Admiral Group plc (ADM.L) Q4 2024 Earnings Call Transcript

Hello. Hi. Good morning, everybody, and welcome to Admiral Group 2024 Results. We're proud to share with you another year of excellent results and progress on many fronts. I will start with an overview. Geraint will follow up with more detail on financials. Alistair Hargreaves will today take you through our major business, UK Insurance. Alistair succeeded Cristina Nestares as UK Insurance CEO in October. He has big shoes to fill. His impact to date in his previous roles and knowledge of the business are second to none and is already on a great start. I'm also pleased to announce that Scott Cargill, Admiral Money CEO, also with us today, after he built such a strong business for Admiral, will be joining Alistair team to lead our personal insurance lines of business beyond motor: pet, travel and household paths, like an alternative path to go, an additional path to go alongside motor insurance. I'm proud that we continue Admiral tradition of developing internal talent also in more senior roles as they built such a strong track record in their previous positions. We are in the process of identifying Scott's successor as CEO of Admiral Money. Costantino will present international results, as usual. He will share a bit more insight than usual on Europe as we decided to postpone the deep dive on Europe that we anticipated at half year. Going forward, we will run annual deep dives dedicated to one area of the business. And this year, we will start with the UK Household insurance instead. Good. So 2024 was a remarkable year. Finally, after the pandemic, cost of living crisis, major regulatory changes and inflation spikes, the market has been more favorable with inflation reducing and more benign weather. We've been fast to react to market conditions, and I'm glad to be able to share with customers some of these benefits. We reported 28% turnover growth as we increased our customer base by 14% and as average premiums were higher on average than 2023 across the board. We manage the business with discipline during the inflation spike in 2022 and 2023 and, as a result, started last year from a position of trend, able to reduce rates earlier than most and gain market share. Group profitability reached GBP 839 million, an all-time high, driven by UK Motor insurance that delivered close to GBP 1 billion of profits. We were proud to see the progress of other lines of business as well with 2 international countries, France and U.S., and the 2 largest business in U.K. beyond Motor, Admiral Money and UK Household, reporting all double-digit profits. At the same time, we continue to strengthen our capabilities, particularly in data and AI, and successfully completed relevant technology projects. Softer market conditions are continuing in early 2025. We are well positioned, strongly capitalized with the solvency ratio over 200% and happy with the business we are underwriting now. We will continue to remain disciplined, as always, and adapt as needed. So a bit more color on 2024. Great momentum with GBP 1.3 billion increase in turnover and 1.4 million increase in policy number. Main growth driver was UK Motor, particularly in the first half of the year with around 0.5 million additional customers at the end of H1. But other lines of business in U.K. were material contributors too with the progressive migration of More Than customer in the second half. The integration is proceeding well. The teams are working well together, and we are confirming our expectation for the value creation of this deal. Outside U.K., a mixed picture with robust performance in France and U.S. U.S. turnaround was a key focus of 2024, and we're very pleased with the results despite having to shrink our customer base there. Spain is also making good progress. ConTe instead had a tough year and reported a disappointed loss, mainly due to the challenging market conditions with high BI inflation for an increase of BI settlement values of reference. Costantino will expand on this later. The team already put in place bold remediation actions, and we remain committed and confident on the prospect of the business. Regulation is a major theme in U.K. as well with the concentration of initiatives focused on motor insurance. Alistair will touch on some of these later. The new government set up a task force in November to look at the increase of average premiums in UK Motor insurance in the recent years. We are collaborating to help identifying the drivers, mainly car technology enhancement and maintenance cost, and cross-sector initiatives to generate savings to pass on to customers. The good news for the customers and the task force is that premiums are already down since the task force was set up, reflecting easing inflation and a positive impact from the change in Ogden rate in December. The U.K. market is indeed extremely competitive and elastic, and we're confident that we'll adapt well to any change that has always been the case in the past. Our agility and performance track record leave us in a strong position with additional flexibility. Finally, we're proud of the turnaround of Elephant in 2024. But as we anticipated, we were reviewing strategic options for the business, and we now enter exclusive conversation with a potential acquirer. It's early days. I can't expand more at this point, and we will update you as soon as we'll have more to share. So before hearing more from Geraint on 2024, I would like to take you -- take with you a step back on wonderful world to reflect on our journey in the last 10 years and our future prospect. Here we are. In UK Motor, in the last decade, we maintained an average combined ratio advantage versus market of around 20 points while, at the same time, materially outgrowing the market with a CAGR of around 5%. The graph at the bottom of the slide show how we managed to grow across cycles, often with an acceleration at the beginning of a softer period as it happened in 2024. This track record of sustainable profitable growth is underpinned by relentless focus on insurance fundamentals, technical competence in pricing, in claims and on improving customer service with no complacency and continuous investment in new data and technology to upgrade these capabilities over time. Thanks to this consistent outperformance of the market, we were able to secure strong reinsurance agreements that enable our capital-light business model. Our plan for UK Motor is very simple: to continue to do the same across the next cycles. In addition, another interesting growth opportunity is represented for us by the incremental retention of the UK Motor policies for customers that have more than one product with us. And as we will see in the next slide, this segment is growing fast. So looking now beyond UK Motor. Does it really work? Yes. In the last 10 years, we built a book of 5.4 million customers beyond UK Motor, roughly half of our group total today between new product lines and international countries. These businesses have contributed with a turnover of GBP 1.7 billion. The investment has been limited, and it's now delivering positive results. Our plan here is also straightforward and is to increase margins, focusing the growth on the product lines and the market with higher potential when we have a proven competitive advantage and a clear right to win. Last year, the results of these lines of business combined was GBP 18 million with 4 business delivering double-digit profits and good combined ratio as well and 2 additional profitable business, Veygo and UK Travel. But the positive results were partially counterbalanced by ConTe losses and investment in the younger business such as pet insurance. Looking forward, we remain confident in an increased contribution to our profit for this business and in ConTe turnaround. As just mentioned, we're also particularly excited about the increasing customer lifetime value as we develop our multiproduct strategy further. I also mentioned that continuous innovation and continuous upgrade of our data and technology capability is really crucial to our success. In the last 5 years, we renewed the key element of our tech stack, now almost entirely cloud-based. We implement scaled agile across the group, sharing learnings among countries, and leading to a drastic reduction in release times and better quote quality. We extended adoption of predictive AI also beyond pricing. And this last year, we set the foundations to leverage more on Gen AI to increase efficiency across the group. We also continue to develop our motor insurance proposition to meet emerging customer needs and new trends. We're one of the leading insurer of electric vehicles with a high-quality product, extensive covers for batteries and charging equipment, good brand association and also good financials. We're in a strong position to continue leading in this fast-growing segment. Finally, our window on the future, Veygo, our brand for the youngest with innovative short-term insurance and subscription offers growing once again for the fourth year in a row by more than 40%. Last but not least, very ingrained in our culture is a focus on long-term sustainability of the business. Once again, we were glad to receive strong feedback from our customers and excellent engagement score from our 15,000 colleagues. It has been a pleasure this year to reward the efforts and the commitment of our colleagues that underpinned these results, not only with the usual GBP 3,600 worth of share, but also in additional special bonus of 500 pound, dollar, euro each. This year, we also achieved important milestones for our commitment to the environment, obtaining a AAA MSCI rating, having our Science Based Targets approved and having published our Net Zero Transition Plan. That's all for me for now. And to you, Geraint, to deep dive in 2024 results.

Thanks, Milena. Good morning, everyone. Okay. So I'll talk through some of the highlights and the main drivers behind this very positive set of results for 2024 for the Admiral Group. And to start us off, these are some of the usual group metrics. Pretax profit was GBP 839 million or 90% higher. That includes the Ogden impact of GBP 100 million, net of which profit would obviously have been GBP 739 million or an increase of 67%. Among the main drivers were much higher revenue and a significantly lower loss ratio. Earnings per share was around 217p. That's nearly double 2023. Return on equity was very strong at 56% on the back of the big increase in profit, only partly offset by the higher capital requirement. Solvency ratio remains very strong, it's over 200%. And we followed our usual approach on dividends, which results in a full year dividend of 192p a share. That's around 90% up on 2023, and that full year figure includes 121p a share of final dividend, which I'll cover shortly. Then the bottom half of the page shows the main metrics behind a year of very strong growth at group level, as Milena has already mentioned. The growth was around 60-40 weighted to the first half due to the shape in the U.K. And with the exception of Italy and the U.S., all parts of the group grew. And turnover broke through GBP 6 billion, increasing by nearly 30% year-on-year. Now let's take a look at what's driving the big increase in profit. This slide shows the results by business versus last year. So UK Insurance is the big driver of the change. Motor profit was GBP 360 million higher, including the GBP 100 million from Ogden, and more on that very shortly. U.K. home insurance reported a really nice result of GBP 34 million, a big increase on 2023, which results from higher revenue and a better combined ratio. Internationally, we saw an adverse swing in the European result and a big positive change in the U.S. Starting in Europe, L'olivier in France reported another good result, now into double-digits millions of profits and sustainably profitable. Our Spanish result was a modest loss overall, profitable in direct whilst continuing to invest in the newer distribution channels, in line with our plans and satisfactory. The biggest story, though, is in Italy where we saw an adverse change in the result to a GBP 23 million loss, consistent with the trends we reported at half year. ConTe has been consistently profitable for a decade. So as Milena mentioned, this is naturally disappointing. As we said at half year, the change in the Milan bodily injury tables was part of the reason, but there was also disappointing loss ratio development on 1 or 2 recent underwriting years. And our team in Italy is obviously all over this. Moving to the U.S., we saw further improvement in the bottom line during H2 and a very large improvement, as you see, year-on-year, and that was mainly due to a much lower loss ratio. Credit to our team there for the turnaround. Admiral Money continued its profitable growth. Outstanding balances increased by around 1/4, and profit was up 30%. Very good progress all around. And Scott will later on also mention an interesting and important development in the Admiral Money business model with the first deal to use third-party capital signed in the last few weeks, which will allow Admiral Money to continue to grow beyond our balance sheet limits will boost Admiral Money's return on capital. There were offsetting changes compared to last year in the share scheme cost and the other items, and we've included some comments on the slide here and in the back. Shout out to Veygo for making a small profit and continuing its impressive revenue and customer growth trajectory. Let's take a look now at the UK Motor P&L account. So this is the usual summarized P&L with a few of the key ratios and some observations on the main changes. In the back of the pack, we've showed how Ogden impacts the results on the ratio, so you can see what's going on there. Just a quick comment to start with on Ogden. The personal injury discount rates across the U.K., as you know, changed during 2024 to align at plus 0.5%. The approximate ultimate profit impact to Admiral of those changes is around GBP 150 million, of which GBP 100 million has been recognized in 2024. A further GBP 30 million or so will flow into 2025 and the rest thereafter. We adjusted our prices immediately on the news of the change, and so there is no impact moving forward. So the observations and the main movements are quite consistent with the half year. We've already noted the very large turnover increase, and I think the reasons for that are well understood. Investment balances and the rate of return were notably higher than 2023, and they contributed to nicely higher investment income. We've set up more information on investments in the back of today's pack. A word on profit commission where the revenue for '24 is maybe counterintuitively a bit lower than 2023. As I mentioned at the half year, that's due to the impact of the 2022 underwriting year. That's still booked as loss-making and is still restricting our ability to recognize profit commission on the profitable 2023 underwriting year. We expect to start recognizing profit commission on '23 shortly. And then below the P&L, you can see a nicely improved expense ratio on the back of higher average premiums and revenue growth. And on the bottom right, we show the split of the loss ratio into the current year and reserve releases. And here, you see quite a notable change. The current year loss ratio is a lot lower than 2023, high-teens percentage points improvement, and that's due to reasonably positive claims experience in year, but also the impact of higher premiums combating the elevated inflation we've seen in recent years. And on reserve releases, as at the half year, they were quite flat in absolute terms, but lower in percentage terms, and that's mainly due to the large increase in revenue, but also in a smaller way due to us taking a higher prudent risk adjustment position at year-end '24 compared to year-end '23. Let's look in a bit more detail at the UK Motor loss ratios. Our usual 2 charts here. These are underwriting year discounted ratios. The best estimates are on the left and the booked ratios on the right. We show the undiscounted ratios in the appendix, and you can see that discounting still has a notable impact on the ratios. There's quite a lot of information here, so let me give a few observations. Firstly, the best estimates obviously now reflect the new Ogden discount rates that had a circa 1 point positive loss ratio impact on the '21 to '24 years. But even excluding those impacts, we see some quite nice improvements on the back years and particularly on 2023, where the projection improved by 10 points over the course of the year. 4 of those points came in the second half, including the one from Ogden. As I mentioned previously, we expected this pattern for 2023 because of the impact of higher premiums positively impacting the loss ratio for '23 as the premium for the year earned through. The first projection of 2024 is pretty low at 63% discounted. In light of the reasonable claims experienced during the year, particularly on frequency, we're now expecting the 2024 underwriting year to be a bit better than 2023, but not hugely so. And because of the different premium earning pattern on '24 compared to '23, the '24 loss ratio will not develop as materially as the prior year to its ultimate point. Alistair will cover the trends we are seeing on severity and frequency in a couple of minutes. And then on the booked reserves, you can see the development in the ratios on the right. We've increased our risk adjustment strength in the motor reserves to the maximum 95th percentile, effectively taking a cautious approach to recognizing the profit, the good news coming through in the best estimates, including from the Ogden change. Reserve releases, as already mentioned, in absolute terms were strong, slightly lower in percentage terms because of the revenue increase and the risk adjustment position. And there's no change to our recent guidance on reserve releases. Next, let's look at capital and dividend. On the left, we show the movement in the solvency ratio from half year to full year. In summary, we saw very strong capital generation during the second half, mainly, but not solely from UK Motor, plus the Ogden change, and that was not fully offset by the higher capital requirement and the final dividend payment. And the position, obviously, is still very satisfactory. Quick comment on the internal model. We entered the pre-application process with our regulators during the middle of 2024, and we got the feedback from that at the end of last year. We're now acting on that feedback and planning the full application, though, of course, there remains a lot of work to do on the project. We'll continue to provide updates in due course. And then on the right is the dividend. Proposed final dividend, as mentioned, is 121p a share. That's just under 90% of H2 earnings and is 2.3x the final 2023 dividend, benefiting from the Ogden impact in H2. And as you see, the full year dividend is 192p a share, again, just under 90% of the full year earnings, and that's 86% higher than 2023. There's no change to report in our approach to dividends. And a couple of closing remarks to finish off. Obviously, this is a very strong set of results with excellent UK Motor performance leading the way, but nice also to see some positive results from a number of our other businesses, including UK Household, French Motor, Admiral Money and the U.S. We maintained our very strong solvency position, and we see a big increase in the final and the full year dividends. And then on the right, I've added a few outlook comments and maybe just to pick out one. In UK Motor, we expect the 2025 underwriting year for Admiral and the market to be less profitable than 2024 as prices have reduced, though still profitable. And when thinking about 2025, it's important to remember the increased reserve strength at 2024 year-end and the significant profit still to earn through from 2024 and 2023 in particular, but also the earlier years too, and I expect that to be a strong support for profits in 2025. That's it from me. I shall pass you to Alistair to talk about the UK Insurance business.

Thank you, Geraint. Good morning, everyone. I've been part of Admiral for 17 years. I'm very proud to be taking the baton of UK Insurance CEO from Cristina. It's a fantastic business with a track record of sustainable profitable growth, driven by a great team who consistently deliver for our customers. So let's take a look at our excellent UK Insurance results. Motor grew very strongly as we moved earlier than the market to reflect better-than-expected claims experience by reducing premiums. Beyond Motor grew by 27%, and we now insure over 3 million customers. Our extended breadth of products, combined with our great service, as evidenced by high net promoter scores and our #1 position on Trustpilot, is leading more customers to choose Admiral for more than one product. The More Than integration continues to go well, providing an additional boost to household growth and a step change for pet. We completed the product pricing systems builds and started the renewal migration as planned. The migration will complete in August 2025. Our new colleagues are making a great contribution to the team, and retention performance is in line with expectations. All of this, plus the Ogden discount rate change, contributed to an all-time high for UK Motor profit, a record profit for home and the second year of profitability for travel. Let's look at what drove the strong results in Motor, starting with claims trends. If I can? Frequency was lower than expected, falling in '24 compared to '23. This partly reflected vehicle safety features on more vehicles, increased road safety measures such as reduced speed limits and relatively benign weather in Q4. Severity inflation continues to be elevated compared to the long-run trends, but not to the extent we saw in '22 and '23. Damage severity benefited from repair cost inflation slowing from record levels in '23 and lower secondhand car prices. Bodily injury inflation is also slightly elevated but stable, driven by commercial care costs and increases in general damages, but partly offset by the favorable impact of the Ogden rate change. The combination of lower frequency and moderating severity meant better-than-expected market claims burn costs, where claims burn cost is the average claims cost per policy. The second graph illustrates how relatively flat burn cost in '24 contributed to falling market premiums. We, at Admiral, continue to benefit from years of cumulative experience and expertise, combined with strong supply chain management, and this enables us to deliver good customer outcomes whilst maintaining control of claims costs. Finally, total loss. In line with the FCA multi-firm review, our analysis is near completion. The final impact is not expected to be significant to our results, but uncertainty remains. Moving to motor pricing. In 2024, a key driver of our exceptional results was being quick to recognize positive claims experience and reduce premiums earlier than the market. We became very competitive when prices and new business volumes were at their peak. When market premiums started to fall, we maintained pricing discipline, we remained competitive, but less so than at the peak. In total, we reduced prices by around 10% in 2024, broadly in line with the market overall, but our reductions were earlier in the year. So the 2 graphs on the left show that market prices increased in 2023 and reduced in '24. The graph on the right shows Admiral's times top, which is the percentage of times were cheapest on price comparison sites, a measure of our competitiveness. Looking at the second half of '23, you see our competitiveness increased as the market continued to increase its prices whilst we remained broadly flat. Towards the start of '24, we responded to improved claims experience and decreased rates by mid-single digits, which led to us being most competitive when customers needed it most. This resulted in exceptional growth in the first half. Since March '24, we've seen competitors decreasing prices. We also made reductions, reflecting both positive claims development and the Ogden discount rate change. But these were less than the market, reducing our competitiveness compared to H1. One area of regulatory focus is premium finance. It's too early to understand the outcome of the FCA market study, but our internal fair value framework means we're confident this product provides fair value and accessibility to our customers. Our APR is 17%. This is competitive compared to alternative sources of finance and remains at the lower end of the market. So an excellent year for Motor. Let's move to look at a strong year in Household where we delivered a combined ratio of 77% and a record profit of GBP 34 million. The market saw a period of elevated claims inflation since 2022, contributed too by the December '22 freeze, which put pressure on supply chains. In '24, we've seen signs that severity is starting to moderate. We also saw lower frequency than '23, largely driven by more benign weather. After many years of being flat, market premiums increased in '23, and this continued through '24, with '24 premiums reaching 30% higher than in 2022. This led to increased switching with new business volumes up 14% year-on-year and price comparison making up over 75% of new business sales. Admiral UK Household was well placed to capitalize on these market dynamics. We have strong pricing and claims capabilities and a disciplined approach to balancing margin and growth, similar to the UK Motor business. Admiral increased rates slightly ahead of the market whilst continuing to grow through our strong focus on price comparison, multi-cover, retention and More Than. We're very pleased with the development of our current and prior year loss ratio, which, along with the benign weather experience, have contributed to our record profit. So a very strong year across UK Insurance overall. Now let's look ahead to 2025, starting with Motor. We expect claims frequency to remain lower than pre-COVID, but is likely to increase from the particularly low levels we've seen in 2024. We expect claims severity to continue similarly to '24, higher than the long-run average, but lower than the levels seen in '22 and '23. We're seeing market prices continue to increase in Q1. There are different strategies from various players. So it's not clear how much longer this trend will continue, but no signs of showing -- no signs of slowing yet. For Admiral, our pricing will be disciplined, reflecting claims inflation and our own trends. In 2025, we expect margins on business written to return to more normal levels with much more modest customer growth. In household, we expect continued stabilization of market claims inflation, while frequency trends remain dependent upon weather. We've seen signs of prices starting to reduce, and we anticipate modest market price reductions in H1. Our pricing will continue to reflect inflation, weather and other claims trends. We anticipate continued growth, both organically and through the More Than renewal rights migration. We remain focused on delivering great products and service for our customers whilst managing strong combined ratio performance. We're confident this will drive sustainable, profitable growth over the medium term. And now over to Costi to talk more about our international results.

Thanks, Al, and good morning, everyone. In this section about our international business, I'll focus on how we have navigated diverse market conditions to deliver for our 2 million international customers as our core objective remains prioritizing healthy margins and exceptional customer satisfaction. Let's move to the next slide, and let me highlight the key messages. In Europe, we saw L'olivier in France achieve strong growth and profitability, while Admiral Seguros in Spain made progress with improved combined ratio nearing breakeven. In Italy, ConTe faced challenges due to strong increases in bodily injury cost inflation and some back-book loss ratio deterioration, and we are actively implementing a comprehensive turnaround plan. Across all European markets, we have maintained our commitment to delivering market-leading customer service. In the U.S., as Milena mentioned, we are in exclusive talks for Elephant, and we are pleased with the results achieved. Turning to the next slide, let's delve into each country's performance. We observed hardening market conditions in France and Spain, reflecting necessary rate adjustments, which are driving direct market growth. While Italy's market remains challenging, we are seeing signs of cycle upturn in recent months, including increasing average premiums and customers returning to shopping. And we expect it to recover in the near future to historical margins level seen prior to 2020. In this context, ConTe faced significant headwinds for 3 reasons: unprecedented inflation, coupled with increased bodily injury cost from the updated Milano tables and adverse loss ratio developments from the 2022 and 2023 underwriting years. Specifically, during those underwriting years, we expanded our portfolio into newer segments that afterward performed poorly. Having learned from past challenges, we have identified the issues and implemented strong actions, like substantial price increases resulting in a 25% average premium growth since 2022, exceeding inflation, prudent reserve adjustments reflecting the updated bodily injury tables and strategic portfolio realignment to focus on profitable customer segments. Furthermore, we contained our costs and achieved a 2% expense ratio improvement despite almost flat turnover. And we are confident that these actions will drive positive returns, although they will take time to fully materialize. And we remain optimistic about ConTe's profitability potential in the Italian market. L'olivier Motor delivered an excellent performance with an 89% written combined ratio, driven by strong growth in customers and turnover while maintaining our controlled loss ratio. Admiral Seguros showed encouraging improvements in its combined ratio, thanks to sustained positive contribution from its direct channels that has traded south 90% combined ratio and also improved performance from new distribution initiatives, brokers and the ING Bank insurance partnership. Overall, the strong performance of L'olivier and improvements in Admiral Seguros helped mitigate the impact of ConTe's challenging year. On the next slide, let's touch on the key progress on our strategy. We are strategically building scale in Europe, now representing around 18% of group's customers and 10% of turnover. Our commitment to pricing discipline, particularly through significant rate increases since 2022, has resulted in improved loss ratios versus market in France and Spain; while, as previously mentioned, in Italy, this has not been sufficient to fully offset yet the worsening loss ratio. We're also focused on operational efficiency, achieving across Europe a 24% reduction in motor servicing cost per policy since 2019 despite strong inflation. And our investments in technology, including a market-leading telephony system and cloud-based data platform, are driving synergies and efficiency gains. In L'olivier, we are progressively expanding into household insurance, mirroring our successful U.K. direct-to-consumer and multiproduct strategy. In Spain and Italy, we are making significant progress in closing the broker opportunity gap through refined propositions and portfolio optimization. Crucially, we continue to deliver market-leading customer service across all European markets. Turning to the next slide and to Elephant. The U.S. market has been softer and faced increased competition. And in this context, we delivered $80 million profit, a significant turnaround from last year's $24 million loss. This was driven by the consistent and effective execution of our turnaround plan announced last year. While we experienced a reduction in top line growth due to our focus on margins, the rate of policy shrinkage has slowed, and we expect it to stabilize in 2025 when we will continue to prioritize profitability. And as I commented a few minutes ago, we are in excellent talks with a potential acquirer to sell the business. In summary, we have seen strong performance in L'olivier and improved outcomes in Admiral Seguros, demonstrating the effectiveness of our strategies. We are actively addressing the challenges in ConTe with a focused turnaround plan. In the U.S., we achieved a nice profit improvement, showcasing our ability to adapt and execute. Across all European businesses, we remain committed to continue to improve margins while building scale and excelling at customer satisfaction. Overall, we are confident in our strategic direction and our ability to deliver long-term value for our shareholders. Thanks. Now I hand it over to Scott to present Admiral Money.

Thank you, Costi. Good morning, everyone. Firstly, I'm pleased to say it's been a very nice year for Admiral Money. I'll start with a few highlights. Throughout the year, we retained a firm focus on prime lending and continued to prioritize a controlled and a conservative approach to growth. Our book at end of December stands at GBP 1.17 billion. That's 13 -- 23% growth since full year, and our credit performance has been more than satisfactory with a full year cost of risk of 2.5%. This has been our third consecutive year of growing profits achieved whilst maintaining an appropriately conservative IFRS 9 provision. We continue to focus on being the lender of choice for Admiral insurance customers with now over 68% of new business coming from current or recently lapsed UK Insurance customers. And importantly, we're able to confirm the completion of our first third-party capital deal signed in February and unlocking the ability to grow the business off balance sheet. I'll provide a bit more detail on that in a moment. So coming into the year, we knew there would be continued uncertainty with the higher interest rate environment. We continued our philosophy of protecting our margin and ensuring strong risk resiliency in our pricing. Our book net interest margin finished the year at a healthy 650 bps and, combined with strong growth in balance, has increased our gross income to GBP 113 million. That's 19% higher than 2023. Combined with a solid credit performance, we are reporting a profit of GBP 13 million for the year. As I mentioned, 68% of new customer flows in 2024 came from Admiral insurance customers. We achieved this by working closely with the UK Insurance team. Our goal to be the lender of choice for Admiral insurance customers is a key pillar of our strategy, and we're expanding our advantage there through creating greater insight and tailoring our offering, making us increasingly competitive for them compared to other lenders. That's where we have the most significant and sustainable competitive advantage, both through direct sales and by searching for them on open market channels. The chart on the bottom left shows that the loss ratio delta between Admiral customers and non-Admiral customers continues to widen, demonstrating the advantage of the incremental data and the incremental understanding we have of them. Our NPS score of 75 also provides a very nice point of evidence that our commitment to providing certainty and transparency to Admiral customers on their lending needs is more than meeting their expectations. A let alone strategy. So when we set out Admiral Money's strategy in 2018, we identified 4 key ingredients to create an Admiral-like lender. Over the last 7 years, we have made solid progress improving 3 as pricing and credit excellence, expense efficiency and product differentiation. I'm delighted to see us take our first step towards the fourth, which is using third-party capital to enhance capital efficiency. I'm pleased to confirm our first off-balance sheet deal, which is a forward flow agreement with a major U.K. bank. It consists of GBP 150 million back book and GBP 300 million per annum, which completely transfers the loan risk off Admiral's balance sheet in exchange for origination and servicing fees. This model provides a travel benefit. It is accretive to return on capital. It accelerates profit recognition and enables future growth beyond the group's balance sheet parameters. I've added a slide in the appendix on Page 60, which gives a bit more detail of how it all works. Looking to 2025, we enter with strong momentum, and I expect to see continued growth of up to GBP 1.3 billion on balance sheet and total loans under management growing to up to GBP 1.6 billion. Thank you very much. I'll pass to Milena.

Thank you, Scott, and congratulations on another good year for Admiral Money. So to summarize, an outstanding year with record turnover, record customer number and record profits. This was driven by our UK Motor business, but also with an acceleration Beyond Motor. We continue -- and we will continue to innovate for our customers and continue to be focused on developing future-proof capabilities. The market health was more favorable in 2024, but it is softening. We will continue to steer the business as we've always done in the past with discipline and with agility to continue to build on this year and long track record of success. Thank you, and we're now happy to take any questions. [Operator Instructions] A - Milena Mondini: If we start there. Yes?

It's Abid Hussain from Panmure Liberum. I've got 2 questions, please. The first one is on the pricing strategy. It feels like you've got enough headroom now across the motor margins to reduce pricing and take further market share. Is that the correct characterization of your strategy for 2025? And it feels like you have much more headroom than the market, and the market can't operate that strategy. Is that sort of how I would characterize your thinking into 2025? That's the first question. And then the second one is on M&A. So you're obviously looking at disposing the U.S. business, but I'm just wondering on the flip side in the U.K., given that the U.K. market -- motor market is particularly fragmented, there's a few large players and a long tail of small operators. Would you consider expanding your customer base there inorganically? It looks like you have the balance sheet to participate in consolidation, but just curious as to your thoughts on M&A there.

Sure. Al, do you want to take the first and I'll take the second.

Yes, sure. So in terms of having good margins, we were very happy with the margins that we wrote in 2024. And as you say, in terms of outperforming the market by being able to go ahead of the market with our price reductions, that was what gave us the strong growth in '24. We're still happy with the margins that we're writing in 2025, but they're lower than in 2024. And so we're expecting much more modest growth in 2025 as we're really focused on good combined ratio discipline at this point in the cycle.

On M&A, as we commented in the past, our primary route to growth so far has been mainly organic. We've been successful in this way, but we do remain open to consider M&A opportunity as they fit well our strategy. The acquisition of More Than last year was an example of this and is progressing very well. We are happy where it's leading. We expect this to be accretive to EPS from 2026 onwards. And we'll continue to be open to consider opportunity as they come. Sorry, I think you were first, and then Will.

Faizan coming from HSBC. I just wanted to get a bit of insight on the 2025 sort of exit rate for the business you've written on UK Motor. Clearly, it's very profitable last year, and you mentioned a few drivers of positive profit margin in '23, '24, but I just want to understand what the exit rate is for the 2025 business. And the second question is coming back to the prior year releases, just there are a few moving parts there where you've increased the reserve percentile from 93 to 95. When I look back at your sensitivity at the half year, it was about GBP 26 million that was required to get you to the 95th percentile. Is that the right way to think about what the underlying reserve releases are ex Ogden? And therefore, are we suggesting that was a decrease on an absolute basis? Just to understand what's going on there.

Geraint, do you want to take the second and maybe also the first? Or -- yes.

So I'll do the -- so yes, reserve releases. So the -- remind me exactly the question again on releases, lower percentage...

I guess you've increased your percent of 93 to 95. Your H1 sensitivity suggests that, that was GBP 26 million to get there. And then you also have the GBP 50 million Ogden load as well, trying to understand all the moving parts there.

Yes. Sorry, that is pretty much the position, yes. So we increased our reserves strength to the 95th percentile. It was 93rd at the half year and 93rd at the end of last year, too. The impact on reserve releases was about 20 to 30. So had we held at 93rd percentile, reserve releases would have been 20to 30 higher and profit would have been 40 to 50 higher. And then we show sensitivities in the back of this pack, which gets you down to the 90th from the 95th and the 85th, which is a bit unrealistic, but yes.

Sorry, the GBP 50 million Ogden, is that sitting in the reserve percentile as well?

No, the impact we've seen this year, the GBP 100 million in 2024 was mostly reserve releases on back years. It's about 1 percentage point on about 4 years. The impacts that will come through in future years is actually come in things like profit commission. So the reserve release element of that is largely done. The other question was exit rate and entry rates and things like that. We talked about the exit rate for '25, which is a bit forward-looking, I think. We were very, as Alistair said, very comfortable with the ratios that we wrote business at in '24 in December and January and for the year as a whole. So we enter 2025, I think, in very good shape. If you do some math in the pack, you add the discounted best estimate loss ratio to the expense ratio, the '24 underwriting, you get to a combined ratio in the high 70s and with some improvement probably to come on the ultimate loss ratio for that year. So it's a very strong start point. We don't give the exit loss ratios and things like that, but we're very comfortable with the margins for sure.

Will?

The first one is not 1 million miles off, but actually just thinking about trying to work out a little bit on the exit rate of '24. And I know you're not going to give us the exact number, but just trying to think of that shape H-on-H because I think it was initially booked at 77 H1. I guess the seasonality benefit was removed because it was a benign Q4, then we have Ogden. I guess just trying to work out if that 2024 year is also booked exactly at 90 bps percentile or if it's spread across the years a bit differently. Tying to -- I guess, essentially trying to work out the half-on-half and a broad guide of where we're exiting. And secondly, just thinking about Admiral Money, it's an interesting development. This is essentially presumably where you've been looking to take it to some degree to more fee income. Any guide on that sort of long-term trajectory of that balance between on-balance sheet and off-balance sheet and guidance towards nonspecialists in this area about sort of ongoing versus -- ongoing fees and origination fees?

Yes, I'll give the same answer, put the words in slightly different order maybe. So the H2 2024 underwriting year was worse than H1 2024 underwriting year for sure because of the shape of the premium changes. But frequency in H2 was a bit better than frequency in H1, as we mentioned, because of the weather in H2, and I'm talking excluding Ogden. And obviously, Ogden impacted H2. So H2 was a bit worse than H1, actually not that much because of the frequency. And yes, just to reiterate, very, very satisfied with the margins we wrote business at throughout the year in December in H2 and H1. But we do expect '25 underwriting year to be worse; still profitable, but worse than '24.

And on Money, the way to think about it is the first back-book deal is GBP 150 million. Obviously, we've got GBP 1.17 billion on balance sheet. We would expect the share of off-balance sheet to increase in the coming years. I gave an indication of that in the presentation to the split for 2025, and I would expect that to continue.

Will, so you also asked about the spread of the risk adjustment by underwriting year. It's a fairly standard split, the bigger margins on the more recent years, and I think it's 8 or 9 points of margin on 2024, which is pretty normal and pretty large. So I'd say that it's also booked at the 95th percentile, but we think about it in aggregate, like you say.

Thomas Bateman from Mediobanca. Can I just talk about premium finance, please? So you said that you reduced the APR and now it delivers fair value, but I think you said it delivered fair value before as well. So what has changed there? And maybe if you can just help me bridge like the investment income that Admiral makes versus the installment income that you make because it seems to me there's a big incentive for someone -- for you guys to pay in monthly installments because I think about 1/3 of your customers use premium finance, and you generated GBP 160 million or so of installment income this year, whereas investment income is you make a 4% yield, that includes your whole customer base. It includes your reserves, it incudes your capital and you only generated GBP 150 million. So 1/3 of your customers are generating multiples more on -- and really, the way I'm thinking about this, you're just losing the investment income here. So yes, can you just bridge between GBP 160 million of installment income for customers versus GBP 150 million? And maybe just 2 other tiny little questions on that. What's the administrative cost for you to deliver premium finance? And how many people actually default on their monthly installments?

Good. Al?

So if I take premium finance, I mean, first of all, we think it's a good product for customers. It enables accessibility to insurance by enabling them to spread the cost of that insurance monthly. We -- you asked about the change in our APR. We look at that on a regular basis on a fair value basis. We look at the cost of funds. We look at the operational costs associated with it. And it's those that mean -- the reason why the APRs reduced. We've seen the cost of funds going down, and we pass that on to customers. It's also very transparent. So most of the price comparison sites will -- if a customer says that they want to pay monthly, they'll show the payments monthly, including the premium finance charge. So for all of those reasons, for the fact that the 17% is -- compares favorably to alternative sources of finance and we're at the bottom end of our competitors, we're very comfortable that it provides fair value to customers. Did you want to comment on...

Yes. We also said that we probably wouldn't give the stat on how many of those customers default and what the cost of that element is, too. I think it's just slightly different. Some, obviously, the money we make on investments is slightly different. At the end of the year, there was GBP 1.5 billion on the balance sheet, I think, of customers owing us money on premium finance. So that's the relative scale of these things. But clearly, it is a higher interest rate on the premium finance than it is on the investment because of the costs associated with it.

Maybe the only other thing on that is with the higher average premium, the impact of the admin cost, so the fixed cost element of the premium finance is also spread across a higher premium.

Maybe just to come back very quickly because you're implying that there's a reasonable amount of operational cost there, but then you apply a flat rate. So for a younger customer that has a much higher propensity to use premium finance where the premiums are substantially higher, there's no change in rate there. There's no reduction of that kind of average administration cost, which, to be honest, I think is actually tiny for you guys. So what -- I don't know, I'm trying to understand what is that administrative cost. I think it must be miniscule. Similarly to the amount of people in default, I think it's tiny. So I really struggle for you to justify a market average 20% APR versus your own investment yield of 4%.

Our APR is a single rate and is 17%. There is a cost, you're right, it's more fixed than variable, but there is some variability in the admin cost too that is reflected, and we'll continue to review as referred. But as Alistair said, we're very comfortable at the moment as a variable product for customer and it's very important for affordability too.

Andy Sinclair from Bank of America. First, just coming back to the Admiral Money partnership. Just trying to understand, clearly seems ROE positive, takes away a bit of risk. Just to understand, what's the profit impact? I'm assuming that maybe a little bit of a tick down in profit from that, but just to understand a little bit more there. And then second was just on profit commissions. Geraint, I think you mentioned 2023 is getting close. Just if you can give us a little bit of color on that. And also just looking back 2022, even 2021, kind of where are we on profit commission kind of scope there?

You want to start, Scott?

So just as a reminder, the way we think about the on-balance sheet loans is that we target a return in the region of 2% to 3% on that asset. That would be a flat scale, and that would be in the medium term. What the originate sale deal does is it gives us a fee immediately, and then we get a servicing component every year going forward. And there's also a small profit share part. So clearly, it's less than if you held it on the balance sheet for the entire 5 years, but it's still a meaningful part of the model. And as you identified, there's no capital requirement for those loans, so it's accretive to return on capital.

And on profit commission, so the -- yes, the income we recognized this year was -- I think it was entirely from 2020 underwriting years and earlier, plus a very small part on 2024, too, which obviously started very low. 2021 underwriting year is effectively at the point where it will start recognizing profit commission from the next GBP 0.01 of loss ratio movement. So that's right at the cusp we're starting to recognize. 2022, as you know, from the book ratios in the back is still a bit high. And so we don't foresee profit commission on that year at this point. And 2023 is very close. I expect that probably to come in the next 12 months. It requires 1 point or 2 of loss ratio movement either on '22 or '23. And I think given our loss ratio movements, usually by calendar year, you'd expect that pretty quickly, I think.

Derald Goh from RBC. So the first one, just to clarify that more prudent reserving, is it you being opportunistic because of how strong the earnings were? Or was it a case of you accounting for a very high share of new business that you've written in the year? And maybe you could also speak more broadly about the impact of a higher share of that new business within your overall risk mix? And secondly, thinking about growth for 2025, what are the levers you have? I think you spoke about increased scale. Now how much more has that played out in 2024? And how much more might still come in, in 2025? And then thirdly, just very quickly, just in terms of the excess capital return, what is the thinking behind sticking to a special and maybe not doing a buyback with where you're trading?

You want to take the first 2?

Reserve strength, so our accounting policy, as you know, 85th to 95th percentile corridor. Typically, and actually for all of our history, I think we've adopted a prudent approach to reserving. We think motor insurance can be uncertain and can be volatile, particularly early in development and particularly where you've written a different mix of customers or there's an upcoming legislative change or something. So we will always reserve conservatively, and we think that's the way to approach it. At this period, we moved from the 93rd to the 95th percentile. And there are a couple of reasons why we might choose to reserve higher. One is elevated uncertainty in the best estimates for whatever reason, that's not the case right now; or we might choose to take a prudent approach in recognizing good news that's coming through in the best estimates, including from something like an Ogden discount rate change. And that's what we've done at this point. So that's available to us under the accounting policy. Opportunistic is a strong word, but that's what we've chosen to do at this particular point. In the long term, we wouldn't really expect to sit at 95th percentile consistently. That's a very conservative position. So once the group's reserves are a bit more evenly spread across the different lines, we'd expect probably to average out around the 90th, but that will depend on the particular circumstances, how the best estimates develop and so on. New business mix?

New business mix. So you're right, we grew faster in 2024, and it meant a bigger share of new business. New business is typically a higher risk mix of business. And actually, you see that in -- when you look at the average premiums despite us passing on rate reduction to the market, the average premiums are slightly higher as a result of that new business mix.

On the dividend buyback, we historically always prefer dividends over buyback. We always did dividend. Historically, we consult regularly our shareholders, and there is no unanimous preference. But in general, they really like consistency. So that's why we maintain this consistency over time. Our employees are also shareholders and part of their bonus linked to dividend. That's not a major reason, but I would say they also prefer dividends too. We revise this very regularly with our Board, and we're continuing to do very seriously every year now as we go on. There's been a small tweak that we announced at the half year in which we'll stop diluting for shares that we need for the employee share scheme, but that's relatively small in the overall context. Sorry? There was a question on scale. How much this will play out in 2024 and how much we expect this to play out in 2025.

So in terms of growth or...

In terms of profit, do you mean? Or in terms of...

Unit economics, servicing income, retention...

Yes. I think there were different -- do you want to?

Yes, sure. So in terms of growth, I think we've really grown in 2024 by cutting rates at the right time of the cycle. In terms of scale going forward, I think managing the cycle remains a component of how we'll grow. So it will change at different points, similar to the slide that Milena showed. And in the meantime, we continue to invest in core capabilities, pricing, claims, customer experience. You mentioned scale, extra data has a benefit in terms of pricing. We've got more products now, more customers and we see good traction with multi, which helps retention. So there are benefits of scale as well beyond the way that we've managed the cycle.

Good. I think it's -- then here.

Rhea Shah, Deutsche Bank. So just coming back on to the scale question, what is your retention rate in UK Household? And how many customers or what proportion of your total U.K. customers have multiple products across car and home and travel as well? So that's question kind of number one. And where do you expect that to really go over the next few years? And then the second one is actually around new business and capital strain. So you pointed out in one of the slides that your new business strain was around 11%. Is that a good guide for future years until at least the internal model is passed through?

Okay. Al, you want to take that?

Sure, I'll take the first one. I don't think we disclose retention, but our household retention is very strong. And when we look at benchmarks, it's stronger than the market average. You tied that in with multiple product holdings, which is -- does have a positive impact on retention. And we mentioned in the slides that we've got 1.3 million multi-customers. So they'll hold at least 2 products each.

And the second one is the capital strain. So what we're saying there is the increase in the capital requirement over the course of the year divided by the increase in revenue is about 11%. There are some moving parts in this. So it won't be exactly that level moving forward, but that's not a terrible guide, I would say. And that demonstrates really quite strongly the efficiency of our model and the benefits of using reinsurance.

Yes, I think we go here and then there.

It's Anthony from Goldman Sachs. The first question is, if I may follow up again on the growth outlook for 2025. You mentioned you expect growth in UK Motor going to be slower in 2025. Coming to the price momentum, could you give some color in Admiral's portfolio? Are you declining price higher or lower than the market so far in 2025? That's question one. And then question two is on your -- you guided PYD in UK Motor to be 10 to 15 percentage points. Does that bake in any expectation of the commutation of the reserve? And also, just in general, what are you doing on the reserve commutation currently?

Al, do you want to take the first and, Geraint, the second?

Yes, sure. So in terms of motor growth, as we've said, we expect it to be much more modest in 2025 than in '24. We're happy with the margins that we're writing. We've seen some small reductions in price in the market in the first part of '25, and we've also made some small reductions. Still very happy with the margins. And going forward in 2025, our focus will be on combined ratio discipline.

And then on commutations, to start with, we've not changed our approach. So we'll continue to commute the reinsurance where we think it makes economic sense, i.e., where we're confident about the outcome for the year and it's cost effective from a reinsurance cost point of view to do so. So during '24, we commuted everything up to and including almost all of the 2021 underwriting year contracts. There's one more to go, which is designed to be commuted at the end of 2024. So that one will be done probably at the start of this year. The PYD guidance, which is 10% to 15% moving forward, actually is not impacted by commutations. I think that the -- that sum is the gross claims reserve releases divided by the gross premiums, so it's not impacted by reinsurance.

Sure. I think just here and then there.

The first one is on your investment portfolio. Obviously, the investment income has grown quite strongly. I haven't quite done the math, but it appears that you've, as a proportion, grown your money market funds greater than other parts of your portfolio. Just given the fact that you are a fairly long-duration liability with the BI stuff and given where yields are, is there an incentive to lock in to those yields by increasing duration? That's question one. Second question is on the More Than acquisition. I understand there's still a portion left to renew. Can you just explain how much is left and what roughly the retention is on that business?

So on investments, to start with, so the portfolio is very well matched to the duration of the liabilities to start with. So there are some long-dated liabilities, which are well matched by long-duration assets. The flows that we saw, quite a large increase in balances during 2024. They initially go into money market funds and then they get allocated out according to the strategy. So we saw an increase -- a small increase in money market fund allocation and government bond allocation in '24. We'd expect that to get allocated out during 2025, but no big change. So money market fund yields in '24 were pretty attractive, and they're obviously on the shorter end of the duration. But we review it all the time. We're very comfortable with the allocation. I think at this point, it's well matched from a liability duration point of view. So no big change to report, I don't think.

On the More Than migration, the way that works is we've got the book of business and it's migrating over a 12-month period. That migration will complete in August '25. So we're more than halfway through. In terms of retention, we're not disclosing the retention number, but we're -- it's in line with our expectations for the migration.

And sorry, just to clarify, the insurance revenue growth should be faster than the gross written premium given the fact you're migrating More Than into it, I guess. So 2025, insurance revenue growth in home should be stronger than gross written premium growth. Is that correct, because of the migration?

Yes, you get the benefit of the earning through, I suppose, of that policies that we acquired and migrated over.

Maybe just to remind that we'll have a deep dive on household insurance at some point later. And we -- at that point, we'll have complete migration by August, and so we'll be able to share a bit more on that at that point. I think we're here.

Andreas van Embden from Peel Hunt. I just had a question around your price elasticity in the U.K. motor market. Does that change during the cycle? We're now sort of at the peak of the cycle, average premium policy is very high. Does that change your price elasticity as we go down perhaps to softening market, lower average premiums for policy? And the second question is, if you compare the price elasticity of your MultiCover product to a single product, is there a material difference between the 2?

In terms of elasticity, it can be impacted by a number of different things. I think you sort of pointed to higher premiums more elastic than lower ones; I think they can be. That's partly why you see a higher risk mix of business at new business because those customers with higher premiums are more likely to shop. But we wouldn't try and predict changes in elasticity through the cycle. It's something we monitor very closely. In terms of single customers and multi-customers, we do see a benefit for retention for customers who hold more than one product.

Just to add color on it, I think elasticity, one element is, of course, the level of premium, but also depends if you are an outlier or not. So your relative position versus others, you maybe have more elasticity if you are an outlier in some cases and also depend on alternatives. If you have a very, I don't know, low new business from competitors, of course, there can be more elasticity and so forth. So there are a lot of elements playing into this. That's why Alistair mentioned, it's difficult to predict. It's very much something you want to monitor on a weekly basis and act on it.

Carl Lofthagen from Berenberg. Two questions from me. The first on bodily injury inflation, I think care costs are expected to increase in the second half with the changes from the budget. Are you pricing for these changes already? And are you kind of pretty comfortable with the way you are? And then just similarly on accidental damage, obviously, big topics at the moment in the U.S., tariff discussions, secondary impacts. Are you comfortable that we won't see kind of a big spike in inflation this year as things stand today?

So on care costs, yes, we're pricing for the expected increases. Those care costs and the inflation on those impact the largest claims. So it also is some protection within the excess of loss agreements that we have, but we do price for that. In terms of accidental damage, we're not anticipating at the moment any spikes in terms of anything that's currently being talked about in terms of tariffs, but there is a geopolitical noise, let's call it that. And so we're watching that very carefully in case there's anything there that we think we need to adjust for.

Yes. Maybe a couple, and then we check if there's someone connected.

It's Ivan Bokhmat from Barclays. A couple for me. The first one, you've alluded to the -- some of the initiatives discussed at the task force. I was just wondering if you could elaborate where, if there is any action taken, where -- what are the work streams that now can be identified? And secondly, just thinking about the cost outlook into 2025 now that we're probably with slightly lower pricing, not getting as much operational leverage, do you see you can keep cost flat in relative or in absolute terms? How do you think about this?

Yes. So on the task force that was set up like 4 months ago, I think the good news is that prices are already down, and that's put a bit less pressure. There's been a lot of work. We've been very supportive in collaborating with the government on it. But it's a bit early days. So it's not clear yet what are going to be the key initiatives. It's a very early stage to comment on what the outcome is going to be. As I said, good news is prices are down. We think there are a lot of interesting opportunity that may be road safety. So there is focus on government on potholes, limit -- speed limits. That's already had some good impact on frequency in the area where it's been implemented, lower speed limit. You have a measure like on the anti-fraud, anti-theft that can be very helpful. I think telematics is a fantastic tool to help to control price, reduce price, mitigate risk. The main cost driver, though, is really the technology of the car. So it's the cost -- total cost of ownership of the car rather than excessively the cost of running insurance. But there is a lot of areas that the government is exploring and it's a bit difficult to say at this stage where this is going to land. I think it's going to take a bit more time to play out. And your second question was the outlook of cost of price, average premium in motor insurance for 2025, right?

I was asking about the operating costs of your business, whether you have some big investments to make, whether with lower prices, you'll be able to keep the expense ratio flat, lower or higher.

Yes. I think in general, in terms of expense ratio, of course, we need to think about average premium and how this is going to play out because it's a ratio and the average premium, as we anticipated, the premium at the end of the year were lower. So that will have an impact. But in terms of cost per risk, so if you take out the average premium volatility, we are -- we continue to invest to create efficiency, to increase digitalization, automation. So we're pretty good at trying to maintain cost. In the last few years, we invest a lot -- we increased our investment in data and technology. Now we're more in the phase to try to make the most out of it. So we don't expect a major shift in one direction or the other in terms of cost per risk. We go here and then we need to, I'm sorry, we need to go home.

I just want to understand a little bit what happened in H2 with premiums because that was substantially lower than what I think most people thought. So was there any like mix change? Or were there some big contracts in H1 maybe? If there was, will they repeat? And also just a small point on pricing. You said pricing is down 10% this year. Was that just for new business or the whole portfolio? And I guess what I'm comparing that to is the ABI average increase of 15%. So I just want to -- should I be carrying minus -- comparing minus 10% with plus 15%?

So in terms of total premiums, in the first half, UK Motor did GBP 2.2 billion, I think, and it was GBP 4.2 billion for the year. So it was about GBP 2.2 billion first half, GBP 2 billion in the second half. There are a number of reasons why H2 can be a bit lower, including November and December are quite small months. So we don't write a huge amount of business in November and December. So there is a seasonality where H2 can be a bit smaller. And there was a bit of a mix effect. We grew less in the second half, so we wrote less new business. New business attracts higher premiums than renewals, so that also contributes to it. Plus, of course, we reduced the prices in the first half. So there are probably 3 reasons for it. Hopefully, that wasn't unexpected because we talked very clearly about that in the half year results. And so GBP 2 billion in the second half, GBP 2.2 billion in the first half.

The thing that I can't square is when I look at your average premiums, they were up like 45% in H1. And you're telling me that you actually dropped pricing more in H1. So I don't know, I can't square the 2, and I think consensus is a long way off on premiums for next year, but maybe we can take it offline.

Yes, I'm not sure I recognize 45% increase in average premiums.

I think it depends also if you look at H1 on H2 last year, H1 on H1 because don't forget in 2023, the average premium increased very substantially. So the starting point at the beginning of 2024 was at the peak. So even if we decrease a lot, we decreased less than was increased in 2023. So the average is higher. You had a second question, right? No? No. We need to move -- yes, 2 questions from home. Is there any question from home?

We have a question on the phone line. Your question comes from the line of Shanti Kang from Bank of America.

Congratulations on an impressive set of results today. I just had 2 questions. The first one was just on ConTe. What's the recovery trajectory time line in your view? And what do you see as the key execution risks to that? And the second question is just on Admiral Money. I was just wondering if there's anything specific about what business does or doesn't get passed on to the third party. So for example, how does it get selected from back book versus new business?

Thank you. Costi, do you want to take the first and Scott?

So what is making us confident on the next period for ConTe is that we have identified the reasons of the issues that we have that basically have impacted our 2024 results, and we have implemented very strong actions to recover ConTe in a good place. And at the same time, we are seeing positive signs from a market perspective of improvements, both in terms of average premium growth and also in terms of quotes coming up very clearly on price comparison side and market retention that have reached a sort of a record low, still stayed quite strong, but reached this record low in Q4 2024. So if you combine all of this, we remain positive for the near future. Although in terms of execution risk, we need to continue to stay very focused on monitoring the impact of our actions and be ready to take further actions if needed and be vigilant on the market conditions and market cycle.

On Money, when I do it like this, we're very keen to make sure objectives are aligned with our partners. So it's a vertical slice, random allocated loans. There's no difference in the criteria to what we hold on balance sheet.

Good. Thank you. Thank you very much for your time and question, and we'll be around for a few minutes if you need us. Thanks. Thank you very much.