Good morning, everyone. I think we are good to go. I think everyone's in the meeting. A very warm welcome to our half year results. You'll be pleased to hear this year we've found someone who can use PowerPoint better than me and Adam, so you'll see some improvement in the slides this year. Sadly, I'm still in charge of the tech, so fingers crossed for the next 30 minutes. For those of you who would prefer to follow the pack, online, it's now on our website, if you want to find it, find it there. We're gonna have our usual run through of, the results and how we see the market. We're also gonna spend a little more time on our strategy now we're in slightly calmer waters after the last couple of years.
We'll have plenty of time for Q&A at the end. Do feel free to put Q&A in the Q&A box at the top of the Teams screen. Alternatively, at the end, we'll do a sort of hand raise and, we'll come to you individually. Onto the highlights, I think what we are seeing this year is the benefits of having moved early and assertively to cover claims inflation. We've got a very strong capital position, and we therefore are confident of giving good returns to our investors at the end of this year. Strong financial result, obviously, a huge increase in profit, exactly as we expected. Big improvements on the combined operating ratio, really pleasing loss ratio on car, and within that, also good underlying loss ratios on bike and taxi. We're now very happy with the underlying profitability of those products.
Also, good improvement in the expense ratio. Very healthy growth, 26% up overall, 35% on motor. I think importantly, we also expect to grow further in the second half of this year. We'll talk more about the market dynamics later and how we intend to play our way through that. Also, very good progress on our key initiatives. The price and infrastructure, I know I've both bored and confused people with over the last year or two. What we'll talk about today is really how we intend to use that in a little more detail. Motorcycle distribution, we're well on track to expand that in the early part of next year, and direct to customer efficiencies for our direct products are also going very well.
I guess the key thing is we've delivered these, I think, very strong financial results, while we're also fully and perhaps slightly ahead of track to cover claims inflation at 10%. One of our key priorities is always to cover claims inflation first. Profitability is our target, and volume continues to be the output. So we're in a very strong position at the half year stage, with a very firm platform, which gives us options going forward. We've also got very low exposure to regulatory and political focus, and we'll talk more about that as we go, go through this presentation. So very strong position at the half year, and we anticipate much more to come in the second half of the year. I will then pause for a few minutes, and Adam will take you through the, the highlight numbers.
Thanks, Geoff. Hi, everyone. So I'll take you through our financial performance for the first half of 2024. Overall, our results are significantly ahead of the comparison period in 2023 and continue the momentum gained during last year. Premium is up around 26% versus H1 2023 and at a similar level to the second half of last year. That's despite evidence of market price increases slowing in the second quarter of this year, while we've continued to price in claims inflation in full. Insurance revenue shows how that gross written premium is earned through, and that's increased by 41% since H1 2023. Loss ratio has improved by 4.7 percentage points since the first half of last year and is similar to the full-year 2023, and I'll dig into that in my next slide.
Another significant improvement has come through in our expense ratio, which is down to 26.3% for the first half of the year, from 31.8% in the first half of last year. That's primarily due to operating leverage working in our favor, having grown considerably in the previous 18 months, and our continued tight control of costs across the business. Overall, that adds up to a combined operating ratio of 10.2 percentage points versus H1 2023 improvement and a net profit margin of 18%. That means that our rates of profit generation has improved considerably, with a profit before tax of just over GBP 20 million, more than 4x that earned in the first half of last year.
Because of that, we're comfortable paying an ordinary dividend at the interim stage of 1.7p, in line with our dividend policy. Our post-dividend solvency coverage ratio sits at a very comfortable 185.2%. Geoff, we can flick onto the next slide, please. So I've broken down some of the moving parts in our loss ratio to help show how it's evolved from the full-year 2023. This waterfall shows the loss ratio across all of our products together. The reported net loss ratio for the full-year 2023 was 56.3%. Due to the pricing and underwriting actions taken over the past 18 months, our current year loss ratio has improved by five percentage points.
It's worth noting that all else being equal in the first half of the year, the current year loss ratio is expected to be worse than the full-year due to it having a high proportion of open and undeveloped claims. We've seen a lower impact from discounting in H1 2024, which is down to a combination of lower average discount rates in the period and a normal variation in the cash flows associated with claims. Overall, the impact of discounting on the profit and loss account, which is the discounting credit, less the run-off expense, is very small at GBP 0.2 million, as expected. Prior year development has been less favorable than in 2023. Back to the previous slide, please. Which has partially offset the significant improvement in the current year loss ratio.
That's mainly down to large movements on a small number of claims, rather than any correction made across the reserves, the impact of which is far greater on a six-month period than it would be on the full-year. Now, onto the next slide, please.... So this gives a feel for how the different products have developed over the past year. With the core motor vehicle product having returned to significant growth, the relative impact of the less mature products, which naturally have more volatile loss ratios, is reduced, leading to a more stable overall loss ratio and rebalancing the business towards the core product as intended from the outset.
It is pleasing to see that together, motorcycle and taxi products have generated a profitable return, and we think that on an underlying basis, these are both profitable lines of business, which provide useful resilience to the portfolio as a whole. On to the next one, please, Geoff. This waterfall shows how capital's built up organically over time and how it's been distributed by way of dividends. There are a few key points to note here. Our interim dividend policy remains to pay out 1/3 of the previous year's ordinary dividend, which allows for a predictable interim dividend, which should be well covered under most scenarios. At the full-year, we assess whether additional capital is available to distribute. This would usually approximate to anything over an appropriate point within our preferred solvency coverage range of 140%-160%.
Our primary means of distribution remains an ordinary and special dividend at year-end, and we consider whether any further capital return is appropriate at that point. And now back to you, please, Geoff.
Thank you, Adam. That didn't take me too long to mess up on the tech. So I know you'd be disappointed if we didn't spend some time talking about the market and our view of claims inflation, so that is exactly what we'll do next. As you'd expect, we remain fully focused on market developments. We think claims inflation will remain high for 2024 and will also remain elevated going into 2025. Maybe slightly softened, but still very high compared to historic levels. The market continues to be very dynamic, and we'll talk about our view of how the market may be moving in a moment. Above average or above inflation GWP increases last year, corrected for a very extended period of our view, irrational and unprofitable pricing.
Given that there was always going to be a slowing of price increase this year, I think the market was probably around 35%-40% last year. Clearly, that's not going to happen again next, this year, and nor do we expect it to. However, we do think market price increases are needed to fund forward-looking claims inflation as well. Regulatory focus stays on product value, and probably renewed focus on things like total loss as well. And as you'll be aware, the Labour manifesto pre-election definitely indicated a political focus on, on premiums. My view, and I think our view as a team, is we haven't seen the ABI stats for half one yet. I think they may be due next week. I would suspect they're going to show a very low level of increase across the market for the first half year.
To reiterate, we have put through quite a lot of price to make sure we are covering that forward-looking claims inflation. So what's going on in the market? We think there are some possible positive factors to come through this year. We would hope rational market price increases come through in the second half of the year, some stabilization of used car prices, and hopefully, continued improvements in part supply, which will knock through to credit hire or to delays in repair and credit hire costs. The flip side of that, of course, is there could be some not very rational pricing behavior. Underlying claims inflation will continue, in our view. Global politics have a factor that will include impacts on the supply chain and supply chain costs.
Cost of living challenges may increase claims frequency, and ongoing uncertainty of claims assessment, driven by some of the delays in settling, especially small personal injury claims. There are some general uncertainties, which is the FCA and government motor market focus, and the Ogden Discount Rate, which you'll be aware has to be announced by, I think, the eleventh of January, next year. So twice the claims inflation. All signs are that claims inflation, as I mentioned, will continue at high levels. Some of you may have seen the recent market seminar by EY, which landed on exactly the same number as us at about 10%. Other Big Four consultancy feedback suggests very high single digit, or up and around the 10% level. So we don't believe our views here are out of line at all. What's driving this?
Overall, while overall inflation is due to fall, many of the factors that impact claims inflation are quite specific to the industry or to claims, particularly. We look at the cost of fixing cars, high energy costs, continued labor rate pressure, ongoing high theft rates, actually interestingly moving around between different vehicle types now, cost and frequency of windscreen claims, the continued rise of more complex and electric vehicles, and there are some very aggressive credit repair and credit hire models in the market, which do drive up cost as well. I paint the voice of doom all the time, so there are some positives as well, which is, say, used car values and credit hire softening.
If you then think about, sort of the cost of fixing people and personal injury claims, public sector minimum wage increases will drive further cost pressure in the care industry. I think we saw a proposed, pay deal for junior doctors yesterday of 20%-odd over the next two years. That's undoubtedly going to knock through into further wage inflation in the private sector and I guess more widely in the NHS as well. That's on top of an ongoing scarcity of resource in those care industries. The whiplash tariff hasn't yet come out. That could well be at around a 20% increase, but we'll see. Combined with that is the small claims track limit, which is still at GBP 5,000. If that doesn't increase, given the JCG increases and the whiplash tariff, we could see more claims exceeding that, that GBP 5,000 l imit.
which could obviously inflate claims, but might also make it more attractive for legal firms to pursue those claims. So overall, we are pretty confident in our call at 10% claims inflation. What's going on in the market? We think that it's probably not right to say there is a market at the moment. We think there's very differentiated strategies within the market. This is how we've been thinking about it for this year. On the Y-axis here, we have a sort of scale of companies who are rational, well-funded, or profitable, or some combination of those, and then some companies that are not any of those things, so irrational, poorly funded, or loss-making. You then have companies that are growth-oriented or margin-oriented, and that then we think leads to sort of four sectors of the market.
We think there are some good, well-funded, profitable companies, who are growth-oriented. They may have taken a calculated risk on claims inflation, put through low price increases for the first half of this year, and maybe a controlled sacrifice of margin for volume. There may have been some tailwinds coming through from last year in terms of the amount of price put on. Maybe a bit of reinsurance cost benefit as well. You then have, and this is unashamedly green because it's where we plant our flag, companies that are cautious on claims inflation; we'll always make sure we cover that first. Looking to maintain margins. We'll sacrifice volume if necessary, but very happy to take more margin, take more volume where we think the margin supports it.
You have some weak companies who want to do the right thing, are aiming to meet inflation, but maybe weakly capitalized. They may be MGAs and losing capacity. These are companies that will have a tough time in a claims inflation environment. And then you have the box, which are growth-oriented and irrational, poorly funded, or loss-making. Could be very low price increases, either over-optimism on where claims inflation may go, blissful ignorance. Potentially companies that are looking to grow, potentially for M&A or for other purposes. We think this is the box that can cause problems in the market, and that then sort of drives a corridor of uncertainty where people aren't quite sure what to do.
I think the really interesting bit for the second half is what perhaps some of those companies in the top left box do. There's a risk that companies chase rate down to maintain volume, or perhaps they move to the green box, where we are slightly, and are prepared to sacrifice volume for margin. So I think probably difficult to say there is a market approach for the second half of this year. It'll be really interesting to see where different competitors move in the next few months. On the legislative and regulatory focus, as we mentioned, there were clearly comments pre-election from Labour about the cost of insurance. I guess our view overall is that premiums reflect the underlying cost of claims. I don't want to spend too much time on these slides.
I think the key thing for us is that the market, to us, feels like it delivers well for consumers. Through price transparency, it's highly competitive, there's lots of product choice, and it does reflect the underlying cost of, cost of claims that we've outlined in our claims inflation slide. In any event, we think we are well-positioned. All our products go through a robust, fair value assessment, and we've taken action where we think that's been necessary, with a very transparent and fair valuation of claims on things like total loss. Consistent target margin across our products and market segments, and we seek to provide insurance to the widest possible market. We've got no appetite to generate income from claims activities, and a low reliance on non-premium income, things like add-on products and premium finance.
I'm going to spend a few minutes on our wider strategy now we are in sort of slightly calmer waters after a very lively few years. There's also going to be an investment pack published on our website later this year, which will give a few more details on things we'll talk about here, and also talk more about customers and staff issues, for example. But just to reiterate our core strengths, and this is a thing we spend a lot of time making sure we don't lose sight of. We have highly integrated teams and business processes, very short and effective feedback loops between claims and pricing, which we consider vital for staying on top of claims inflation and maximizing volume opportunities when they rise.
Very large and consistent data set for non-standard private car business, the sort of data lake as we've described it in the past. A very efficient operating structure. Hopefully, we've demonstrated over the last few years a keen insight into market developments and a, I think, unique culture focused on profitable growth, both direct and through our partner brokers. Where are we now? I think we have re-established our long-standing, successful strategy. I take no shame in restating. You know, we see profitability as the target and volume as the outcome. I think we've shown very strong resilience across the market cycle, probably under the most stressed scenarios we could think of, of having COVID, then bouncing into the high inflation environment. We've generated our highest ever level of premium, and we expect this year to be higher again. We're underwriting at market-leading margins.
We've established two new product lines during that period that we think will support profitable growth in future periods. And we've maintained our focus on our expertise and widening our competitive moat in our, in our typical competitive market segments. So short term, what are we doing? Enhancing the efficiency of our direct operations. We want to see customers able to deal with us online, if that's what they prefer to do. That's much more cost effective, and I think a better customer experience all around. Really, the key one for us is completing the build of the infrastructure for our pricing. We think that will allow us to expend, expand rather, our competitiveness profitably over time, and enhance motorcycle product distribution. As I mentioned, we're very happy with the underlying profitability.
What we want to do now is build a bigger portfolio, and we are well set to do that as we go into the early part of next year. Longer term, we don't feel at all short of growth opportunities, we're less than 1.5% of the market by premium and probably less than 1% by product share. That's a very long runway ahead of us in terms of being able to expand from our current base. The infrastructure for that is what we're putting in place this year through the enhanced pricing, sophistication and technology. There is a wealth of engines and wheels products that we could look to underwrite in future years. Not in the short term, but in future periods.
Anything we do will stay true to our principles of being in the broadly non-standard, higher margin part of the market, where we can leverage our core strengths. Just one slide I'd like, we would like to put up. Hopefully. Just 'cause this slide always gives us the warm glow. This is probably the number one priority for us, is to maintain our position in among the very best combined ratios in the market. This is courtesy from their recent seminar. You will see us in the bottom left-hand corner, substantially better than most of the rest of the market in terms of combined operating ratio. Onto the outlook and the summary. We're in a very strong position at half two. We've established a very strong platform as we go into the second half of the year.
We've more than covered the amount of rate we need to put through so far to cover claims inflation. We're confident we're going to align within our combined operating ratio range of 75%-80%. We're very vigilant on identifying claims trend, and think we're pricing correctly for that. And importantly, we expect further growth to come through on a monthly basis through this year. So overall, we would see it as a pretty strong return to form. Strong performance continues. Growth in premium for this year should be our highest ever, and we'll be delivering that, having covered claims inflation and delivering a combined operating ratio amongst the very best in the market, and heading back towards where we want to be on a long-term basis. At that point, I am going to pause, and we will open up the floor to Q&A.
If you raise your hands, Hanro will then give you access to the mic. Hanro, can you introduce people as we go?
Yes, we can. The first question is from James Pearce, from Jefferies. You can just unmute yourself, James.
Got it. Thank you. Hey, guys.
Hi.
So two questions from me. So first one's on claims inflation. Just wondered if that ten percent claims inflation number that you've given, is that what you're actually currently seeing, or is there some margin in there to account for the uncertainties that you listed out in the presentation? So that's the first question. Second question's on your guidance. So you've reiterated that discounted combined ratio guidance for 75%-80% this year.
Mm-hmm.
You have also said that it's dependent on the level of discounting credit recorded for the year. So just wondering how we should think about the combined ratio range, I guess, on an undiscounted basis. And when you talk about writing at target margins, do you think about that on an undiscounted basis or a discounted basis? Thank you.
Sure. Adam, perhaps you can take the two first on the combined operating ratio guidance. Then Matt, Trevor, you can talk about where we are on claims inflation. So, Adam-
Sure
... you can go first.
So on the guidance, absolutely, that's on a discounted basis. The discounting credit being the sort of slightly unknown factor within there. I think we were, we're quite open that that might mean that the undiscounted combined ratio came in above 80% for 2024, and we're perfectly comfortable with that being the case, if that's right. You know, we're still in a situation where our expense ratio, while significantly improved from where it was last year, is higher than it would've been sort of four or five years ago. So, you know, if we have a similar loss experience, that's still going to put a combined ratio sort of outside an undiscounted 75%-80% range. And that's, as I say, perfectly within our sort of strategic ambitions at this point.
So that's fine with us. Discounted credit, as I mentioned, has been slightly lower in the first half of this year than it was throughout last year. I suppose it remains to be seen exactly what credit we get from that throughout the full-year. Although, I think the important thing to note for us is that we always expect it to have very little impression on the P&L as a whole, and that's certainly what happened in the first half of this year, when you take into account the run-off cost.
Excellent. Thank you, Adam. Matt, do you want to talk about claims inflation? I think the question is, is that what we're seeing now, or is that sort of allowing for more in the future?
So 10% is our best view on what we think the claims inflation will run at going forward. So that kind of accounts for both what we're seeing and what we expect to see.
... Thank you, Matt.
Make sure that everything's added, so.
Yeah.
I was gonna make exactly the same point in terms of the 10% is our look forward. In terms of prior years, the points that we've made around uncertainties, for example, in terms of the tariff, whether that will apply to outstanding claims or just new claims, but we've reflected all of those into our reserves.
Thank you, Trevor. Thanks, Matt. Hopefully, I answered the question, James?
Yeah, no, very clear. Thank you.
Thank you. Hanro.
Next question is from Abid Hussain from Panmure. You can just unmute yourself.
Good morning, Abid.
Morning. Can you hear me?
Loud and clear.
Excellent. I've got three questions. The first one, if I can just go back to the previous question on target margins. So when you're thinking of writing at target margins, did you say that you are focused on the undiscounted combined ratio? And if that is the case, do you think at some point you can share what your guidance or what your target is on that basis going forward? I appreciate the guidance on the discounted combined ratio, but it's just that there's a bit of noise there on the discounting, which is obviously outside of your control. That's just bond yield movements. And so, just a question and a request there on the first question. And then the second question is on the regulatory environment you touched upon in your presentation.
Which areas do you think the regulator might get involved with in terms of another review, if there is another review across the motor insurance industry? And then how exposed do you think Sabre is to such a review? And that's the second question. And then the final question is on your excess capital. Strong capital coverage ratio, so almost a two ratio, how quickly are you thinking of trying to get back towards 160% through additional capital distribution, whether it's specials or something else? How quickly do you wanna get back to 160? Thank you.
Okay, perhaps we'll go in reverse order, and Adam, you can pick up the target question at the end. I think excess capital, we've always been very clear, we don't wanna hang on to excess capital. People can invest it better than we can. We'll take a view on what our capital requirement looks like in terms of growth and capital needed to support growth as we get towards the end of this year. Then I think we'll be taking a pretty sensible view on how quickly we can get that back. I'm not gonna pin myself down to anything now, Abid, but, we've always been very clear we don't wanna hang on to excess for no reason. On the regulatory environment, I think there's a few bits here.
Clearly, we know the FCA have been looking at things like ancillaries. So that's the product sold alongside the core product. The fair value assessments are now fairly rigorous. So I wouldn't be surprised to see more focus put on ancillary products. We know premium finance has been in focus. We consider we're very well placed on both of those. We're not dependent on them anyway, and we think our APR and our prices for ancillaries were among the best in the market, so we don't consider ourselves exposed there. I think the government is also gonna be concerned about what's been called a poverty premium. So that is where the least affluent in society potentially face the highest premiums because of where they live or their roles or their jobs.
We apply exactly the same target margin to all of our customer segments. We don't look to load any particular segment groups. So we think we're pretty well positioned on that one. We're clearly working closely with the ABI, who are engaged with government, in terms of what are the government thinking about, what solutions might look like. So we're very closely plugged into that, into that process. Adam, there was another question about can we give undiscounted guidance, I think?
Yes. So on the guidance point, I mean, we always try and be transparent and comparable as far as we can, and sort of move with the market expectations as to how we'll form that guidance. IFRS 17 has been in for a little while now, and we're all learning how best to deal with that, and I think there is a bit of a steer from the market that people would like now sort of undiscounted numbers, so we can start to guide on that basis, potentially. It's probably a time to reflect on what the right kind of guidance is, bearing in mind that doesn't change our overall focus, which is to arrive at the most profitable margins that we can achieve, regardless of sort of discounted versus undiscounted.
I suppose on that one, point taken, and it's sort of worth considering as we go through the rest of this year as to how we guide going forward.
Thanks, Adam.
Thank you.
Thank you. Hanro.
Next question is from Nick Johnson, from Deutsche Bank. Nick, if you can unmute yourself.
Great. Thanks. Hi, team. Morning. Just one. Hi, hi. Hi, Geoff. Question on growth. You say expect further growth in the second half. Just wondering how dependent that is on market prices increasing. I guess market pricing feels pretty unpredictable. Just wondering what gives you the confidence you can deliver further growth in the second half, given that there wasn't much growth in premium income in May and June? Thanks.
Yeah, sure. I mean, I guess the key thing here, Nick, is the most important thing for us was to make sure we'd covered claims inflation first. Now we're well on track to doing that, where we're sort of ahead of where we might expect to be at this point. Given that, we've got a very strong platform, and we now consider we have options, that means we can either optimize margin, or we can optimize volume, or I guess find an optimal point between, between the two of them. Now, we always have pricing assumptions at the start of the year. It may be we have some headroom in some of those assumptions that we can gently unwind. We generally think we have options within our control.
If the market goes up, that's gonna be a great thing, 'cause we can then take margin and accept growth. If the margin doesn't move up, I think we have other levers we can pull to ensure we do carry on growing, if that's the optimal point to be. Matt, do you wanna say anything else around that?
I think for us, it's gonna be continuing to make sure we optimize that profitability. Our key focus will be making sure we make the optimal profits for the premium writing.
Yeah, absolutely. Thank you. Nick, did that answer the question? So I guess overall, that yes, yes, LV can grow more if the market's supportive, but we can also grow, should we think that's the optimal place to be, through our own activities as well.
That's clear. Thanks very much. Thank you.
Hanro.
Next question is from Ivan Bokhmat from Barclays.
Hi, good morning. Can you hear me?
I can.
Yep, loud and clear.
Hi. Thank you. So I've got three questions. The first one, perhaps just following up on, on the question Nick just asked. I think on the policy count, we've seen a bit of a drop since, end of April and May and June. Just wondering if you could share a little bit more color, whether that's coming in the, you know, your core non-standard segment or, you know, it's, it's just the general market competition picking up, you know, perhaps those irrational players. Second question, you have alluded to Ogden rate in your market outlook slides. Maybe you could share what your reasonable expectation might be, and how do you think the market is, is reflecting that in the pricing?
The third question, perhaps now that as the time is passing, could you share a little bit more, on the insurer-hosted pricing, what the benefits of that might be, for growth, for the loss ratio, or maybe what the costs associated with that could filter through in 2025? Thanks.
Sure. Okay, I'll start, Matt. Maybe you can pick up on some of the bits around insurer-hosted pricing in a second. On the policy count, I would say we're losing that from the fringe of the mass market. We're still feeling very secure within our competitive moat in terms of the non-standard business, so we don't really feel undermined, in that part of the market at all. Ogden Discount Rate, interesting one, I guess. Trevor, maybe you can comment here, what some of the things we're seeing from some of the legal companies we work with? You can find your unmute button somewhere.
Right. There we go, unmuted. Morning, Ivan. I think that it's fair to say that there's a range of views in terms of where we're gonna end up with the discount rate. And of course, we've got budgets that are gonna happen in October, which may also have some sort of bearing. I guess our view is, in England and Wales, which of course is where the majority of the claims will arise, is that we will see a small improvement, but we're not expecting anything significant. Importantly, however, we continue to reserve on the basis of the current discount rate, so we're not taking any benefit for potential improvements.
We believe, and I think, Ivan, you sort of extended your question to what's competition doing, we believe that the competition has been taking some benefit, and that those numbers may well have been reported in 2023.
So, Trevor, we have things like, like, thoughtful around investment advice, for example, which, you know, is a factor on top of the underlying discount rate.
Yeah, so the constituent parts, whilst the returns are likely to improve, we're, we're nervous that there may well be some add-on layers of cost in terms of investment advice, and certainly the sort of the half a percent margin that's currently in there. We're, we're gonna see Scotland and Northern Ireland rates come out possibly earlier. And that may, that may give some indication. However, the methodology in those jurisdictions is wholly, is, is wholly different. Of course, the other question that we're waiting to be answered is, will we remain on the current basis of a single rate, or will we end up with a dual rate? The current view is very much that we'll end up with a single rate, but a dual rate applying to different periods or different heads of damage is, is a possibility.
And it's fair to say it's an unhelpful bit of timing. You and Matt have already got your head in your hands about the thought of doing this in the first couple of weeks of next year anyway.
Yeah, less than optimum.
Yeah. On insurer-hosted pricing, I don't think you'll see the cost, Ivan, come through in any significant way. It's a small, small software house development. Really, the really great work is gone here by our own internal teams, so it's an internal prioritization process, I guess. But there is a small, you know, capital expenditure, but nothing that you'll really see make any difference. You won't be surprised to hear me say I'm not gonna tell you what we're gonna do, in terms of how we're gonna deploy this until after we've done it. Matt, anything you want to say around that?
I guess the high-level things are, it does allow, I think, which we've talked about before, it allows additional sophistication in what we're doing and improves the speed to market of any incremental improvements you want to make. So overall, we think it'll be a great benefit to the company.
Yeah. We think that's gonna be a big driver of how we can gradually expand our competitive footprint over time.
... Thanks so much.
Okay. Pleasure. Thank you. Hanro.
And then, Geoff, the last question is from Andreas van Embden from Peel Hunt.
Yes, um-
Hi, Andreas.
Thank you. Good morning. Hi. Just two questions from me. Just on the pricing dynamics, which you described in your presentation, I just wondered whether what we're seeing in the mass market and, you know, the numbers coming out of ABI and Confused.com, whether you're seeing that spilling over into the non-standard market. Are these two markets behaving in the same way, or is there... are there any differences that you're seeing in terms of how pricing is moving in non-standard? And could you maybe also comment on the competitiveness of the non-standard market today? Are you still seeing some players exiting, or do you think it's gonna become more competitive in the second half of the year? My second question is actually on your reinsurance program. Just a numbers question for you, Adam.
I think your reinsurance P&L was quite positive in the first half of the year. I think you made a GBP 8 million gain on it. I just wondered whether this is just your reinsurance program helping you out with that sort of additional reserving and that additional prudence you're putting on your reserves in the first half of the year, or just does it just reflect the growth of your book? Thanks.
Sure. I mean, Matt, perhaps you might take the first bit on reinsurance and the second. If we talk about the pricing dynamics, it's certainly impacting the non-standard market much less than the mass market, Andreas. Given that we've put on quite a lot of rate, and we don't think the market's put on much at all with any price elasticity, if it was as impactful for us, we wouldn't be writing any business at all. And that's clearly not the case. We've written very healthy levels of business. So I think there's definitely less impact in the non-standard area. We haven't really seen anyone new join. No, we continue to see some MGAs struggle for capacity. So I don't think much of an update really on the full-year pitch we outlined.
No, we're certainly not complacent in this area, but at the moment, we feel we're very happy with being in our part of the pond in terms of the, the market. Matt, on the reinsurance, do you want to talk about how the reinsurance impacted, and I think it's worked pretty effectively?
Yeah, so during the first half of the year, the reinsurance in force was the same as the second half of last year. The performance has been in line with expected, so sometimes that'd be- it'd be good or look like a good result on reinsurance, sometimes it would be poor. The idea of that reinsurance is to smooth through that volatility on the larger losses, so we're happy with how that's been performing.
Yeah, so the XOL programs worked exactly as we would hope it would work to smooth the result. Adam, anything you wanted to add on that?
No, that's absolutely right. I mean, the gross result by definition is subject to more volatility. Gross reserves carry a decent risk adjustment and also obviously, you know, the movements generally on larger claims are more significant. The reinsurance program is there to absorb those large movements and make the impact on our P&L relatively small, and in this case, that's worked to reduce the impact on the P&L of those large gross movements.
All right. Thank you very much.
Thank you. I don't know, is there anything... anything else?
No further questions, or Nick has just raised-
I can just see-
Yeah. Yeah. So Nick-
Yeah
... if you can just unmute yourself.
Hi, thanks very much. Just a quick follow-up on the reinsurance side of things. Can you say anything about how your reinsurance program and cost has changed for the year ahead? Am I right in thinking you may have just renewed that? Just wondering if that would be a positive or a negative to net premium growth for the year ahead. Thanks.
Thank you. We're not gonna give full details there, but I think what we can say is we got a pretty decent discount. But that discount was also in line with our expectations, and therefore, it's inside out. It's already within our assumptions, Nick. So it was a decent discount. We're very pleased with the result. Very good relationships with our reinsurers, but we'd anticipated that result as well.
Got it. Thanks very much.
Okay.
No remaining questions, Geoff.
Thank you, Hanro. In that case, just a final couple of words, and thank you all very much for your time. Just to reiterate, we're very happy where we are at the half year point. We think we've built a really strong platform, really good foundations, and now we've got some pretty exciting options ahead of us for the second half year. So thank you. Look forward to talking more about that at the full-year, I guess. Thanks a lot. See you later.