Good morning, and welcome to Admiral's 2020 Interim Results Presentation. Thank you very much for participating, and I hope you and yours are flourishing in these difficult times. I'm David Stevens, Admiral Group CEO.

And I'm Milena Mondini, Group CEO Designate.

We've taken advantage of this virtual format to invite a number of senior managers to participate today. We're going to start with Geraint Jones, CFO, who will talk you through the key financials. And then Cristina Nestares, Head of our U.K. Insurance Operation, will talk about the core business. Costantino Moretti, our recently appointed Head of International Insurance, will talk about our International Insurance operations. And Elena Betés, Head of Comparison Platforms, will tell you how those have performed for us over the last 6 months. And towards the end, Scott Cargill, our Head of Loans, will, you guessed it, talk about our Loans business. Before we start that out, I've asked Milena to give you a bit of an overview of Admiral's response to COVID. Over to you, Milena.

Thank you, David, and good morning, everybody. These have been very challenging times that we have faced, but Admiral has performed very well, is proven to be very resilient and has focused on the right thing. I'm hugely proud of how Admiral reacted. I've always been very proud to work for Admiral. But in the last months, it has been heartwarming to see the commitment and the energy of our staff to support customers, each other and the broader community. The whole company is united as ever, stood up for its values, adopted quickly, continue to focus on the business, delivering a strong set of results and putting the customer at the heart and the center, and all this despite the disruption. We have been received such a great feedback from our customers, particularly in response to our Admiral Stay At Home Refund, as you can see in these slides and which I will talk more about later. In general, COVID has been a major disruption for everybody. But we're beginning to see the world entering gradually into a new normal. There have been several market-wide impacts, but the 2 most relevant ones for our core business have been, first, a temporary drop-down of customer shopping for insurance, as you can see on the left, naturally partially offset by strengthened retention and now reignited; and second, a massive reduction in driving your lockdown, as you can see on the right, with a low in April when motor vehicle usage was only roughly 30% of February and now, as restriction lift, reverting back towards more normal levels. Beyond Motor, the impact on Household was less pronounced, and we took early and proactive measures in our Travel and Loans business and stopped writing new business for this product, so we could focus attentively and entirely on our existing customers. Staying true to Admiral approach and values, we have strived to look after all our stakeholders. The biggest highlight was the decision to pay back £110 million to our Motor customers through the Admiral Stay At Home Refund, the first and only rebate of its kind in the U.K. Customer were using our product less, and simply, it seems fair to refund them. But we also put in place many other initiatives to support our customer. For example, in the U.K., we have weighed the access for health care professionals. In France, we gave them free breakdown cover, and in Italy, we provided the free COVID protection product. We've been keen to give back to our community as well. In the U.K., we launched the Admiral Support Fund to support charities across South Wales as well as contributed towards industry-wide charitable funds. Example of initiatives that we have supported include buying a tablet device for a nursery home to help residents to stay connected and the Admiral Stay at Home Half Marathon that saw Admiral staff, including majority of presenters today, together running the equivalent distance from Cardiff to the North Pole. Staff well-being has been paramount from day 0. We protected immediately our vulnerable colleagues and ensured job safety to all our staff without any government support. We implemented several initiatives to support our staff in the transition to homeworking. We have offered flexible working options and increased engagement. More than 95% of our staff felt well supported by the business in this period. And last but not least, we continue to deliver good performances for our shareholders, and we're going to pay a full half year dividend as well as the withheld full year '19 special dividend, as Geraint will explain soon. So what does the future hold? The outlook for the future is uncertain. We are entering what is likely to be the worst economic crisis of the last century. Some changes to consumer behaviors are here to stay; others, we don't know. It is unclear, for example, how mobility and car usage will evolve, as Cristina will explain better later. Also, we may see a second wave in the next months. Fortunately, our core business proved to be resilient. I would like to end by highlighting that opportunities always present themselves during times of crisis, and our intention is to ensure that we realize these opportunities. First, we have laid the foundation for strong operational resilience, and we want to build on this through further improvements to our technology and digital capabilities to enhance the user experience. Second, the move to remote working give us additional access to new talent and the chance to strengthen at the same time productivity and staff satisfaction by offering more flexible working options. And finally, the increased propensity to online shopping should benefit us with an increase in online distribution within our international operations and within our product lines such as Household and Loans in the U.K. where price comparison are not the dominant channel yet. I'm confident Admiral will come out from this crisis stronger than ever. To conclude, we have performed well, we have proven to be resilient, and our people have stepped up to the mark and delivered on Admiral core values. Thank you. Geraint will now share with you the group financial results.

Thanks, Milena. Hello, everyone. As we've been hearing, first half of 2020 has been a challenging period, and I'm proud of the way the group has responded, looking out for our staff, doing the right things by customers, delivering a very solid set of results, as we'll hear about today, not least supporting good causes in our communities. And you can see some pictures from the Admiral Stay at Home Half Marathon that Milena mentioned on a slide here. I'm going to mention some of the main features of the results, looking at top line, profit and closing on capital and dividend. First up is our usual highlights slide, and it sets out a generally very positive picture of the first half. Top line has been quite significantly impacted by COVID. The customer numbers continue to move on nicely, and all our insurance businesses are bigger now than they were at the start of the year. Further, material improvements in back year loss ratios in the U.K. led to profit and earnings per share moving up strongly by around 30% each. Those will see the percentage changes somewhat flattened by the non-repeat of some negative items last year. We're declaring a dividend of 70.5p for the first half, 12% up on 2019. And as Milena mentioned, based on the group's strong financial position, we're also confirming payment of the special dividend of 20.7p that we deferred back in April. And we closed the period with a reasonably stable and strong solvency ratio. Moving to the next slide to look at top line progression, and it's good to set out a fair amount of green on this slide despite the negative impacts of COVID. Cristina will cover the detail on the U.K., but despite a little bit of a roller coaster throughout the first half and being around 1% down at one point, we ended the period with more customers than 6 and 12 months ago. Turnover was down, impacted by the lower volumes in early lockdown discounts and, of course, significantly the premium rebate, add back the rebates and turnover was flat. Household grew nicely again, nearly 10% in turnover, 16% in customers. And our International businesses continued their progress, 1.5 million customers now outside the U.K. and turnover increasing. Comparison businesses were significantly impacted in the early part of the second quarter, although the latter part of H1 was much stronger. The turnover for the period was up nearly 10% half year on half year, a very positive result. And finally, net loans balances, although up nearly 10% versus 30th of June last year, they're in line with the 2019 year-end position, having risen in January and February but then reducing after we paused new business in March. To the next slide, and let's take a look at what's driving the significant increase in the profit. The table shows the year-on-year movements for each of the main parts of our business, starting with the U.K. Insurance, where profit was up nearly £60 million to £314 million. I remind you that the first half of 2019 included the £33 million negative impact from changing on to discount rate, so the underlying increase is more in the order of £25 million. Household result was up around £1 million, which was pleasing and came despite £5 million worth of worst weather in 2020. And the Travel insurance loss was around £1 million worse at around £2 million. And so the increase is coming from Motor, and it's made up of higher underwriting profit and profit commission, although a number of offsetting factors there including the rebate and also higher investment income. We've included a waterfall in the back of the pack which sets out an analysis of H1-to-H1 profit. Moving down, the International result improved quite significantly by around £9 million from a loss of £3 million to a profit of £6 million. We saw a notably higher profit in Europe and a smaller loss in the U.S. with improvements in both back and current year loss ratios and also growth leading to higher other revenue. The Comparison segment was resilient, and the combined result was up strongly despite the early impact of COVID, with Confused profit up over 50% in the first half. Admiral Loans, as expected, has reported the worst loss for H1 at around £9 million as we set up what we believe to be prudent provisions for expected credit losses in the second half and beyond. Detail on the other items is in the appendix. And finally, to address what impact COVID has had on the profit, tough to put a precise number on that, and there are numerous items that offset the significant claims benefit from lockdown such as the rebate, Admiral Loans loss, charitable support and lower other revenue, to name a few. And we estimate that the impact on H1 has been positive but not materially so. One of the main drivers of profit is U.K. loss ratio movements and reserve releases, and so we'll go there next. To the next slide, and the first chart on the left shows a number of things. The solid line is the usual current projection of the accident year loss ratio, along with changes in the last 6 months and since they were first projected. As you know, these numbers are prudent and especially so for the more recent years. U.S. pre-2015 didn't change much at all in the first half, as expected. Despite an unusual 2020 accident year, which we don't show a projection of at this point, movements on the back years were actually quite normal and mainly reflect releases on big claims as settlement activity continue to be at more normal levels after the slowdown a year or 2 back. And the chart on the right shows the contribution to profit from reserve releases. And as you can see, it's been another period with above-normal releases and high contribution to profit from back years, although the current period percentage is impacted by the lower premiums in the first half, notably the rebate. And if the percentage is adjusted for the rebate, it would be in line with 2019. We've maintained the level of prudence in the book reserves at the end of June in light of the uncertainty in the reserves after Q2. And whilst not shown on the chart, similarly in our International Insurance, we saw a period of good back year loss ratio development, and we remain very prudently reserved. To the next slide and turning now to look at the capital position and dividend. Firstly, on the left-hand side, the solvency position, as you can see, we're reporting a healthy and pretty consistent position with the comparative periods with a solvency ratio of 186%. Movements in the ratio from the end of 2019 as set out in the appendix and are largely as expected for the period other than hit from wider credit spreads, which was around 6 points at 30th of June. Internal model progress was in line with the plan despite remote working, and we made our submission to enter the PRA's pre-application process. We still expect to make our formal application for approval next year. On the right-hand side, that shows the dividend. We're declaring an interim of 70.5p per share, which is 12% higher than the 2019 payment and is a payout ratio of 85% of the first half profit. And we're confirming that due to the continued strong financial position and reduced level of uncertainty now compared to back in early April, we will pay the 20.7p special dividend that we deferred alongside the 2020 interim in October. Onto the next slide and to leave you with the key messages from my section. Top line progress was generally decent. And although negatively impacted by COVID, more recent trends have been much more positive. Profit was up strongly with generally very good results from around the group. And we maintained a strong solvency position after paying the interim 2020 dividend as well as the deferred special dividend. I'll hand you over now to Cristina to talk about the U.K.

Good morning. Thanks, Geraint. As you have said, this period has been a roller coaster for the U.K. Insurance business. I'm proud to say that despite all this, we're in a stronger position than we were a few months ago and also that despite COVID, the highlight of our results have been the same than in previous years, which is the strength of our reserve releases, a testimony of our underwriting capability. Now let's start talking about the top line in Motor insurance. First, a modest vehicle growth, it has been impacted our growth by the reduction in quotes and sales during the lockdown. And it has been partially helped by the fact that we have had very strong retention. Also, turnover was down by 8% due to the premium refund, and additional income was also down. And this was mostly down to the fact that we collected less fees and also that we had less income coming from our noncore claims just because we had less of those. So the combination of a reduction in income and an increase in expenses due to COVID has meant that our expense ratio has gone up by 1 point versus last year, but we expect this to be just a one-off. Moving on into claims, it's clear that the biggest impact of COVID in our business has been the strong reaction in frequency. You have a graph that shows car usage in the market. Frequency was down as much as 75% at the beginning of lockdown. And it's been going up week-on-week. Today, it's around minus 30%. COVID has also put some pressure on our repair process. And as we had less capacity in our garages, which meant more written off and also longer duration of car hire. So we have seen higher inflation during this period, but we expect it to come down to more normal levels. Frequency is the big uncertainty in the future. There are many factors that are going to push frequency up like, for example, less usage of public transport. But we're also going to see reductions in frequency due to recession and also maybe due to further COVID restrictions. So very hard to tell what is going to happen to frequency. My take is that we're not going to go back to normal levels at least until the end of the year. So let's take a look at prices. For the market during the second quarter, we have seen a reduction in prices. The ABI indicates about a 3%. And Confused, which only looks at new business prices, is talking about a 5% decrease. Now it's important to note that this is the average for the market, but actually, we have seen very different behavior by different players. In the case of Admiral, and as we told you at the full year results, we increased prices in the first quarter of the year to take into account the inflation we were seeing and will reduce prices in the second quarter given the strong reduction in frequency. Taking everything into account, we have decreased prices both for new business and renewals by about low single digits. We haven't shown this time the time stock graph, and that is because there was a lot of volatility. I think the highlight to mention is that we are today more competitive than we were at the beginning of the period. And now the future, again, is very hard to predict, lots of pressure on claim severity, lots of uncertainty, as I've mentioned, on frequency. But also, we don't know when and how big it's going to be, the impact and the outcome of the FCA pricing as time goes. I think that we're going to see price increases if frequency comes back to normal levels, but that is hard to tell. All I can say is that so far since July, we have seen relatively flat prices in the market. Moving on to our Household book. It's been a positive period, good growth in terms of numbers but also good growth in terms of profit. Despite bad weather at the beginning of the year, we managed to increase our profit. And the overall impact of the storms was about £5 million net of Flood Re recoveries. COVID hasn't impacted Household as much as it has impacted Motor, but we have seen a change in claims mix, more accidental damage claims and less theft and escape of water, and this is just because people stay more at home. Maybe we will see some more of these changes in the future as people might work much more from home. And in the future, for our household book, we expect a continuation of growth and, hopefully, an improvement in our loss ratio. Now at the beginning, I said that I was very proud because we're a stronger business today than we were just a few months ago. Why? Well, we have a stronger brand, we have accelerated and improved our digital capabilities, and we're a better place to work than we were before. So let me explain it a bit more in detail. First, in terms of brand, the impact of our Stay At Home Refund has been very strong and very positive from our customers. It's great to see their comments, but also, it's great to see how this has translated into what we believe is higher conversion and higher retention. You can see in the graph an increase in the consideration of our brand during this period while the average of the market has gone down. Secondly, we have seen an improvement in our digital capabilities. We have increased the investment that we're making, and we're seeing the results, double the number of online sales and also double the transactions that we do online during the year. And additionally, we have improved our online capabilities both at renewals and claims stage. And I also said that we were a better business for our staff. We continue to receive very strong awards during this period, but also the fact that we have allowed all our staff to remote working will increase flexibility for the future and will help when it comes to attract talent as well as doesn't need to be the only option for the future. So overall, we're in a very strong position, and actually, I've never been as proud as I am now to work for Admiral. So in summary, a very good period for the U.K. Insurance. The highlight is strong back year releases, also modest growth during this period, but we're starting to see recovery, and reduction in frequency and a good period for our Household book. This is all for me. Now I'm going to move on and give you Costantino, who will talk more about International Insurance results. Thank you.

Thank you, Cristina, and good morning, everyone. My name is Costantino Moretti. I joined Admiral in 2007 as part of the management team that launched ConTe, our Italian operation. I became ConTe's CEO in 2016, and I was appointed Head of International Insurance a couple of months ago. In this new role, I will count on an exceptional team of colleagues who lead our operation in Spain, France, Italy and the U.S. and those who support our technology and governance capabilities. To start, I'd like to highlight levels of commitment made by the International Insurance businesses to pursue sustainable growth, focusing all our efforts on scaling the business whilst preserving our loss ratio and evolving our risk selection capabilities, leveraging on data and analytics. H1 2020 has been positive for us, profitable on a combined basis and with customer numbers 10% higher than a year ago, with a turnover growth of 3% despite the COVID disruption. While it reduced the speed of growth, it has actually provided some benefit to loss ratios. COVID trends observed in the non-U.K. operations have been more or less similar to the U.K. trends described by Cristina. I'm very proud of the resilience demonstrated by our operations that have shown the capabilities to prioritize staff well-being while continuing to serve our customers with high levels of satisfaction. Moving on to the next slide. In the European businesses, we have continued to grow our customer base even if below expectations due to the COVID emergency. Primarily, this affected the demand for new policies. However, renewals performed very well because we focus on continuing to serve our customers while offering lower rates due to lower frequency with fewer people driving. Looking at the single European businesses, ConTe and Admiral Seguros have taken a more prudent approach given the highly competitive markets within which they operate. Improvements in digital conversion and in the expansion of the broker networks have continued in 2020. Both projects supported volume growth whilst turnover remained quite flat as a consequence of lower rates being offered to the customers due to COVID. L'olivier has achieved once again very positive results, with growth mainly driven by the direct channel and strong persistency. The growth is primarily coming from the continuous investments in brand awareness and conversion, whilst product improvement has helped to sustain turnover. The figures for Elephant, our U.S. operation, reflect our conservative approach to not grow in order to preserve technical results. And the lower turnover growth is affected by the launch of the 6-month term policy. Taking it out, it remains relatively flat. Moving on to the next slide. On the left-hand side, the European businesses combined achieved a strong EUR 11.2 million profit with a positive contribution from all the operations. Three main reasons behind these results, in order of relevance: one, the past year's loss ratio has evolved very positively, another demonstration of our reserve in prudence here; two, pre-COVID claims evolution suggests we have positive trends in the current year loss ratio; three, a lower-than-expected frequency experience due to COVID disruption despite us transferring part of this benefit through lower rates to our customers. On the right-hand side, Elephant experienced a lower loss of $4.2 million due to loss ratio improvements in H1 as well as the impact of COVID, although this was partially offset by a customer moratorium linked to increased patients for customer with payment difficulties and also some additional operational expenses. The loss ratio improvements are linked to the continuous strengthening of risk selection capabilities, where a lot of enhancements have happened over the last year. While we see some positive early signs of improvements, we remain very cautious, and we wait for further development before recognizing that. Finally, across all the operations, we continue to focus on cost control and enhancing customer service through the digital channel, improving the expense ratio and producing value for our customers. In conclusion, moving on the next and final slide. I'd like to highlight the 3 key messages for International Insurance: growth temporarily slowed down due to COVID emergency; higher profits in Europe driven by prior year improvements and COVID effects; Elephant continues to focus on loss ratio improvements and strengthen business fundamentals. Thanks. And now I will pass over to Elena to talk about our price comparisons portals.

Thanks, Costi. I'm Elena Betés. I'm leading Admiral online comparison portals. We love to see ourselves as penguins. Its business is a penguin. As you could see on the slide, penguins group it and work as a team under adverse condition. And it has been extremely relevant capability to deliver the following results. So let's move to the next slide to the European penguins. Our Comparison businesses started 2020 strongly and remained resilient during COVID. The pandemic led to a significant drop in core volumes across operations, particularly impacting on businesses in Continental Europe, Rastreator.com and LeLynx.fr, where we suffer a reduction in revenues and profitability. Confused.com performance was particularly strong. Our increasing market share in car and home insurance drive a double-digit growth in revenue and improvements on profit by 55% compared with last year. The team navigated very well through the very tangible last few months, and we are pleased with the half year results. Even more pleased to see strong signs of recoveries across the board in June and July, made possible by teams' reactions in order to adapt and relevant contingency plans in place across Europe. We turn to the next slide. Beyond Europe, let me highlight 2 operations. Our U.S. operations, Compare.com, achieve a substantially reduced loss of $0.6 million despite volumes and revenue strongly impacted by COVID. This was driven by improved conversion and by strategic changes made to the business last year. We are committed to maintain our customer-centric proposition, convinced that this is the way to develop in that competitive market. On the other side of the slide, let me highlight Rastreator.mx Mexico. This is one of the ventures from Preminen, our penguin incubator. Rastreator.mx was launched in 2017 and has performed strongly since the beginning. The first 6 months, we saw not just growth on the revenue line but a comfortable media breakeven. So as a summary, I will say that this is pleasing results, and it demonstrated resilience on our businesses and independently of the size of them. We have seen COVID more as an opportunity right now, that is digitalizing our customers and our suppliers. Second, our purpose continued to focus on empowering more customers to make better financial decisions, which under expected crisis is even more relevant. And last but not least, our strategy under the penguin umbrella to leverage on each other, stronger together, has proven fundamental. In a world where data points to take decision is key. The fact that we have visibility on pandemic impact in each country has allowed a scalable learning that teams has leveraged on to move quicker than local competitors. So thanks a lot to all the penguins for your amazing efforts. And now moving to Scott, who leads our Financial Services.

Thank you, Elena. Good morning, everyone. My name is Scott Cargill, and I'm the CEO of Admiral Financial Services. Since the deep dive provided into Loans at half year 2019, the business has continued to grow in the prime space, and we have continued the trend of tightening credit rules throughout 2019. As you may have seen from the intro slide, January 2020 started with us writing our 100,000th loan customer. That happened on January 4, and we've set the tone for an encouraging start to the year. As you can see in the chart, by mid-March, our balances had grown to £515 million. And we also experienced all-time low loss outcomes during that period whilst maintaining our focus on expense control. In addition, having developed our new pricing capability last year, we launched in early January which during quarter 1 showed signs of an increase in margin. As the COVID crisis emerge, we took early action, firstly, in the early March on pricing; and by mid-March, we posted new business entirely. We implemented working from home and reallocated significant resources to servicing and collections. We also ensured that existing funding lines were secured and extended. Moving to the next slide. The Loans business has fared okay during the COVID crisis so far. We supported customers, resulting in 3.5% being offered reduced payments or payment holidays, to which over 50% have now successfully returned to up-to-date. With the exception of the payment holiday activity, we have not yet seen an increase in defaults. The payment success rate of those customers not in a payment holiday during Q2 has been in line to better than historical ratios. The high loss is therefore predominantly driven by a prudent approach. We have increased in provision by £16 million in H1. And as you can see from the chart, our coverage ratio has increased from 3.7% to 8.1% at the half year 2020. This includes increasing the provision for up-to-date from 1.3% to 4%. Overall, this results in a total provision of £40 million for the £495 million Loans balance sheet. And we've provided some extra detail on the scenario assumptions in the RNS. There were some encouraging signs pre-COVID, and we have started to cautiously writing new business again. We believe the evolution of the market post-COVID plays to Admiral strengths. However, near-term economic uncertainty does drive a more prudent outlook, and therefore, we are revising our original balance guidance down to £500 million to £600 million in 2021. As you can see from this slide, our half year loss was minus £9 million. And we're allowing for a loss in the range of minus £12 million to minus £16 million for the full year. To summarize the key messages from my section. Admiral continues to invest in its Loan capabilities, and there are encouraging signs pre-COVID. We had a rapid response to COVID, and there is a resulting deferred growth plan and prudent provisions have been made. We remain highly cautious about the next 6 months, which is the high level of economic uncertainty. And we expect the next 12 months to be a transitional period. With that, I'll pass back to David and Milena to wrap up.

Thank you, Scott. So in summary, I think a very gratifying set of results. Progress across a broad range of our businesses increased profitability and market share in International Insurance and on our Comparison platforms; clearly, though admittedly, provision at this point evidence of competence and resilience for our Loans business; and of course, above all, another great set of numbers from our core U.K. business yet again.

And David, you were instrumental in building these businesses. As you come to the end of your term as Group CEO, what is the legacy you feel that you're leaving behind?

Well, Milena, I don't think I'll leave a legacy. I think I'd pass on a baton, I'll pass on values and competencies that have made Admiral a great company to work for, to buy from, to invest in, those same set of values and competencies that you deployed such effect in building the European businesses. And as you take on that baton yourself, what are you most excited about in terms of taking the business into the future?

So first and foremost, I need to make sure Admiral culture continues. Our staff is highly motivated, engaged and also shareholder. And this is what make Admiral unique and special, and this underpins all our competitive advantages. Second, I'm excited by the opportunity to accelerate digitalization and enhance our data and advanced analytics capabilities. And finally, I'm looking forward to continuing the journey that you started of offering more products to Admiral customers, to deepen our engagement with them and our understanding of their needs, particularly where we're confident we can deploy our core competencies. Now in order to achieve all this, our people is key, Admiral culture is key, and talent is key. We've recently hired some very experienced managers in the area of technology and data from the outside. But what makes me so positive is that we have plenty of bright passionate colleagues with great potential to make Admiral stronger and stronger in the future. And on that note, should we open up to questions?

Thank you, Milena. Time to open up for questions. First question, please.

[Operator Instructions]. The first question is from Jon Denham of Morgan Stanley.

Firstly, you said that your pricing in U.K. Motor is more competitive at the beginning of the period, and the pricing has been flat in July. Do you think you're taking a more aggressive view on low frequency continuing than peers? Or are you just able to make more targeted range adjustments faster? I guess that's one for Cristina. And you've recently resumed the sale of travel insurance and lending products. And you gave new Loans guidance, but I was just wondering if your long-run growth appetite for either product has changed and, I mean, also changed the kind of loans you're looking to offer. And Milena, just the same, do you say that you're thinking about offering additional products?

Thank you, Jon, for the questions. Should we start with -- we'll take it in your order. Cristina, do you want to do pricing before I hand over to Scott for Loans and then Milena on the new products?

Thank you. Yes. So we are at the end of the period. So in June, we were more competitive than in January. I think it's important to mention that we have been increasing prices, but it's strongly ahead of the market already in the second half of last year. So when we started to decrease, we came from a very different base. And yes, today, we are more competitive which, in a way, might imply our views of the future. As I mentioned during the presentation, what I think we're seeing in the market is a very different response by different players. And that might also be playing into the current context. Just to mention on Travel very quickly that we have started a few weeks ago to offer car insurance to our customers again, although there is a very small volume.

Thank you, Cristina. Scott?

David, sorry, Geraint here. We were on a bit of a lag, and so we missed the second two questions. So could we get the Loans and the new product questions repeated, please?

Okay. Jon, would you mind repeating the Loans question and the new product question?

Of course. So yes, you've recently resumed the sale of travel and loans. You gave a new Loans guidance, but I was just wondering if your long-run growth appetite for either product has changed and if the kind of loans that you're offering has changed. And then just I think I caught Milena saying something about offering new products in her closing comments, so just if we could get more details there.

Scott, do you want to do Loans then?

Sure. The base point on Loans will be that for the next 12 months, we'll be very cautious. And we are looking to find stable risks. So there has been an adjustment. We have remained focused anyway, but we are going to be very cautious for the next 12 months. And therefore, I think you could look at it like it's a delay to our growth, but potentially, it would be a gradual pickup in the next 2 to 3 years. So long term, 5 to 10 years, no change for the next 2 to 3 years less than what we would have been doing otherwise.

On the new product, David started the ambition a few years ago for Admiral to start the journey to diversification. The main rationale there is to be able to offer more product to the customer, to engage more with them, have more contact point, also getting to know them better, having more data and being able to provide them a better user experience, better journey. And we're looking at doing that in area and market where we feel that we have relevant confidence that we can deploy. Loans and Household there has been the first examples. Loans is different from Insurance, but we feel there are some synergies, and we can deploy our ability, for example, to select risk better, et cetera. We've also done other venture like Veygo, for example, in U.K. that provide non-standard insurance, short-term cover; or Umbrella, that is an insurtech in household in France. And we are continuing to explore new ideas along those line and in those principles, and we'll continue to do so in the future.

The next question is from Andrew Crean from Autonomous Research.

And David, I think this -- is this your last set of results?

I gave my notice in March when we did the full year results presentation. It was a -- it's a 12-month notice, and that's where we are. Obviously, there's a process to transition from myself to Milena and more and more of the business reports to her. So even if de jure, I am CEO for a while, yet de facto, Milena is increasingly the Group CEO.

Will this be your last investor call?

I think it depends a bit on the timing of the next one.

Okay. Well I'll save it until next spring. So a couple of questions then, if I might. Firstly, I know on the European Insurance businesses that you've been delaying profit by building reserve. And I wonder with the big release from reserves coming through, whether that process is over and now we should look for a much more rapid acceleration in the profitability of the European Insurance businesses. So that's the first question. Second question is large BI. I mean when the frequency fell in March, April, May, from what I understood, the other thing which was going on was not only were there fewer cars being driven, but there were fewer people in each car. Have you seen that as an important impact, i.e., that there's been a rapid drop in the large BI claims?

Costi, do you want to do European before Cristina picks up large BI?

Yes, David. On the European businesses, in terms of reserving, we are adopting the same conservative approach of the group, and we are planning to continue in this way. While I would say that the underlying trends of the European businesses are consistent and are strong, so we are observing year-on-year improvements in all their fundamental KPIs like loss ratio and expense ratio. And therefore, we are confident that we are on track to reach our previously communicated estimate of the range of £30 million to £60 million written will account profit by 2022.

On the large BIs in the U.K., so we have seen a strong decrease similar to what we have seen in the overall frequency. But there have been 2 key changes: first, as you said, fewer people in the car; and secondly, during the lockdown period, a different type of BIs, so less light riding, for example, and more injuries involving people driving a motorcycle or a bicycle. Having said this, it's very few numbers we're talking about. This is something that we have seen just for a few weeks.

The next question is from James Pearse with RBC Capital Markets.

The first question is just on reserve releases. So I think in the past, you've suggested that you'd expect these to trend down in the long term towards 15%. But again, obviously, they've been really strong this year, so just want to check if that's still the case. And then just expanding on that, has there been any change in the level of prudence that has been booked into your initial loss ratios on the more recent years? Or has there been any change in the rate at which you release that conservatism? And then the second question is just can you give us a sense of how you think the 2020 ultimate loss ratio has developed excluding the claims frequency benefit from COVID-19 in the U.K. And I appreciate there's a lot of moving parts there, but I think it would just be useful to get a sense of which way you think the underlying loss ratio is heading compared to 2019.

Geraint, will you take the reserve releases question and, Cristina, the 2020 prospect?

Yes, no problem. On reserve releases in the U.K., we talked last time about the average in the last 5 years being more in the range of 20%, 21%, albeit you're quite right, the past couple of periods, we've seen high 20s. If you back up the impact of the rebate, we're pretty consistent in the first half of this year with that, the high-20s range, and expected to sort of stay there in the very, very short term but probably trend down after that back towards low 20s, 20. I think 15% is probably a little bit out to take there. But of course, you should caveat that with all depends on what happens with claims development, of course. If it goes as expected, we'd expect continued strong reserve releases.

And level of prudence, Geraint?

There's no change in the overall level of prudence. We measure it and monitor it really across the whole reserve, not individual use. We're trying to have a logical pattern obviously with typically more reserves and more prudence on the more recent years. There is more conservatism in some of the more recent years, and it appears in the back of the pack, because those tend to be prudent projections of the ultimate loss ratios, as you know. So no real change, I would say.

And Cristina, 2020?

From the -- yes, from the loss ratio for 2020, it's very early to make any comments. But I will highlight a couple of things that we have seen. First, that we put price increases during 2019, and therefore, the starting point of 2020 at the beginning of the year is different than the starting point of '19 in terms of level of prices. The second one is that we have seen an increase of accidental damage inflation during lockdown, which has taken higher than normal levels, but we expect this trend to reverse back to normal levels.

The next question is from Freya Kong with Bank of America.

Two questions from me, please. Firstly, shopping activity in May, June appears to have more than offset the slowdown you guys saw in March and April. How are activities trending -- how are activity levels trending now? And when do you expect to see some normalization? And secondly, you've now grown U.K. Home customers to over 1 million, up 6% year-to-date, while competitors continue to shed customers. Are these new customers coming to you via PCW or are these existing customers taking up your multi-cover offering?

I think the price comparison platform businesses have the best insights into shopping behavior. So maybe, Elena, would you take the first one about shopping and, Cristina, the Household one?

Sure. So all around Europe, we have seen like a big impact on activity until May, I would say. However, June, that was an extraordinary month for everybody. Most kind of recovered from all the drop. July, August is trending as normal from our perspective.

Thank you, Elena. Cristina?

Yes, David. So the growth in Household comes from both channels, multi and price comparison. With price comparison, traditionally taking the past share of the growth.

The next question is from James Shuck of Citi.

So a couple of things from me. So the 2020 booked loss ratio on the underwriting year basis, that was 70%. I think the 2019 initial booked loss ratio was 92%. Can you just help me understand that bridge between the 92% and the 70%? Would be helpful. Secondly, I guess over the past, well, your entire tenure, David, at Admiral, you've demonstrated much better combined ratios in the industry, in a very competitive market, 20 to 30 points probably on a fully developed basis. We're at a stage now where the market is changing potentially in terms of customer behavior, shifting quite materially, which means that the data that you have may not be quite as insightful as it was in the past. So my question really is the size of that outperformance in the past, will it get tougher to do that particularly as we move through a new kind of potential paradigm shift in terms of driving behavior, who's in the cars, physical damage inflation, all of these things. Interested to get your view on that. If I can quickly squeeze in a third one as well, it's just really a clarification on Slide 18. Because you showed the new business online sales being up 47%, don't really understand that because that implies that your previous new business online sales was actually quite a low number, whereas I thought you were selling kind of 80% or so through price comparison sites. And if that is the scale of the increase, could you just clarify what the implications might be for ancillary sales given you wouldn't be closing via calls, close as much as you have done in the past?

I'm going to do them in a slightly different order. Cristina, do you want to clarify the point on 18 first? And then I'll pass to Geraint to do the 2020 detailed question. And then maybe I'll pick up the under -- the combined ratio advantage and the impact of shifts in consumer behavior at the end. So Cristina first, then Geraint, then me.

Yes. So when we talk about new business sales, we traditionally have talked about where they start. And you're right that the more -- about 90% or more, the majority of our sales starts online, either price comparison or directly priced. What is different now is where they are closed. So it's a normal process where the customer sees a price comparison, and then they might call us. What we have done during COVID is to change this trend, and we have more and more customers finalizing the sales online. The implication on ancillaries, there is a difference between sales that close in the phones and sales that close online, but we still -- a lot of our products like legal protection and breakdown are needed by the customers, and they still take it online. So the gap is not that big.

Thank you, Cristina. Geraint, on 2020?

Yes. Thanks, James. It's a good observation. I think the point there is that 2020 underwriting year, 6 months into its development, with the particular period we just had is an unusual underwriting year. So it's not -- there's not a lot of earned premium on it. And it's obviously gone through a second quarter which is unusual from a claims perceptive. So it's difficult to comment for meaningful trends here at this point. I think let's wait until the end of the year. We'll see where we book it at that point, and we'll show it at that point, obviously, a 2020 ultimate projection as well. It's difficult to comment at this point, and it's very influenced by quarter 2 and a low amount of earned premium on 2020.

And James, you made the point that historically Admiral has had a very strong combined ratio advantage. And you raised a question that maybe with a major shift in consumer behavior and driving patterns, that advantage may not be sustainable, well, or maybe in some sense is challenged. But I sort of suspect the opposite might be true because if you get a discontinuity and a change in behavior, as we are seeing, although I think the world will revert towards a different -- towards normal, if you see that discontinuity, I think the winners are the people who make the quickest and most intelligent responses and who are closest to their business and to the drivers of loss ratio. And I hope, and this is a hostage to fortune, but I hope we are making the right responses, reading the data quickly and implementing appropriate changes. The big challenge for any car insurer at the moment is to understand when we commit to a price for 12 months and there's so much uncertainty around frequency and, to an extent, severity when you look at the sort of second half of a policy term of 12 months or even the last three quarters of that term, then there's a lot of judgment call. But I think that we're probably in a better position to make those judgment calls than some of our competitors because of our culture and heritage.

The next question is from Johnny Irwin with UBS.

Two from me, please. So firstly, can you talk a bit about the structure of the U.K. motor market with regard to the recent consolidation that we've seen? I mean do you think this could be helpful in kind of improving the structure of the market? And secondly, I was interested in your observations around the potential opportunities arriving -- arising from COVID-19-driven disruption. I mean of those four areas that you note, which do you see most potential from? And are you backing this up with accelerated investment?

Johnny, could you sort of expand on the 4 areas that we noted? Was that me that noted them? Or...

It's on Slide 5.

Okay.

So shift towards digital contact channels, acceleration of online distribution, flexible working and operational resilience.

So Milena, do you want to take that? But first of all, maybe if Cristina would like to comment on the big picture on the markets and the changes we've seen.

Yes. Actually, we don't expect to have significant change. I mean [indiscernible] is a strong player with a clear focus on data and digital. They've been growing a lot in the recent periods. And I would expect that the new owner will continue with this strategy. So no major changes.

So it is difficult to prioritize them because we don't know exactly what the new normal is going to look like. Just for the benefit of everybody, I mentioned an improvement in digital contact, an acceleration of online distribution, that will be particularly beneficial for the product where online is not the dominant channel yet. This is International Insurance and products outside Motor in U.K. And then flexible working, access to new talent and operational resilience. I would say personally that this order is somehow reflecting what I would expect to be the order of that. And probably the shift towards stronger user experience, higher adoption of digital channel and online distribution is probably going to give an additional boost to a company that can provide good service online. They are competitive in pricing, and they're very customer centric.

The next question is from Greig Paterson with KBW.

Can you hear me?

We can, Greig.

Three questions. One is the net earned premiums, I thought you were going to book the rebates there. Am I correct that you rather booked it as a claims cost? And I'm just trying to understand the accounting. Second question, in terms of the first half of the year, ignoring COVID-19, I wonder if you could give us sort of an idea of what the year-on-year, just broadly, inflation rate was. Was it low single digits, high, medium, whatever? And then if you could answer the same question, including COVID, so in other words, what was the year-on-year inflation in U.K. Motor from COVID? And then thirdly, there was press speculation about your disposing of your European and U.K. PCW. I was wondering where -- what your thoughts are. Was there anything to that press speculation? And what is the strategy there?

Thank you. And maybe I'll take the last one first before handing over to Geraint on the handling of the rebates and Cristina on motor inflation before and after COVID impact. So yes, I mean, ever since we launched price comparison a fair while ago, it's been an area that's attracted a lot of external interest. And that has been more the case in recent years even than it had been historically, partly based on the increased success of our Comparison businesses and particularly Confused. Coming out of the lockdown also and there was a lot of private equity money out there looking for places that have been resilient to COVID, so we do -- we have been approached. And we have a strict policy of considering approaches and trying to judge them from the point of view of what's in the shareholders' interest. My predecessor, Henry, used to say everything's for sale, except his wife, and that sort of applies. Having said that, they're lovely businesses, they generate a great return on capital and a solid profit flow. So there's no urgency to consider external offers.

Greig, on the accounting for the rebate this year, I suppose you have gotten to Page 59 of the accounts we've done and what we've done with the accounting. It's all taken in the first half into the net earned premiums. It's not offset against claims costs. The impact is obviously -- net of reinsurance, is a bit lower than the £100 million. That's a top line figure but it's set out in the notes. Marisja, can you just talk through it?

Greig, on year-on-year inflation for claims, if we don't take into account COVID, we have experienced normal levels of completion around mid-single digits. When you take into account COVID there, the inflation of the repair claims of accidental damage has been higher than the normal levels. Given the infraction that we had in our repair process during lockdown, there was limited garage capacity, and that has an impact, for example, in the sense that we had more written-offs, we had more duration of car hires. However, we think this is a clear effect of lockdowns, and we expect inflation to go back to normal levels once things go back to normal levels around especially garage capacity.

The next question is from Thomas Bateman with Berenberg Bank.

Just a couple of questions to begin with on the International division. You flagged sort of longer-term cautiousness on -- in Italy and in the U.S. and the U.S., I kind of get that. That's understandable given sort of focus on cost control there and you pulling back a little bit. But I don't quite understand the cautiousness in Italy. Can you give me a little more context around that? And linked to that, you said you chose to increase the net retention in the U.S. What's the sort of rationale behind that? Was that an internal decision or a reinsurer decision? And finally, just a second question on the Loans. Can you just run through the numbers again, Scott, on those that went onto a payment holiday, those that are now still on payment holiday and how that's impacted the provision?

I'll do the retention question first before passing to Costi on the U.S. and Italy and then back to Scott to finish on Loans. So yes, so we have regular conversations with our reinsurers as contracts come up for extension and renegotiation. And the balance of -- our view of the balance of outcomes in terms of what was on offer was that we shouldn't take as much reinsurance as we historically had, and we stepped down from 75% cover to roughly 50% cover. So it's the outcome of a negotiation. Costi, over to you.

Yes, thank you. So I would say that we -- that the consciousness is part of our DNA. But having said that about Italy and ConTe, we are building a strong business there that is profitable over more than 5 years. And all the underlying KPIs are continuing to improve year-on-year despite, to be honest, a very challenging and competitive market, while, I would say, in the U.S., we remain very cautious and very committed to improve business fundamentals.

Before I hand back to Scott, let me -- sorry, I realize I slightly misstated. We were at 66%. We weren't 70%. We've gone down to 50%. Over to Scott.

Payment holidays, we had around 3,500 customers going to payment holidays. And at the half year, over 50% of those have returned to up-to-date. Looking at it now, it's about 1,000, so it's continuing to go down. And the way we account for that is that they're maintained as up-to-date because that's the way we treat them in accounts. But -- and we've held about 75% of them in Stage 2. So you'll see the coverage there is around 34%. It would return immediately back to Stage 1 because we still see a lot of those customers as continue to pay us and a clear duration in the second half.

The next question is from Dom O'Mahony with Exane BNP Paribas. Dom O'Mahony: Just two questions from me, if that's all right. First is just on inflation and not so much the year-on-year inflation but in terms of longer-term inflation, in particular on large bodily injury. One of the topics that's sometimes debated in the market right now is whether monetary stimulus and similar measures might increase inflation in the short to medium term. What's your approach to inflation on the LBI reserves? Clearly, because you retained that more than some of your peers, in the past, the good management of those reserves has to be very critical. But I'm just wondering how you control that, whether you, for instance, use inflation swaps to control that. The second question, more on the business. Lots of discussion today on trends in digital distribution, which looks very encouraging in terms of the market trends. One of the things that at least I've noticed is more car companies talking about the connection of essentially the technology in the car to insurance. I wonder if you could flesh out your approach to partnering with the car OEMs. I know you have a partnership with Ford. Are you seeing that as a potential distribution channel in the future and using car technology as part of that?

So Geraint, do you want to handle the impact of inflation on large bodily injury exposures? And then Cristina, are you all right to talk a bit about connected cars and our relationship with Ford? Over to Geraint.

I think it is fair to say that we buy a lower level of excess loss reinsurance for bodily injuries. So when we see an elevated number of large injury claims, then we would suffer. But on the contrary, when we see a reduced number of large injury claims or lower inflation, of course, we would benefit from that. I'm not sure we're actively pricing in or doing anything different in response to potential long-term trends on inflation on large injury claims at this point. We'll adjust our prices to what we see on our portfolio in terms of the numbers and the cost of claims that come in. It's immaterial to say this [indiscernible].

Is there anything you might say about the matching of assets and liabilities in the context of large bodily injury exposure?

Yes, of course. From the asset side, we are well matched to the duration of the assets as well, and that's the duration of those liabilities. Hence, when interest rates move up and down, you don't see big swings in solvency ratio as a result of that at all.

Thank you. Cristina?

Yes. Let's start by saying that we value a lot the data that telematics or technology in the car can bring. And it's clear that we're one of the largest providers of telematics insurance in the market because of these reasons. So we are very open to getting to partnerships with OEMs or with other data providers that might give us access to the technology in the car data. We have done a partnership with Ford, and we remain open to finding new distribution channels and new partnerships as a way to get this data but also as a way to find customers in a different way.

Thank you. Do we have any...

Yes. So we've got some questions coming in from the website. The first one is from Abid Hussain. And his first question is, do you think driving will ever return to normal given flexible working is likely to continue over the long run, meaning fewer car journeys? And his second question is, can you explain how Admiral Loans works? How are they funded? What is the risk to shareholders if losses arise? What is your medium-term growth outlook on Loans given the recessionary environment? Thanks.

Okay, thank you very much. Cristina, do you want to take the first question and obviously, Scott, the second?

Yes. I think it's very hard to tell if driving will ever return to normal, but I will tend to agree with the question in the sense that flexible working is going to stay and are going to continue in the future. I think we're going to see, for example, less traffic in peak hours. We might see people moving from city centers to the outside. And that is definitely going to impact frequency or overall car usage down. However, there are other trends like less usage of public transport and more domestic holidays, which I also think might continue in the future, at least some of it. So overall, lots of uncertainty. In my view, we won't go back to normal levels of driving at least for a very long time.

Okay. Next question from the website?

On the Loans one, David.

I'm sorry. Sorry, Scott.

So on funding, there's detailed notes in Page 42, but we have some internal funding which is just [indiscernible]. And then we have a payout warehouse, which is around £400 million. So the detailed drawdown in most of the half year are in Page 42. In terms of losses in the near term, our weighted unemployment rate in the provision is around 11.2%. So we found it's towards the higher end of market percentages. And that said, we have to have some conservatism and also in the notes which we -- and show what would happen if there was a view to the downturn or to the severe. And on balanced outlook, and I think it was broadly covered this yesterday, in 12 months, we will definitely be taking a view of caution, but we have big ambitions for the future. So when we see the opportunity, we'll look to grow again. Thank you.

Thank you. All right, our next question is from Ming Zhu [ph]. And the question is, what is your claims inflation outlook? And how is that versus your comment of being more competitive? Are you implying that you are writing a lower margin? Thanks.

Cristina, do you want to do that one?

Yes. Admiral has a history or a trend of moving prices ahead of the market. And I think to answer this question, it's important to mention what has been happening in the past couple of years. So we started putting prices up in the mid '18, which means we -- and we continued in '18, '19 and the first months of 2020. So for about 20 months, we've been putting prices up, which meant that at the beginning of 2020, we were less competitive than we were a couple of years ago. In Q2, we decreased prices by low single digits. And I would sense that now is closer to what it was a couple of years ago.

Our next question is from James Hyde [ph], and he asks, you seem still to be writing U.K. motor policies from a German entity. How long post Brexit do you expect this to be allowed to continue? And will there be costs from bringing the writing back to the U.K.?

So that relates to the Munich Re company, Great Lakes, which is a German company with a U.K. branch. We very confident they've got the right commissions to carry on writing the U.K. business in the U.K. post 2020. I don't expect to see any additional cost of doing that.

Thanks, Geraint. Our next question comes from Roman Friedman. And the question is now that you're reaching scale and ongoing profitability in international operations, when do you think you'll be able to improve overall economics on the COVID reinsurance contracts internationally to progressively move towards U.K. similar economics. Thanks.

Milena, do you want to have a go at that one?

Sure. As we mentioned in the past, we think that over time, once we prove a track record of strong set of results, we can improve the terms of the contract that we have with our insurance internationally. Just -- so we think that's going to happen in time. Just to remind that those contracts are multiyear contracts, so it's not a linear function. It's something that will come when the contract will reach their expiration date.

Thank you. Our next question is from Faizan Lakhani [ph], and he asks threefold question. One, how are your quota share negotiations developing? Do you expect any change to your reinsurance structure? Two, could you split the benefit in Motor profit for claims frequency benefit from COVID-19 versus the underlying improvement? And three, you've mentioned that accidental damage inflation in H1 has increased. Could you provide further detail what that is due to you and what gives you comfort that trend will reverse? Thank you.

Marisja, I slightly wonder if that question was asked before Cristina answered a very similar question, a few questions ago. I'm wondering about asking Geraint to comment on the reinsurance contracts and leaving it there.

Happy to. Yes, the U.K. quota share reinsurance discussions are active, and they're productive. And we'd expect them to continue very shortly. And at this point, not expecting any notable changes to those arrangements.

That's all the questions from the webcast, so no further questions from our side.

Okay. Does that mean, Marisja, that we'll wrap it up here?

That's correct, David.

Okay. Thank you, everyone, for participating in today's call and question and answers, that we very much welcome your questions, and looking forward to a successful second half. Bye.

Bye, everyone.

Bye, everyone.

Bye.

Thank you. Bye.

Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.