiscounted booked loss ratio is at 85. It's not, it's higher obviously than 24. That was an exceptional year, it's not unusual if you look back at previous years, hence the comments about good profitability. As I said, we managed rates through the year, paying very close eye on claims trends. In the second half we were flat. I think that means that the exit loss ratio was slightly higher than the overall, but not significantly so.
As I also mentioned, as we started in 26, we made some adjustments to price to make sure that our starting point in 26 was in the right place.
The second point is about the confidence about the other line of business. It's a mix of two things. First of all is the momentum. If you look at where we are, momentum and maturity, if you want, of some of our some of our other lines of business, we had fantastic 2025, doubling profit in Admiral Money, strong recovery in Europe and return to profitability with the confidence and the prospect in the future and other lines of insurance in the U.K. also deliver a stellar year. I think we reach a more a maturity in those areas that allow us to continue to grow and increase margin over time.
It's also, I would say, a reflection of our strategy, because the strategy is also very much about compounding. What I mean is that we're focusing a lot on. Is our proposition to multi-customer is very important because customer with more risk have better retention, have better loss ratio, have better NPS, tend to be happier and stick longer with better results, and also better experience for them. I think there is momentum in terms of the multi. You know, our, our journey to multi-products are probably later than some other player in the market because historically we were very much a U.K. Motor story. As this business grow, there is a lot of potential there. That's a very interesting opportunity.
Also transferring some of the strength in predictive AI, for example, across all the business is also another big driver of value. If you merge those two things, plus economy of scale, plus potential benefit, we do see a momentum that will allow us to both continue growing and deliver more profit. I think it's really very much a reflection of our strategy and a bit of the switch of focus from growing individual business that are standalone interesting to really compound the benefits. It's just meant to be that over time. We'll continue to be disciplined. We follow cyclicalities. There are cyclicalities in the U.K. household market that will take into account. We do think we can achieve both growth and higher margins.
Hi, morning all. Thomas Bateman from Mediobanca. Just a quick question on the reserving. I was surprised to see the PYD quite low, but then the risk adjustment percentile come down. Could you just explain how that's working? The second question is actually a follow-up to Will's on, I guess on Europe. I take your comment of Spain is breakeven now, I guess you have been working on that for a while and there is more confidence there. You alluded to AI platforms, et cetera. Have you been able to launch on any of those AI platforms, either in the U.K. or in Europe yet?
Do you want to take the risk adjustment? Costi maybe briefly comment on the confidence in Europe and Spain, and I will pick up maybe on the AI.
Actually, Tom, if you split out the Ogden impact on last year and compare YoY , you get the same percentage. It's a fairly strong level of release, releases coming through YoY . The percentile was at really ever so slightly down, I would say. I wouldn't say that we'd, you know, notably dropped the risk adjustment strength. It's this very strong set of reserves and continued pretty consistent releases coming through. Basically in line I think with what we've guided at sort of, in that kind of 10-ish range over the past couple of years.
Sure. On Europe and on the AI point. Yes, as Milena mentioned, there is good level of confidence. It's a large opportunity where we are making very good progress on several fronts. What is giving to us the confidence is that we are keep trading at very good margins on the direct business, and we are seeing very good progress coming from the distribution diversification initiatives, which will help us to target much larger opportunities. Once also those initiatives will turn into profitable ones in the medium term, we expect our overall margins to expand.
In addition to that, we expect more efficient reinsurance agreements to provide benefit in the medium to longer term. Clearly, there is also an element about competitiveness on the expenses side and on the efficiency, and we're also there making good progress, and we are testing also some more advanced GenAI tools and models. On this front, it's more early days, but early signs are very promising.
I think more in general on AI, there is a lot of opportunities, and a lot of those is focused on improving efficiency internally. It's about improving automation, increasing speed of servicing the customer, and so forth. I guess your question was more referred to the distribution element, so how customer interact and choose insurance. If you think about Admiral from very early stage, we've always been a bit of a forefront of disruption in distribution. We were among the first direct player in the market in the UK. We were the first to have an internet-only brand, elephant.co.uk. We're the first to embed price comparison site with Confused.com and so forth. It's obviously something that, as you may imagine, we're very close...
We're working very close to Price Comparison Site as they may embed more GenAI technology in their way of interacting with customer and distribution and adapting our website. We also have interesting pilots in part of the business, like GenAI embed the chatbot in Veygo and other initiative across the group. Something we're very close. Now, if you ask me, do you think this is gonna be a very big disruption in U.K. Motor in the short term? I personally don't think it's the case. I think there will be different way of interacting with the customer, but the value proposition to a customer, how much you can save by shopping on Price Comparison Site on motor insurance is huge. It's hundreds of pounds sometimes.
I don't think it's gonna be the first market where we see a lot of change. I think, you know, it's early to say. Everything is very, very nascent at this stage, but I think there are markets where this could be an acceleration to direct, and this could be the one where customer more used to speak with an intermediary, for example, so it can be commercial lines, it can be Europe, where direct is not big. At this stage, it's very early to say. As for us, you know, we try to be close to everything and work and progress on all the fronts at the same time. I think we had one, two, and three. Yes.
Hi. Carl Lofthagen from Berenberg. Just the first one on the U.K. Home b ook. I think we've seen kind of continued expense ratio improvements as you've gained scale, and you're now running the business at a combined ratio in sort of the mid-eighties. Is that sort of the level that you're sort of happy with, or are you willing to trade some margin to take market share, as you've kind of said you want to be a top three player? The second question is just a clarification on the share count development. I think if I just look at the basic share count, which decreased by GBP 5 million, from GBP 306 million- 301 million in H2, but diluted went up GBP 1 million. Presumably, the shares you're buying back for the share scheme shouldn't impact the share count.
Just I guess for modeling purposes, I mean, how should we kind of, yeah, think about that excluding sort of any sort of additional buybacks, et cetera? Thank you.
Al take the first, current.
On the household expense ratio, we've had an advantage in terms of expense ratio per household for some time, as you highlight, it's an area of focus. As the book grows and we get more renewals customers, that helps in terms of expense ratio, we're also focused on driving improvements. For example, Milena talks about how we can use GenAI for both customer experience and efficiency, those are areas of focus. In terms of the combined ratio range, we think about households similar to motor, where it's about optimizing for value over the medium term. As you're alluding to, we're a bit more biased towards growth on household than margin. We think the 80 is good.
I think we talked a bit about a range when we did the deep dive. We're not sort of sticking to a specific target, but we'll do that, optimizing for value and growth over the medium term.
Mm-hmm.
On share count. Carl, if you look in the back of our accounts in note 12, you've got the update, the number of shares that are in issue every year. It's been 306 million-odd for a couple of years since we stopped diluting for the share plans. The 301 million is actually the number that's used in the EPS, and that excludes some of those shares that are held in the trust. The share purchases for share plans won't adjust the number of shares that are in issue, obviously. They only go to employees. The share buyback and cancel, obviously, that will reduce the number of shares in issue. The purchase for the share plans doesn't change the number of shares. Buybacks obviously will.
Hey, it's Derald Goh from Jefferies. Two big picture questions, if I may, please. The 4% sort of EV, AV, penetration rate by 2035, that's an interesting number. I'm just keen to hear what are the main variables that might sway that number. Essentially, how prudent is that 4%? Maybe if you could also say, you know, what were your projections 10 years ago? How does that 4% compare to what you had 10 years ago, let's say? Secondly, going back to distribution, you mentioned there's potential to disrupt the... Maybe could you speak to your past experiences? I know you've been trying to push PCWs outside the UK. Some places were more successful than others.
What might be different this time that would allow you to be more successful with whether it's AI or changes in customer behaviors and what not? Thank you.
Sure. I think I'll take the first and second, but Cos, if you want to add anything on distribution outside U.K., it would be great. AV, this is a refer to relatively common forecasts that have been held like the World Economic Forum and a lot of other organization, and I think it's the number is quite aligned. You may look at car sales. In terms of car park, it's 4% because there is quite a lag time from new sales to fit into car park, the average, the median age of a car in U.K. is 16, and probably the average is 11 years. It takes time as the new model gets released.
I think you're absolutely right, it's still very much of an estimate, and there are a lot of influencing factor. You need to get, first of all, regulation in place, infrastructure in place, technology and investment in place, and customer appetite in place. There are a lot of things that can contribute and can go both direction. If we don't see the simultaneous of development of all these four areas, it's difficult to imagine a world in which people will really freely, you know, just use autonomous vehicles, car on the roads. I cannot tell if it's prudent or not, but I would say this is really the majority of the, of the, of the...
I think everybody agrees that it takes some time, both because there are some hurdles and because there is time for the car park to evolve. I think also take the chance to remind that this is about L3. Plus L3 basically means when the driver can take their hands off of the wheel, but still need to get in in 10 second. It's not really full benefit of AV in terms of, for example, liability shift and so forth. Anyway, it's very nascent now. You ask me how this is, it was versus 10 years ago. I think this is a story that we see in all the technology disruption. If I go back 10 years, this was supposed to be earlier. What happened is that this projection tend to shift.
If you ask me how it was compared to a few years back, like maybe three, four, what I would say is not very different. We see a slightly later adoption, but probably faster. It's very often happen with every technology now that it takes longer, but then it can be more so. It's difficult to say, honestly. It's very, very early stage. U.K. is a bit behind the U.S. in terms of regulation and so forth. Second question was on distribution. I don't know, Costi, do you want to kick it off?
Yes. No, on distribution, the European markets, as you know, are very different. When we started our businesses a few years ago, I think direct was about 5%. Now, on average, it's getting closer to 20%, between 15% and 20%, so direct is still growing. Therefore, if a more AI-driven disruption would happen, we would say that being a leading player in those market would put us in a nice place. At the same time, price comparisons, you're right, we try to educate the market and to push more digital growth to accelerate. It didn't happen at the speed we expected. At the moment, as I said, direct is still growing. Price comparisons are doing nicely, but not at a super fast speed.
At the same time, traditional are still a very important channel, which predominantly is the main channel, which is linked why we decided a while ago to start to diversify the distribution. On how to win and how we can be confident, basically because the right two wings are exactly the same of direct, so risk selection, customer experience, and lean operations. The moment you demonstrate that you can replicate those, then you can win in that market. Our results that are coming through are making us confident more and more that we can achieve this.
Andreas from Peel Hunt. two questions, please. First one is on ancillary sales. I saw that the average sort of revenue per vehicle in the U.K. has come down from GBP 76- GBP 71. Just wondered what your outlook is for this in 2026 and 2027, particularly not only on the installment income, 'cause I assume you've lowered your APRs, which has brought down the average premium per policy there or per vehicle there, but also on the other ancillary sales, whether you're seeing any pressure on those fees and commissions. Thank you. 2nd question is on price velocity. I think you mentioned that. I just wondered what you exactly meant by that in the U.K., and whether extending it means changing pricing more.
I don't know whether you do intraday pricing or not in the U.K.. Whether with that velocity, by how much could you extend it, and how important is that to maintain your competitive position, particularly through PCWs in the U.K. as the market becomes more competitive? Thank you.
I'll take the first one. As you mentioned, the main driver of the change in other revenue is premium finance. It's worth noting that there's two impacts there. We did reduce our APR through 2025 in line with the cost of funds. Also we saw our average premiums coming down through the year, so that also impacts on that other revenue per vehicle. In terms of our APRs, they're very competitive at the moment. Not necessarily anticipating any changes, but we'll continue to assess for fair value on that product. In terms of average premiums, as we've said, we're expecting the market to turn and that will lead to.
We're increasing our premiums, so that will flow through as well. I don't think there's anything else of significant note to call out on other revenue.
On the price velocity, I think if we step back, just a few years back, a lot of the pricing was done through SaaS or Excel, and we could put price change in production overnight. Basically have a meeting. If you ask me, Al and Geraint, and decide and make change almost overnight. That is still the case.
I think it's an advantage, and I think it's really rooted in the culture and the closeness of the management team to pricing, to claims trend, and that relevance that we give to roster issue around all around Admiral. Our planning is more and more based on machine learning and predictive AI models. This, of course, is not something that you change overnight because it's more complex, require more technology. The process to upgrade and renew the model is just takes longer. We've done a fantastic like a lot of work in the last year or two to really bring this time from ideation to change in production much shorter and shorter. I think there is still a bit we can go for, so we're very close.
I think we have strong capability, more than 120 models in place, GBP 100 million illustration incremental value. We start from a good point. I think there is more we can go to increase this even more. The biggest opportunity in my mind is to extend this also more and to extend this strength more into other lines of business. That's where I see the excitement. To do that, we appoint this year a new group CDO. She did a great job in Europe to set up a new data platform. She just... She's coming over, she came over actually a couple months ago, and she's gonna help her to increase even more this ability.
I think we're already in a very strong position, but months ago, we were very keen now to be as fast as we can.
We've got a question on the-.
Great. very happy to
Thank you.
Yeah.
Thank you. As a reminder, if you'd like to ask a question on the phone line, please press star one one. We will now go to the questions. The question comes from the line of Vash Gosalia from Goldman Sachs. Please go ahead.
Hi. Hopefully you can hear me. First of all, apologies for not being there in person. I have two questions, please. The first one is just on something you mentioned on your 2026 profitability. If I heard you correctly, you said you plan to move to the middle of your confidence interval through 2026, and you've obviously also said you expect flattish profitability. Can I read that as your earnings in 2026 actually being supported by PYD just to offset some of the weakness in U.K. Motor? Any sort of color as to how or why that might be different would be really helpful. The second question, a slightly longer term or big picture question.
You've obviously sort of alluded to you having a lot of, sort of advantage on the cost ratio front, and you can obviously leverage AI and GenAI to improve that. I'm just trying to think, if the technology essentially democratizes the use of AI, wouldn't that allow your competitors to actually gain advantage quicker and narrow the gap to you? Any sort of color or comment on that would be helpful as well. Thank you.
Good. Take the first.
Yeah. We would expect to start to Reduce our risk adjustment percentile from its current near max level towards the middle of the range during 2026. I would reject your assertion of weak U.K. Motor. I think U.K. Motor profitability for 25 is strong, but slightly less strong than extremely strong in 2024. We think there's good profitability to come on in 2025, and obviously that starts to feed into the accounts in 2026. PYD and reserve releases are a constant feature of our income statement and profitability. You are right to expect as we reduce the risk adjustment to some extent, obviously that contributes to profitability in 2026 versus 2025.
If you do the mix, flat profitability, but higher, other higher profits from other lines of business means slightly lower profits from U.K. Motor, but from a very high start point. I think Vash , I think that was the nature of the question, right?
Yes. I mean, apologies if I said, like, weak profitability. I meant more direction-wise. Yes, you've answered my question. Thank you.
No offense taken.
On the second point, it's a very good question. It's a very good question. I think every technological evolution, data evolution, and if you think about digitalization, automation, migration to cloud, more and more, like, technology, it becomes more and more a commodity itself. But the way technology is implemented is very differentiating and it becomes more so as we move along. So a big decision on AI is how you do it, a big driver, how much this is adopted. So you can deploy GenAI tool to have all the organization, but how much is adopted, how is adopted is a massive driver of how much efficiency benefit you can drive.
I think we start in a great, in a great situation because we then have very strong culture, very transparent and people with good expertise that are really, really keen to do what is right for the business. Governance is another differentiating factor. How you govern what you put in place, and how you make sure that it's solid, it's stable, how make sure that the model learn over time. I think an appetite for innovation, bottom up as well as top-down is also very important. I think a lot of the element at plays here are a culture and also the ability to do it faster, better and cheaper than others. You know, it's still early to say, but I think we are well positioned to achieve that.
Fine. Thank you.
Good. We have last question. Hi.
Hi, it's Shanti from Bank of America. You just touched a bit earlier when we talked about the internal model and how that could give you a bit of flexion for M&A. Historically, I guess you guys have partnered with names via Pioneer, or you've had a relationship with existing names before you would kind of move forward with an M&A transaction. What kind of skill sets or regions, if you were looking at that, would you be thinking of? Thanks.
It's the last question. Do you want to take it? Your last presentation.
Sounds like I've explained things badly. I wasn't really referring to the internal model coming in, giving us more firepower for M&A necessarily. I understand the point of the question, but I think funding small M&A to retain profitability is one of the options I would talk about. You should cover and where M&A might play a part of it.
Yeah. As I said, our history is history of successful organic growth, and we're excited about the plan we have on growing organically. We'll look into opportunity, mainly to accelerate diversification, I would say. You know, as we've done with Flock or as we've done with More Than, we'll look at accelerated diversification in other lines of business, in insurance in the U.K. or in Europe where we need more scale. We stay open, look and see, but also very, very focused on our organic growth plan, and consider different option on how to eventually tackle the challenge. Thank you very much. Thank you for your question, and thank you for your time, and we'll be around a few minutes, if this can help. Thanks a lot.