Welcome! Welcome everybody to the Half Y ear Presentation of Admiral H1 2023. Very pleased to say that despite the challenging market condition, we deliver another period of solid performance, great service to our customer, to more customers, and good outcome for our shareholders as well, despite the high inflationary environment. Thank you for joining us. As usual, we start with the key highlights. Geraint will follow up with more detail on our key financial metrics. Cristina will explain us how we navigated this extreme cycle, and will provide more detail on household and market trends. Costantino will tell us how we strengthen our position overseas, and then I will come back to share some exciting progress on our lending business and our strategy. Well, this are picture from Top Ten.
This is our most iconic event, in which we celebrate our colleagues that go above and beyond for our customer and our shareholders. Let me start by thanking those who are really beyond, behind the achievements that we are about to present. Speaking of which, in the last year, our turnover grew by more than 20%. This was mainly driven by price increase to respond to the high inflation. Our customer around the group overall were up 4%. It was driven by Europe and new product, and this grow more than compensated the reduction in active policy base in UK motor insurance. Our profit under the new accounting standard, IFRS 17, were GBP 234 million.
This figure is higher than last reporting period, and is also higher than H1 2022, restated under IFRS 17, but is lower versus H1 2020-2022 under IFRS 4. I think overall, this is a, a solid combination of results, and it's nice to observe that this was also a true team effort, as all our mature business contributed both to turnover growth and improved bottom line. We're proud of the progress we made in our strategy, particularly the adoption of advanced analytics, tech capabilities, and some of the development in the newer business. I'm pleased to say that we are again, in a very strong, solid capital position, with a solvency ratio of 182. That, as usual, we've been disciplined in our underwriting and pricing, and this put us on a strong footing for a, a turning cycle.
Now let me start with a bit more detail on market conditions. I wish I could tell you a different story from six months ago, but it's a bit more of the same, to be honest, although we believe that we are closer to a turning point. In the graph bottom left, you can see CPI inflation and average market premium increase in each country for H2 2022 and first half of 2023. As you see, CPI inflation is decreasing everywhere, but is still high. That's even more true for material damage inflation, for which unfortunately we don't have comparable data by country, but that sits higher on top of CPI inflation. This inflation stubbornness led to stronger price increase than anticipated for the market, that should lead to materially improved results in the underwriting year 2023.
Another consequence of renewal price increases is a strong growth in shopping. Overseas, where shopping is a, a less ingrained habit, this may lead to an acceleration of the migration to the, toward the direct channel. As for Admiral, we continue to monitor the trend very closely and act very fast on market condition and change. Our objective is always the same: it remain to focus on and maximize medium-term profitability. That depends by a combination of revised market trend, estimated ratio, and price elasticity. This approach led to different outcomes in different part of the group. In UK motor, where we have a large book, and we had increased price well ahead of the market last year, the rational outcome was to shrink in the first part of 2023. This price...
this gap, pricing gap with the market is closing, as Cristina will explain later, and we expect to return to growth soon. In the other country end product, where inflation was lower, market reaction was lower, and we have still more potential for economy of scales, we continue to grow. 20% overall, around 20% overall, although most more cautiously than previously. The U.S. is the only exception. As anticipated six months ago, we are successfully prioritizing capital preservation and loss reduction in the States, and the process to assess future option is progressing, and we'll provide an update in due course when we'll have more to share. Now to Geraint with more details on our financial results.
Thanks, Milena. Morning, everyone. I'll cover off some of the highlights from a solid first half. I'll give an overview of the impact of IFRS 17 on this period and the restated 2022. I'll look at the UK motor results, UK motor loss ratios, and then I'll finish off on the half year capital position and the interim dividend. To start with, these are the usual set of financial highlights. Just to comment quickly here on the basis of preparation, this is obviously the first time that we've reported under IFRS 17. Financial statements include a restated set of 2022 figures for H1 and the full year. On this slide, the pre-tax profit and the earnings per share numbers are the most impacted, and the originally reported numbers you see in the footnotes....
The numbers continue to be influenced by the high inflation we've seen in all our businesses, though, as Milena mentioned, we're satisfied that we've responded appropriately and robustly, and to what we're seeing. Whilst not yet very apparent in the profit numbers, there are clear signs of improving performance and more positive markets in 2023. Pre-tax profit for H1 was GBP 234 million, and earnings per share was GBP 0.58. The higher U.K. tax rate of 25% versus 19% explains most of the difference in the percentages there. Return on equity was improved and strong, at just under 40%, and that's partly positively impacted by lower equity under IFRS 17 as we flagged.
The half year solvency position was strong, again, at 182%. We've declared an interim dividend of GBP 0.51 per share, which is a touch under 90% of the first half post-tax profits. Despite the payout ratio remaining the same, basically as the first half of 2022, last year's interim dividend was, of course, based off the IFRS 4 profits, which were higher than the restated IFRS 17 result, as we'll see shortly. As I mentioned, the effective tax rate is high for this period. Those two factors explain the 15% change in the dividend. You see clear evidence of our strong response to claims inflation in the top-line metrics, where customer numbers increased more modestly than in recent periods. There was a very strong increase in turnover, driven by significant increases in premiums across the group.
Let's take a quick look now at how those numbers break down. This slide shows customer numbers and turnover across the group. The main observations here are: firstly, on UK motor, customer numbers reduced by around 3% in the first half, as the cumulative impact of our rate changes over the past 15 months or so continued to impact volumes. It's very apparent, though, that those rate increases are taking effect with the big increase in turnover reported that you can see. U.K. household delivered strong growth again. With pricing moving up in our business and in the market, we see a large increase in turnover. Internationally, again, we see double-digit growth in customer numbers, growth in Europe, slight reduction in the U.S.. Again, to continue the theme, strong pricing action led to a bigger increase in turnover.
Finally, in Admiral Money, we saw continued growth, though further tightening of credit rules in response to economic conditions has consciously slowed the rate. This slide doesn't show the growing numbers of customers across the group with Travel, Pet, Veygo, et cetera. We see very strong growth in those areas. Before we look at the group results, I wanted to make a few points here on the new accounting standard. Obviously, big news. The main qualitative points are at the top are, as stated before, IFRS 17 does change the accounting and particularly the presentation, and can change profit recognition patterns, though it doesn't change our business fundamentals. In reasonably normal trading conditions, we wouldn't expect to see significant differences in profitability under the new versus the old accounting standard.
We don't keep IFRS 4 accounts anymore, of course, it's not possible to present full reconciliations from here on. Of course, thankfully, as a non-life insurer, we are able to adopt the simplified approach. On the bottom left, we make observations on the restatement of 2022. IFRS 4 H1 profit was a little higher than the restated numbers, and that's mainly due to differences in the reserve strength or risk adjustment positions over 2022. Under IFRS 4, we moved down to the 95th percentile at the end of 2022 from a higher position at the start of the year. Under IFRS 17, we started and ended the year at the 95th percentile, and so smaller reserve releases led to lower profit on the IFRS 17 basis.
The difference in profit is more pronounced in H2, as the reserve strength movement in H2 under IFRS 4 was more pronounced. We see this aligning of reserve strength positions at the end of 2022 as part of the transition to IFRS 17, rather than the new standard leading to a different result. On the bottom right, some more straightforward observations on 2023 H1. Assuming similar changes in risk adjustment percentile, we would not have seen a materially different IFRS 4 number for this period had we prepared IFRS 4 accounts. There are some ups and downs, of course, and discounting is one of the positive impacts, but there is no real difference to the bottom line from the new standard this year. In the appendix, we include more information than usual to hopefully help in understanding the new accounting treatments, including discounting and reinsurance, particularly.
We have dedicated sessions, as you-- I think you all know, set up tomorrow and more time available on Friday for technical queries. Give us a shout if you're not down to join those who want to. That's the background. Let's now take a look at results across the group versus the last half year. Here we also show the IFRS 4 2022 H1 numbers for reference. Main theme in the insurance businesses continues to be claims inflation. Although we see generally strong improvement in underwriting year 2023 combined ratios, it's predominantly the earlier years that are contributing to profit in this half year, and of course, particularly including the lower margin 2021 and 2022 underwriting years.
The UK insurance business reported a total profit of just over GBP 300 million, which is around 5% up on the restated 2022 H1. Motor profit, as you can see in the text on the right, was just under GBP 300 million, that's covered on the next but one page. U.K. household profit was up to GBP 9 million from GBP 4 million, with a few factors impacting the result there. Firstly, we see a higher non-weather loss ratio this period that's impacted by inflation. Secondly, there is a lower severe weather cost this H1 as a result of lower severe weather. Thirdly, lower reserve releases, which are impacted by an increased estimated cost of the December 2022 freeze event. Finally, a one-off crystallization of profit commission on one of our quota share contracts on household. Internationally, we saw decent and expected improvement half year and half year.
Starting first in Europe, the overall results improved to a profit of GBP 3 from a loss of GBP 3, including a motor profit of GBP 5 versus a loss of GBP 2. Obviously, more satisfactory first half. The results are still impacted by higher loss ratios over the past underwriting year or so, although the underlying results, again, have improved with significant rate increases. There is continuing investment in distribution diversification in Italy and Spain, and investment in growth across all businesses, which does impact the expenses. In the U.S., our goal was to materially improve the bottom line compared to last year. We're satisfied with the improvement and more so in the underwriting year result. The U.S. loss was particularly heavy in H2 last year, and we don't expect a similar pattern to repeat this year, though conditions in the U.S. remain tough.
Admiral Money continued to grow, as we noted earlier. Business pleasingly remains profitable and is, of course, prudently provided. We'll continue to take a cautious approach to growth and risk appetite. Admiral Pioneer result was a bit worse half year and half year, notably impacted by a handful of large claims in the Veygo business, also continuing investment in growing our SME insurance business. The other items at the bottom were higher, as you see. There are a number of factors that contribute to that, including some one-offs. There is analysis in the appendix. Happy to take any questions on that later. Let's now, though, take a look at UK Motor, which is the key driver to group profit. This is a summarized income statement versus the restated 2022 H1. Comments on the right on the main drivers of the change.
Firstly, as noted earlier, despite the small reduction in the book size, rate increases have led to a much higher average premium and a strong increase in turnover. Secondly, higher interest rates have a couple of impacts. Firstly, higher investment income, as expected, but also higher discounting impact on current year claims. We've got more detail on investments in the appendix, but there are no changes to report in our approach on investments. Then three, in terms of the ratios, we've shown two sets of ratios on this slide. First set is based on total insurance revenue, so includes add-ons and fees, and the bottom set shows just the core motor insurance policy metrics. We see essentially a flat core motor loss ratio, which is made up of a higher current period ratio, impacted by 2022, offset by larger reserve releases.
The expense ratio is higher on an earned basis, partly due to the impact of a lag in the higher earned premium, higher average premium earning through, but the written basis ratio is flat at around 19.5%. Perhaps the most important metric currently is UK motor loss ratio. Let's take a look at what's happening there. Two charts, both on an underwriting year basis for the core motor insurance only. On the left, we show the projected ultimates and on the right, the booked ratios. IFRS 17 means we're showing the ratios on a different basis here, and so they won't be directly comparable to the ones you've seen previously. Both these sets of ratios are discounted, which is obviously a more important element under IFRS 17, and we've included guidance in the appendix on how discounting works, and we also include the undiscounted triangles.
Some key observations. We're not yet seeing notable changes in average claims cost inflation in H1, though we expect inflation to start easing in H2 and beyond. We believe the ultimates on the more recent underwriting years are still prudently projected, and for instance, include prudent positions on bodily injury claims, where we're not yet seeing particular stress come through in our numbers. We also continue to reserve at the actual - 0.25% personal injury discount rate, but as we approach the review date in 2024, tentatively expecting a better rate, we've included some sensitivities. We continue to see improvements related mainly to bodily injury claims on the older years, though the more recent years have been stable, as you can see. On the right-hand side, the book reserves close the half year at the upper end of our accounting policy range.
As flagged, we've moved that percentile down slightly from the 95th percentile at the start of the year to the 94th percentile at half year. Reserve releases are still an important contributor to profit, and we expect this to continue absent any major claims shocks. Moving now to look at the half year capital position and the interim dividend. Firstly, on the top, this is the capital position, 182%, slightly higher position than at the full year, and it remains very comfortable. The level of surplus in GBP million has increased. As you will have seen at the end of June, we successfully refinanced our Tier 2 capital. We increased the size to GBP 250 million and bought back most of the 2024 maturing bond.
The movements from full year 2022 to half year 2023 are set out in the appendix. That broadly shows half one capital generation, offset by the interim dividend and the impact of the new Tier 2, partly offset by the impact of a higher capital requirement, which results from growth. If, as we, as we're currently seeing, the business written in the second half is more profitable again than in the first half, we would expect capital generation in the second half to be larger. Most of you, I think, will be familiar that we also track and report solvency under the PRA-approved capital add-on, as opposed to the numbers here, which feature an updated add-on, which takes account of the latest balance sheet and risk positions.
At our request, the PRA has agreed to reduce that approved add-on from just over GBP 80 million to closer to GBP 20 million, which is a significant reduction. There is now a smaller difference between the updated numbers you see on this slide and the regulatory approved solvency ratios. There's no news to report on internal model development, where work and regulatory engagement continues. On, on the bottom of the slide, the dividend information. The interim dividend, as I mentioned, is GBP 0.51 per share. That's equal to 89% of the first half post-tax profits, in line with our usual practice. I explained earlier the reasons for the change period on period, despite the flat, basically flat payout ratio, as you can see on the slide. There's no change in dividend guidance.
To summarize, a few of the key points from the first half: firstly, strong claims inflation continues to impact the reported results, as the profit on the lower margin 2021 and 2022 underwriting years is recognized. Our response, mainly in terms of substantial rate increases, means much improved profitability on the 2023 underwriting years across our businesses. In the very short term, the accounting results will continue to be influenced by those 2021 and 2022 years. We've seen stronger levels of rate increases in various markets in the first half, and we expect this to continue through H2 at least. As usual, we report a strong solvency position. We've successfully refinanced the Tier 2 capital, and we're paying out nearly 90% of the first half profits. Over now to Cristina to talk to us about the U.K..
Thanks, Geraint Jones. Good morning, everybody. I am going to cover the results for our UK insurance business, starting with the highlights. In 2023, so far, we have seen inflation, which has remained very high, and we have seen very strong price increases, both in the market and in Admiral. This trend applies to our both products, to the household and motor markets. Now, interestingly, the impact on the size of our book for those two products have been quite different. In the case of motor, we decrease, year-on-year our book size by 7% and 3% compared to the end of last year. In household, we grew by 14%, mostly helped by retention.
Our price increases, starting from last year, are feeding through our average premiums, and you can see strong increases in our turnover for both products. For the rest of the year, we expect a continuation of these trends, price increases for both Admiral and the market, and hopefully, we might start to see costs stabilizing. Finally, Consumer Duty is live, became into effect a couple of weeks ago. In the Admiral, we're very committed to delivering good outcomes to our customers and to offer fair value products, so we don't expect any significant financial impact from this reform. Let's move to pricing. Let's start with the market. In the first graph, you have market data. In blue, ABI, which includes new business and renewals, and in red, the Confused Index, which focuses on new business prices on price comparison.
As you can see, the market has started increasing prices in the second half of last year. There has been a clear acceleration of price increases as H1 has progressed. Particularly relevant are the increases that we have seen in Q2, as shown by the Confused Index. Also good to see that in July, price increases in the market have continued to be quite strong. All in all, looking at Confused, the price increases in the first half of the year have been 23%. In the second graph, you have Admiral Times stop. Just as a reminder that what this graph shows is the percentage of times where Admiral was cheapest on price comparison. We indexed this to January 2022. Now, as you can see, we started increasing prices quite strongly from April last year. We became much less competitive.
What has happened since the end of last year is that as the market has started to doing significant price increases, our competitiveness has improved. This explains why we shrunk by 7% if you look year on year, but less when you compare to the end of last year. Now, a key question that you might be asking is: When are we gonna go back to growth? Good news is that in the past few weeks, we are seeing our number of customers in motor stabilizing, so we expect to return to growth in the near future. Now, exactly when, it's hard to tell, and it will depend on what the rest of the market does with prices. We will continue putting pricing up to account for inflation. Let's now take a look at the motor claims, and let's start with frequency.
The graph on the top is road usage. Interesting, in the past few months, we're starting to see very similar levels of miles driven as we saw pre-COVID. However, frequency remains lower than before the pandemic. Two key reasons. First is the impact of the Whiplash Reforms, and secondly, is that we still see less claims during peak hours. Moving now to damage inflation, it remains quite high. You can see in the first graph on the bottom how prices have continued to increase. If we do a bit of a dig down into the reasons for this, definitely, repair delays. There is still some pressure on market capacity. Labor costs have been increasing. Also, when you look at credit hire costs, because these claims are taking longer, we're seeing higher costs.
On the good news, parts availability is becoming better, which helps ease these repair delays. Also, second-hand car prices have started to stabilize, as you can see in the 2nd graph on the bottom. Finally, there has been an increase in theft in the market, although it remains a small part of claims. In terms of bodily injury, quite stable. When you look at the claims that have settled in this 1st half of the year compared to last year, we don't see significant changes. A couple of things to take into account. First, in terms of a small BI, we still wait for the resolution of the court case on mixed injury settlement, and we expect this at the beginning of next year.
Secondly, in terms of large bodily injury, they are developing as expected, but we hold some prudent reserves to take into account for a possible increase in wage inflation. Finally, in terms of the Ogden rate, not further news. We expect to know more in the next six months-12 months, as we think the rate will be decided at the end of 2024 or beginning of 2025. Taking everything into account, it's quite pleasing to see that despite all the challenges, Admiral claims costs continue to be better than the market. Let's move to our household business. We recently celebrated our 10th anniversary since the launch, and in this period, average premiums have remained flat.
Basically, when looking at the ABI data, the premium, the average premium in the first half of 2023 has been the same as in the first half of 2013. This puts into context how pleasing it is to see finally clear increases in the market in 2023. Overall, according to the ABI, prices in the market, or sorry, premiums in the market have gone, gone up by 10%. The rationale for this, inflation, very strong and very clear. The second one is freeze events and, and weather last year. Then the third reason, we believe, is the impact of the FCA GIPP reform, which put pressure, especially on renewal premiums. In this environment, Admiral has continued putting prices up.
We started in the second half of last year, where we increased about high single digits. This year, in the first half, we have increased prices even more, around 20%. Despite this, we have been able to grow, helped by retention, which continues to be above market levels and our multi-proposition. As mentioned, inflation for household has continued to be high. Also, there are pressures on our supply chain and the market supply chain. Partly, a bit of more pressure has come from the freeze event. There are still a lot of claims that need to be settled.
What I want to say is in, in terms of profitability of our household book, we have seen good profits this first half, that has been mostly influenced by one-off profit commission coming from the commutation of our reinsurance agreement. To finalize, let's take a look at our expectations for the rest of the year. As I said, continuation of similar trends in terms of prices, Admiral will continue putting prices up in household and in motor, we expect the market to continue doing so. As I said, growth, we hope to continue to see strong price increases in the market, which should help the Admiral Motor book go back to growth. In terms of underwriting performance, we are growing our confidence that for both products, 2023 loss ratio will be better than 2022.
Then in terms of inflation, as I said, and helped by the CPI news this morning, we expect to see cost starting to stabilize. This is it for the UK insurance results. Just a reminder of our core principles. We maintain pricing discipline, and we will continue doing so, prioritizing profit over growth. Secondly, we hold very, or a very prudent approach to our reserves. Now over to Costi to talk to us more about our international results.
Thanks, Cristina. Good morning, everyone. 2023 has been a very intense year so far in our international businesses. Although the market continues to be challenging, we have made good progress. In the U.S., we have significantly reduced losses. We minimized capital injections from a group perspective. In Europe, we are profitable on a combined basis with significant growth, benefiting from higher premiums and economies of scale. Moving on to the next slide and our US business, Elephant. In line with our stronger objectives, we continue to make progress, both in improving the results and evaluating options for the future, which we will comment on in due course, as Milena already mentioned. Elephant's combined ratio has been improving over time compared to market, thanks to the material price increases and bold actions to reduce expenses.
Improving the bottom line remains a priority. In the face of a challenging market with very high claims inflation, we continue to take action focused on improving the profitability of the portfolio and driving efficiencies by leveraging our strong technology platform. Moving on to the next slide, our European operations. A very strong half overall. We reached almost 2 million happy customers with 14% year-on-year growth. We were profitable on a combined basis. In all regions, we have a loss ratio competitive advantage over our direct competitors and continue, sorry, and continuous price increases placed throughout 2022 and the first half of 2023 have supported this.
Our actions have been stronger in Italy and Spain due to the nature of these two markets, where we have seen a more pronounced downward movement in market premiums in recent years, and are now entering a hardening phase of the cycle. All our European operations have been profitable in their core direct business in the first half of the year. We are continuing to invest in distribution diversification, particularly in Italy and Spain. However, in Spain, these investments have more than offset the positive contribution from the direct business. We believe that our strategic investments in brokers and partnerships will provide us with significant opportunities to create long-term value, and we will continue to pursue them with discipline. The economies of scale, the increased adoption of digital services by our customers, and the automation of internal processes have benefited our expense ratio in all the businesses.
In summary, we are very pleased of the results we have achieved and the progress we have made with our strategy. We are conscious that there is more work to do, and we remain focused on medium-term profitability, continuing to balance margin protections and growth in relation to market condition. Thank you, and now I hand over you to Milena to present the results of the loans business.
Thank you, Costantino. Now a bit more details on Admiral Money. Once again, we are reporting strong performance in the first half of 2023, with a profit increase to GBP 2.7 million. Gross loans balance have grown above GBP 1 billion at a rate of 16% since full year, and slowed in comparison to 2022. We remain indeed cautious during this period of economic uncertainty, and we closely monitor the impact of the rise cost of living and higher interest rates on consumers to ensure we remain vigilant for any sign of possible deterioration. Lending strategy have been proactively calibrated to the latest macroeconomic outlook, with action taken to enhance assumptions in affordability assessments, with more targeted action for those customer deemed to be most at risk.
We continue to retain an appropriate prudence in our credit loss provision, with coverage remaining at 7.2%, which include GBP 12.6 million of post-model adjustment to account for potential anticipated pressures on our customers. We continue to demonstrate indication of a long-term expense advantage versus the market as an insurance, with a further reduced cost income ratio down to 38%, which is quite exceptional for a business of this scale. Looking forward, we anticipate H2 to be a period of modest growth. Therefore, we confirm our guidance in line with what we provided at full year. Looking a bit more at the future and our strategy. Our strategy remain unchanged, with customer and people at the very heart.
We continue enhancing our capabilities, particularly in data and technology, innovating further to develop our core competencies, and also transferring them into the new line of business. Let me call out a few example of the progress we made in the last six months. If you look at the market volatility of the last few years, it's clear to me that speed of change and agility are crucial to succeed and will be even more the case in the future. We're proud to have completed the transformation from agile to scale agile in U.K. and other European countries. In Italy, where this change is most mature, this led to halving cycle times and complaints, and increased feedback score every year since.
We also increased substantially the adoption of machine learning models that now empower the majority of our UK motor and household quotes, with a positive impact on both loss ratio and conversion rate. Looking at mobility, in counter tendency with the rest of UK motor book, we increased our share of electric vehicles. We continue to learn from connected vehicles data and new proposition. Finally, we are particularly proud of Admiral Money cost income ratio, as just mentioned, and also L'olivier, that now alongside ConTe.it, is a positive contributor to our group P&L. We're also in the process of acquiring Luko, a French household business with around 200,000 policies, to reinforce our position in the French household market, and also to replicate the synergy that we achieved in the U.K. with our multi proposition.
We thought this was a good moment to do a quick reminder of the main rationale and the focus outside the UK motor insurance. The objective for us is to create win-win opportunity for our customer and our shareholders, as well as increasing the resilience of our business model. This not only through diversification of profit, but also by strengthening the relationship with our existing customers and their lifetime value. The main focus is only on a few large opportunities where we believe we have a clear right to win, and we can leverage on our asset and capabilities to create value, and build business that can continue to deliver growth and target a good return on equity over time. To do so with a fast, possibly cheap learning approach, and with strong discipline, that includes not be afraid to make bold choice when needed.
For example, as we did the 4 Penguin Portals, or Compare or this year when we exited the small French fleet business. We have a strong framework in place for efficient investment, and we organize ourselves to ensure limited distraction to our core business before the new venture is scaled and its business viability is proved. On the right side, the main current area of focus, in dark blue, the business that are mature contributors to the bottom line, and in lighter blue, the one that are at earlier stage. The biggest growth come from GI products, such as household and travel, and more recently, pet insurance for our, for our UK Admiral private customer. The results are very strong from retention, customer feedback, and growth standpoint.
ROI is expected to be fast and solid for all. Similarly, for Admiral Money, it's a different business, not an insurance product to start with, but in reality, surprisingly similar in terms of skill required to succeed and has good synergy with our core business. In addition, there is our first step beyond private customers. That's in U.K., where we're investing to develop a proposition, a stronger proposition for small/medium business. SME Insurance is an appealing market where we can leverage on our brand and also capture similar trend that support our growth in U.K. 20 years ago. Distribution is to be proved and is still early stage.
Finally, beyond U.K., we continue to grow and develop our European business, as Costa just mentioned, where we believe we can replicate a similar position to U.K., although at smaller scale, given this direct distribution is still limited in those market. The core of our strength remain our culture. We do find purpose, pride, and drive in doing what is right by our customer with good feedback score and trying to make their experience better every day, and product awards that testify that. What is right by our communities, that we continue to support with a focus on employability, having helped more than 1,000 people into new job recently, and also what is right by our planet.
I'd like to close where I started, with a big thank you to our people that all together, year after year, in every country which we operate, make Admiral one of the greatest place to work. Well, to summarize, the key element of this set of results are a solid profit of GBP 234 million. That is up 4% versus H1, restated under the new accounting standard in challenging market condition. Premium growth across all business, with an expectation of significantly improved profitability of the business written this year, but important to remind that this will take time to fit into our reported earnings. A turning cycle will leave us well positioned for future growth, good progress on our new ventures, and good progress on our Admiral 2.0 strategy. Our business remains strong and resilient, with happy customer and happy employees.
That's all for now, and we're very happy to take any question. Couple of logistics. Well, let's try to limit the question to two and leave some of the most, more technical question, IFRS 17, to our session tomorrow. We'll start from the audience. We'll move home, where we have a few people listening us from remotely. If you want to ask a question, you have a mic, a microphone on your left, and you need to take, hold the button, for all the time that you speak, otherwise we cannot hear you. With that, I would like to start. Please. Yeah.
Rhea Shah, Deutsche Bank. Two questions from me. In terms of looking at pricing in the U.K., could you provide a split between renewal pricing and new business pricing, and how those have been moving? Because when we look at ABI versus Confused.com for the market, there's a big difference. If you could talk about that for Admiral. Then second on kind of business mix and diversification, when do you expect Admiral Seguros to break even and start to become profitable now that Spain and Italy are? Also on Admiral Pioneer as well, do you expect it to break even, or is it essentially a sandbox for testing capabilities for other parts of the business?
Sure. Cristina, you want to take the first one, and Costi, the first part of the second one, and I will conclude.
Yes. Regarding new business and renewals, after the FCA GIPP reform, the prices tend to be... to move very similar. Basically, new business prices, cannot be cheaper than any renewal price. We don't give the concrete, split between both.
On Spain, just as a reminder, the direct business, the direct to consumer, is already profitable. But the investments in distribution diversification are more than offsetting this profit. We believe that also in these two channels, brokers and bancassur ance, we can establish a competitive advantage as we have done on direct business. This, we are conscious that will take a bit of time, but we are confident that we can deliver long-term value to the group. It's difficult to give you precisely a date, but this is clearly our objective.
Back to your Pioneer point, I think the way I would think about Pioneer as an umbrella name is the entity where we're developing some of our newer business rather than a business per se. At the moment, the two areas which we are investing in Pioneer, you can think about the sum of Veygo and SME business. SME business, as I mentioned before, is still very early stage. We are in investment phase, and we'll continue to work on announcing our foundation, and we'll continue to invest in the business and react depending on what we see. If it's gonna be successful, we'll push it forward, otherwise, we'll not. It's very early to judge. Veygo is a business that is growing fast in the last few years.
It's very interesting for us strategically because it's mainly targeting young customer and non-standard insurance product or a non-one year insurance product. It's a good window on new trends. He had some reporting period in which was profitable. This year, this half year, as Geraint mentioned, it was impacted by a few large claim, and it's still relatively small business and quite volatile. It's, it's difficult to make a precise comment on the, on the next reporting period, but solid and growing.
Hey, guys, James Pearce from Jefferies. Thanks for taking my questions. First one is just on this initial loss pick of 92% in 2023, which I guess is back around pre-pandemic levels. Would you expect that to improve further for the full year, just given current rate momentum, or a-are you quite happy now just to price in line with with claims inflation, such that kind of that, that, that full year loss ratio kind of remains the same? Second one is just on the Consumer Duty rules. The FCA stated earlier this year that it's looking at premium finance. Can you remind us the level of APR that you charge when you offer premium finance?
And how do you get yourself comfortable that that current level of APR, APR, sorry, complies with the new rules? Thank you.
Sure. Geraint, you want to take the first, Cristina second?
Yeah, 92 is the first pick of 2023 underwriting year, six months in, so that's not fully banking it just yet. You'd expect to see quite a similar pattern in how that develops in the second half of that underwriting year, I would imagine, compared to the past, subject to what happens, of course, on claims costs. It's difficult and too early, I think, to comment on what might happen to 2024 relative to 2023. For 2023, you'd expect the, the book position to improve from the end of first pick, for sure.
Yeah. Sorry, yeah, just to clarify, it's more just kind of that, that initial 92%, is that, do you expect that kind of to remain consistent for the full year? It's not, I don't mean kind of how it develops, more just kind of, what you expect it to be at the full year, essentially.
Well, I wouldn't comment on what it would be at the full year. You, you're talking about the, where we book 23-
Yeah.
at the end of this year, yeah?
Essentially, are you kind of planning on pricing in line with claims inflation for the second half, or do you kind of expect that gap to widen such that 92% improves?
Well, I think the 92% will improve. We, as Cristina mentioned, expect to continue to increase prices in the second half, subject to what we see on claims inflation, but that's definitely our expectation. Yep.
In terms of premium finance, first, the level of APR that we charge is very much in line with the market, I'll say, in the lower end. Secondly, how we get comfortable. Well, even before the introduction of Consumer Duty, we were doing fair value assessments, and we have done it for all of our products, including premium finance, and we believe we're offering fair value to our customers. Will?
Thanks. Will Hardcastle, UBS .
You hold the button, tick.
Can't press it. Will Hardcastle, UBS. You thought I'd know how to use this here, wouldn't you? I guess we've, we've historically seen about 20 points of improvement from the initial book to what I like to call the ultimate, ultimate. With a percentile reduction, I know it's marginal, but just trying to make sure I understand, on a go-forward basis, at the 94th, would we still expect that sort of, you know, broad range going forward? What if you move to the mid-level of the range at the 90th percentile? Is that still a fair statement to make? Then on the UK motor time stop, it's 23% price increases you've put through year to date. Obviously, you became more competitive as the year went on. Were your price increases front-end loaded or pretty smooth through the period?
You know, I'm trying to ascertain how much of that competitiveness was your action versus market stepping out even further.
Good question. Geraint, you want to take the first one, Cristina second?
Yeah, the percentile reserve position does impact, obviously, how much the, the book-loss ratio will move from its first point to its ultimate point. The kind of historical average you point to does reflect the fact that we were above the 95th percentile in our reserve positions under IFRS 4 in the past. That was what was contributing to the size of that, that loss ratio movement. At 94th percentile, it will clearly be lower, and at 90th percentile, lower again. It's difficult to comment. I don't think it'll be 20 points from first to ultimate, but I don't think we would comment on exactly what that would be. Oh, I'm confident in strong reserve releases moving forward for two or three reasons. Three reasons, I think.
Firstly, there is a big margin between the first pick and the ultimate, currently, for the most recent years, so that obviously gets some round over time. Secondly, we expect, certainly for the most recent underwriting years, there is probably prudence in the projections, all the Ps, and we'd expect that to unwind over time as well, so that contributes to reserve releases. Then the final one is the movement in the percentile. We've gone from 95 to 94 in UK motor in the first half. Other businesses are actually slightly higher than that, and we would expect the group's reserves, on average, to be around the 90th percentile in time. That obviously contributes to reserve releases in the near future as well.
Thank you.
In terms of our increases in rates, we have increased prices every month this year. A bit more in the second quarter than in the first quarter. Yeah. When comparing to the data, I think in the slide there are two times the number 23, so let me just clarify. If you look at the Confused index for the first H1 versus end of last year, prices in the market, new business went up 23%. The other 23% being quoted there is at middle year-to-date, so there is, like, a few weeks more. Yeah, so that's where there is a small gap.
Your slide 29, when you laid out the business diversification going forward, there's no sight of the U.S. there. Is the U.S. not going to be there going forward?
Yeah. The reason it is not there is that, as we mentioned, six months ago, we're in the process of looking at option for our US business and try to understand how to maximize the value for our shareholders. This process is still ongoing, and it's a bit early for us to comment about the outcome, but it's a broad range of options. We recognize it's a massive market, large opportunity, but also not an easy one to track, to crack. We're trying to understand what's the best way forward for us and our shareholders, but we'll update you more when we have more to share. Well, okay. Freya first, and then you go. Sorry. Difficult to track who is the first line.
Hi, Freya, Freya Kong from Bank of America. Firstly, just on solvency, I think adjusted for the debt of seven points, it was a bit lower year to date, and you had higher capital requirements as well from, from the growth that you've seen. How comfortable are you operating at, at this level, 182%? Given the outlook for growth is quite strong, it seems like capital requirements can only continue to increase from here, yet you're paying out around 90% of earnings. Do you think there's a need to retain a little more capital to offset the higher SCR going forward? Then just secondly, the discounting impact, would you be able to quantify that on your current period loss ratio for UK motor H1 this year versus H2... H1 last year? Thanks.
Geraint?
Yeah, 182% on solvency. I would say. Sorry, I was trying to think of the answer to the first question, and then you asked the second question, and it threw me right out. Yeah, yeah, 182%. We're very comfortable with that level of solvency. We think that's very comfortable. Our long-term target, as we said before, is 150. We think that 30 odd or 30, more than 30 points of coverage above that is very strong. Over the past 15 odd years, we've paid out on average 90% of post-tax profits and have grown very strongly over that time, and have always managed to fund that growth and capital requirement from a bit of retained profit that we do retain. For the foreseeable future, I'd expect that to be the case.
I certainly hope that the capital requirement grows as our business grows. You know, subject to me saying something different, we don't change the guidance on dividends for the, for the near, near term. There's technical sessions tomorrow on discounting, I'll just spend more time on it there. We don't give you the current discounting number for the 2023 year. It's very small at this point, you would expect that the current year claims will be discounted at a greater rate than the 22 full year claims or the H1 claims, 'cause interest rates clearly now are different. There are interest rates shown in the accounts on how, how much discounting there is, we've not yet shown 23. We will do the full year, obviously.
It's Andrew Crean from Autonomous Research. A couple of questions. On the Consumer Duty and the answer to the question you gave, the FCA very specifically said that comparing your rates to market rates is not something they're looking at. They're looking at value for your, your own customers. Secondly, you said that you were satisfied. I suppose the question is: Is the FCA satisfied? Have you had a narrative with them? Have they sort of said, "Actually, no, we're happy with your installment credit rates" Because it's really up to them, not what you feel. I think that's the whole point of Consumer Duty. Then the second question is, years ago, you had a session where you gave some targets for profitability of the European businesses.
I can't remember whether you hit those targets, but I suspect not. Are you prepared to give targets for the profitability of your European businesses going forward? Because the Spanish business was started in 2006 and is still not profitable. It doesn't appear to be a, a great business, which is what it was pitched as initially.
Very good. Cristina, do you want to take the first one?
Yes, Andrew, you're absolutely right. It shouldn't be a comfort to say that, what we charge in APR or in fees or in any other thing, being in line with the market makes it good for the customer. I was just answering the question of, actually, how much do we charge? Where we get comfort is by doing the fair value assessments that we have done, and we have shared them with the FCA. The reality is that Consumer Duty is a different reform than others. It's much more looking at outcomes, and it's much more about, I'll say, the spirit of law than a guidance. Like, so for example, if you look at other reforms, they were much more prescriptive. It's hard to know exactly how the FCA will interpret...
these reform going forward. So far, we have ongoing communication with the FCA. They have talked about premium finance in the past. They have mentioned in their CEO letters, but they have not, so far, mentioned anything specific that needs to be changed.
Costantino, can I start, and you add on top on Spain more specifically? Yes, you're absolutely right. We had the session, I think it was five years ago, on European business, and mentioning that we were expecting this business to deliver on a whole account written base, GBP 30+ million, or if I remember correctly, in a five years horizon. There has been a year in which we met already that target. It was quite soon, like two, three years ago, so we're already above that level. I think it's important. Like, that, that was on all account written base, and as we continue to reserve release, we see some of the past year to improve.
I think when you, when you look at reported results, first of all, they're on earned base. There is impact of reinsurance. The way reinsurance work in Europe is quite different from U.K. because the terms of the contract is different. Hopefully, they will improve over time as the business improve. There is an impact of reinsurance, and there is an impact of the earned versus written results. Having said that, I think one of the big impact is that we are... it depends from the year, but in the last couple of years, we've been growing the business quite strongly. The business in Europe are very front-loaded, in the sense that there is acquisition cost is a higher proportion of the lifetime value of the customer.
While we're growing so strongly, of course, that's some impact on profitability. Shall we select the grow right now and look at all the account written base, you'll see very different numbers and definitely double-digit minus profit. Spain, I would say, has probably been tougher than France and particulary Italy, where we've been profitable since a long time and relatively early. I think on written basis in Italy, we were already profitable year four, but Spain is more complicated, Costi you want to add some colour on Spain?
Not much more to add, you said almost everything already, but I think that Spain suffered more than other markets in terms of direct market growth. So at the same point, in order to deliver greater value to the group and more profits, we decided to take investments and in widening our distribution opportunities and brokers and bank insurance partnership are going exactly in this direction. But this will take time and again, to acquisition costs on those two channels are even higher than the direct ones. This will also impact short-term return. Overall, I think we believe we have set good foundations everywhere. With the, and with the loss ratio advantage we have built in direct market, we believe that we can also establish a similar competitive advantage in other markets, in other channels, and this will pay dividends at some point soon.
Gosh, it's so difficult to see who was first. Please.
Hi, it's Ivan Bokhmat from Barclays. Thank you very much. I've got two questions. The first one, if possible, going back to the UK motor loss ratio. On slide 12, you show the improvement from the 97% you've booked for 2022 to 85% in H1 2023. This 85% seems to be even lower than the numbers you've showed one year after for the more profitable years of 2018 and 2019, so before COVID. I'm just wondering if you could try to put the underwriting you've seen of these 6 months in the context of your prior profitability. You think you've now hit the right pricing, the right ROE that you would get from the UK motor, or do we expect it to improve further from here?
Maybe there is, of course, a slight IFRS 17 discounting element. The second question, I think it's on, on the turnover growth also in the U.K.. Are there any mix elements that affect it, whether the growth in essentials products or more young drivers, new car sales with more EVs, and so on and so forth? If you could try to help us unpick and perhaps suggest whether it's gonna be a tailwind or a headwind going forward, do you think?
Sure. Again, you take it first, then Cristina the second. There's a pattern. Geraint on the first, then Cristina the second.
There was a clear expectation that we would improve 2023 underwriting results versus 2022, and that's what you start to see coming through in the numbers that we've presented today. As to whether that's, we've sort of hit the right level of margin, I think our approach is just to not target a combined ratio. What we try and do is optimize the volumes to try and maximize the profits over the medium term. For us, there is no right combined ratio. It depends on what the market conditions, what our own profitability is doing, and a range of other factors. That's not necessarily the case that that's gonna be the, you know, the flat or target combined ratio moving forward. It's obviously gonna be much better than it was in 2022.
What happens in the second half and what happens again in 2024 is subject to a lot of moving parts, I think.
Then on the second question, going forward, we expect tailwinds. Basically, we have continued putting prices up strongly in the first half of the year, and it takes time for these price increases to run through, so tailwinds. What has been, in terms of changes in mix, I think the most significant one has been the weighting of renewals. About a year ago, after the implementation of the FCA pricing reform, I think in the whole market, there was a record of renewals, and renewals tend to have lower average premium. We charge the same price, but renewals have a lower average premium. Let me just give you a very basic ex-example. Everybody's a year older when they renew, yeah? Even at the same pricing levels, it's lower.
Last year, record retention in the market, yes, there was more weight in renewals. This year, high prices, lots of shopping, a bit more new business. That is the biggest impact, but I wouldn't say it's explains the 20%. You know, it's really the growth in the average premium of both.
Okay, I'm going to take the last two and then move on the phone. Sorry, do you want to go first?
Hi, it's Kamran Hussain from JP Morgan. Two questions. The first one is on the the reserve margin. See, like 95 to 94 is still, you know, an exceptionally high number. What's, what's the rationale for reducing that margin at this point in the cycle? You've highlighted a ton of uncertainties. You know, the market is just about recovering. What's the rationale for doing that? Then how quickly do you think you'll move to 90? The second question is just on Ogden. Clearly, you know, I, I would expect the number to be more positive than it probably is. I think last time there was a relatively large move back in 2016, the market reacted, and prices went up.
Do you think there'd be, like, a quid pro quo on that this time around if, you know, get a much better number there? Do you think that'll be offset in pricing? Thanks.
Should I quick on the first point, and, Geraint, if you want to add anything on it. I think we've been signaling that we would have moved down the level, the confidence level, the point of the confidence level for a few years. It was kept high quite a lot because of the large swing in the cycle during the pandemic and seeing what we've seen in the last few years. Something we've been seeing now for a while, and so that's part of that process. When we move IFRS 17, we clarify that we're going to stay in the range 85%-95%. That's really part of something that has been signaled for a bit.
In terms of moving down toward the center of the cycle, is going to be in the next few reporting periods, but, we'll, we'll, we'll see, and we'll adjust, as we go. Geraint, anything you want to add?
Yeah, just the, the sort of why, why now? Why move down now question. Part of the uncertainty that you talk about is effectively crystallized in our best estimates. High inflation on damage claims, potentially higher inflation on injury claims is built into our best estimates. So there's arguably less of a need to hold a margin above the best estimates for that. And also of course, you mentioned the potential change in Ogden discount rates. Previously, part of our margin was there to take account of the fact the Ogden rate could go lower than it currently sits at, and we think that risk is reduced.
The, the main point is, as Milena says, as the group becomes more diverse, with differently correlated sets of reserves, we think it's more appropriate to go down towards that 90th percentile over the few reporting periods, as Milena mentioned.
Another question about the Ogden rate. A couple of things. First, we agree, we think it could be positive. That's how it looks given current economic conditions. There is some uncertainty. First, because it's not just a mathematical formula, yeah? There is some subjectivity or some people call political element in the calculation. We have added some sensitivities in the appendix. Secondly, we don't know if it's going to be a dual rate or a single one, yeah? Lots of uncertainty. Whether the market will price it, I'm pretty certain. I mean, the market tends to be rational, at least over time, and any changes will be, you know, definitely influencing pricing, yes. Just to say, we have very prudent approach, we're yet not pricing for it.
Maybe there are some competitors out there that have started to price in some of these potential positive impact. Take the last one and then go home.
Thanks very much. Hi, it's Nick Johnson from Numis. Just thinking about UK motor growth opportunity in the long term. When Henry Engelhardt was asked about the sort of market share opportunity, he used to say, sort of, I think, slightly tongue in cheek, obviously, "Until you get to 100%, there's still a lot to go for." Given your market share today, could you just say, you know, how you're feeling about the growth opportunity and your ambitions around that in the UK motor? That's in the context, I guess, of your competitive advantage today. I get probably lots changed over the last five or 10 years, or maybe not much has changed.
I'm just interested in the, the health of the structural growth engine rather than just the, the impact of the pricing cycle. Thanks.
Yes, there's definitely much more to go for, more than 80% to go for. I think this didn't change. As Geraint mentioned before, the way we run the business is really looking at cumulative profit in the medium term and maximize that value. Then, depending on where we are in the cycle and what's our expectation for the market and also what competitor do, this may result in growing the business, shrinking the business, staying flat, we try to be very reactive and very agile. This philosophy didn't change. We'll continue to maximize the accumulated profitability over the medium term. One of the question may be: Do you have competitive advantage you can leverage to continue to grow to the cycle?
If, if you look at the data historically, I would say that our competitive advantage, the market is, broadly speaking, similar. Like, of course, there are years that are higher and lower, but broadly speaking, on average, it's similar what we used to, used to be. I don't see any reason why, when the conditions are right, we cannot grow our market share. Your second point was? That was the first and only one. Yes. Okay, I'm gonna take a couple of questions from home.
Ladies and gentlemen, we now begin the question and answer session from the phone. If you wish to ask a question, please press star one one on your telephone and wait for your name to be announced. Can we increase the volume a bit? Please star one one if you wish to ask a question. We are now taking the first question. The first question is from Ashik Musaddi from Morgan Stanley. Please go ahead. Your line is open.
Yeah, thank you, and good afternoon, everyone. This is Ashik Musaddi from Morgan Stanley. Just a couple of questions I have, and I, I appreciate that there is another call on IFRS 17, but I guess, is it possible to get some color about what is the gap between discounting benefit and unwinding drag? The reason I'm asking this is because I'm just trying to gauge a bit of sense as to whether your combined ratio has a big discounting benefit, let's say six, seven points, or is it just one or two points?
I mean, normally, short tail lines, motor businesses are having two, three points benefit only, but given that your prudent reserving approach, it might be the case that you have a big discounting benefit, which is not reflected in the unwind at this point, i.e., there is more unwind to happen. So that's the gap I'm trying to understand, if you can give some color on that gap. Secondly, is it fair to say that your, your, your underwriting margins right now is, is much better than 2018, 2019? Sorry, this is kind of a similar question that Ivan asked earlier. On slide number 12, if I'm reading this slide correctly, what you reported in first half is 80% book-loss ratio, which is expected to get better given that the pricing versus inflation backdrop you have been flagging.
Let's say even two points better, 83, versus you kind of booked 90% in 2018, 2019. Would you say that you are in a much better underwriting position right now compared to pre-COVID? The reason I'm asking is just a bit counterintuitive to think about the current inflationary backdrop, but it might be that pricing is just so amazing that underwriting profits is probably at the best ever level. Thank you.
You want to take the first? Take the first.
The discounted one is a bit technical. There are. We've given you undiscounted triangles and obviously discounted loss ratios as well. You can see the initial impact of, well, how much the discounting reduces the loss ratio and the impact on claims in the current year. For the past years, we've shown you how much that is in GBP and how that unwinds, and we've also shown you a pattern of over how many years that discounting should unwind. Clearly, the impact on 2023 will be higher than 2022, 'cause the interest rate that we use to discount is higher. Arguably, this is a peak discounting year. You should get a sense of how much discounting is worth from the information we've given you and how, what period of time that discounting unwinds over to.
We can spend more time on that tomorrow, Ashik, if you want.
Do you want to take underwriting?
Yeah, the second one, I think it's too early in the underwriting year or the actual year to comment on what the ultimate outcome of 2023 is going to be. It's too early to comment, I think, on that one. The, you know, you, you mentioned that inflation has been high for a couple of periods, and that's certainly the case, but the cumulative % rate increase in UK motor over 15 months or so is also fairly large. We shouldn't be too surprised to see an improvement in the underwriting year results for this year.
Thanks. Another question from the phone? No. I think we have time for-
No, ma'am, there are no further questions from the phone. I will hand back for closing remarks.
One and two.
Hi, Ben Firmin from HSBC. My first question is coming towards the back book releases. Your reserve release is quite strong this half year. How do I tie that back to your comment about being quite prudent on large BI? Where is that coming from? Is that from specific case reserve releases, or is that from a general reduction in margin on that front? I guess that ties with the question around profit commissions as well. With the new IFRS 17, does that mean that you hit your profit commission tranches early, or will you strip out the discounting and how does that work to the economics of that front? The second one is clarification on Solvency II.
The Solvency II will be impacted by sort of higher capital intensity in H2 as you grow that business, UK Motor. You plus have Luko in there as well. How do I think about that developing over the next six months? Coming back to your comment about the fact that the 10% that you retain has helped fund your growth. You have Admiral Money in there, which is fairly capital intensive under the Solvency II framework. Does that mean you're still covering or growing your solvency from here onwards? If I may, just very cheeky, ask a final question. You mentioned that your claims inflation for the whole year is at 10%.
What was it in the first half of the year, and what's the delta between the written prices versus the inflation level? Thank you.
I think on the reserve release, something worth to mention is that, if you look at the first six months, a lot of reserve release comes still from 2020, 2021, and paid claims, and we're not observing yet strong inflation in BI. This support reserve release, but we've been prudent both in our case reserve as well as on.
... a buffer, like, our buffer on top of it. I think there may be more inflation on BI coming through in terms of wage inflation, but still early to say. I will keep a quite conservative outlook. Just very briefly on claims inflation, we mentioned more or less 10% for the year. Like, it's, it's difficult to have a precise peak, and probably we wouldn't have not expect such a high level of inflation in the first half. I think we're all subject to more volatility than usual in terms of inflation. Having said that, this 10% for the year is made by a slightly higher level for the first half, and expectation of a slightly lower level on the second half. That's probably where I would go.
I think there was a question, Geraint, on IFRS 17 discounting and issue.
Yeah, there was one about profit commission. The starting from a lower percentile position, does that mean you recognize profit quicker? I think clearly it does, I think. The ultimate... the, the gap in time and the difference between the first pick of loss ratio and ultimate point, both will be lower. That would mean recognition of profit commission sooner, depending on the profitability of the year in question, of course.
I guess with discounting as well, you get an additional lower level of combined ratio there as well. Does that mean your profit commission tranches are better as well then?
That, that question we'll take tomorrow on the recognition of co-insurance profit commission particularly, and quota share reinsurance, because of the change in the way that gets accounted for now, that also comes through in a different way. Let's take that tomorrow. The other question was on capital and, and capital growth. The... and particularly a question on Admiral Money. Admiral Money is not that capital intense, I would argue. We hold roughly 6% of the loans balance as the capital requirement, so it's about GBP 60 million. We would expect that to grow more modestly in the second half, so we don't expect the capital requirement for loans to grow that much in the second half. As I said earlier, if the business grows and we think it's the right time to grow, then the capital requirement will grow for the insurance business.
I don't expect any change in our ability to fund that through retained profits for the short term, for sure.
Sorry, I need to bring it to a close. We're out of time. We'll be around, and, thank you very much for your interest, and thank you for coming.