Admiral Group plc

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 R. Graves 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 he's 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's team to lead our personal insurance lines of business beyond motor. Pet, travel and household. Path, 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 seniors roles, as they build such a strong track record in their previous positions. We are in the process of identifying Scott's successor as a CEO of Admiral Money. Constantino 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 favourable with inflation reducing and more benign weather. We've been fast to react to market conditions and 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 managed the business with discipline during the inflation spike in 2022 and 2023 and as a result started last year from a position of strength, able to reduce rates earlier than most and gain market share. Group profitability reached £839 million, an all-time high, driven by UK motor insurance that delivered close to 1 billion of profits. We were proud to see the progress of other lines of business as well, with two international countries, France and US, and the two largest businesses in UK 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. Software 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 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 half a million additional customers at the end of H1. But other lines of business in UK 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 UK, a mixed picture with robust performance in France and US. US 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. Containstead 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. Constantino 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 UK as well, with a 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 costs, 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 OCDEN rate in December. The UK 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 day. I can expand more at this point and we will update you as soon as we'll have more to share. So before hearing more for Garant on 2024, I would like to take with you a step back and one forward 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 growing the market with a CAGR of around 5%. The graph at the bottom of the slides 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 are able to secure stronger insurance 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, Doesn't 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 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 and when we have a proven competitive advantage and a clear right to win. Last year, the results of these lines of business combined was £18 million, with four businesses delivering double-digit profits and good combined ratio as well, and two additional profitable businesses, Vago 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 multi-product 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 five 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 code quality. We extended adoption of predictive AI, also beyond pricing, and this last year we set the foundations to leverage more on GenAI 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 insurers of electric vehicles with high-quality products, 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, VEGO, 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 effort and the commitment of our colleagues that underpinned these results, not only with the usual £3,600 worth of share, but also with an additional special bonus of €500 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 a 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. Pre-tax profit was 839 million, or 90% higher. That includes the Ogden impact of 100 million, net of which profit would obviously have been 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 217 pence. 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, so we're 200%. And we followed our usual approach on dividends, which results in a full year dividend of 192 pence a share. That's around 90% up on 2023. And that full year figure includes 121 pence 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 UK. And with the exception of Italy and the US, all parts of the group grew and turnover broke through 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 360 million higher, including the 100 million from Ogden and more on that very shortly. UK home insurance reported a really nice result of 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 US. 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 £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 one or two recent underwriting years. And our team in Italy is obviously all over this. Moving to the US, 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 a quarter 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 and 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 Vago 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 result and 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 UK, as you know, changed during 2024 to align at plus 0.5%. The approximate ultimate profit impact to Admiral of those changes is around £150 million, of which £100 million has been recognised in 2024. A further £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 recognise profit commission on the profitable 2023 underwriting year. We expect to start recognising 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 of 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 prudence 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 two 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 one 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. Four 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 2023 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, though not usually 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're 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 recognising 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. 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 121 pence a share. That's just under 90% of H2 earnings and is 2.3 times the final 2023 dividend benefiting from the Ogden impact in H2. And as you see, the full year dividend is 192 pence 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. 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 are reduced, though still profitable. And when thinking about 2025, it's important to remember the increased reserve strength the 2024 year end and the significant profits 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 Christina. 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 a number one 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 second-hand 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 favourable 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 costs is the average claims cost per policy. The second graph illustrates how relatively flat burn costs 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 recognise 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 two graphs on the left show that market prices increased in 2023 and reduced in 2024. The graph on the right shows AdMob's times top, which is the percentage of times we're cheapest on price comparison sites, a measure of our competitiveness. Looking at the second half of 23, you see our competitiveness increase as the market continues to increase its prices whilst we remain broadly flat. Towards the start of 24, we responded to improve 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 markets, 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 34 million. The market saw a period of elevated claims inflation since 2022, contributed to 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 capitalise 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 differing strategies from various players, so it's not clear how much longer this trend will continue, but 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 stabilisation 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 Kosti to talk more about our international results.