Admiral Group (LSE:ADM) Q2 2026 Earnings Call

0:00 Good. We're good to go. Right? Yes. So welcome everybody to twenty twenty six, Admiral Group for ADMiral. I'm very glad to be here today to present you another solid, strong set of results characterized by the usual ADMiral features, discipline, strong underwriting performance and real strategic progress. So I will go through the highlight and then as usual, hand over to Rachel for more detail for on our financial performance. This is my first presentation alongside Rachel as our new CFO since Geraint left us recently as a CFO, but I'm very glad that he's still with us working part time. You can see the picture here of our selfie on our results presentation at year end.

0:48 Rachel has been in the group for twenty years. She's a rare mix of sharp intelligence, real common sense. She has an understanding of the business that is second to none and a strong understanding of our foundational competitive advantage, capital management, risk management and of course our culture. So I'm generally excited to start this new partnership with her. And just before we go into the results, I also want to take the opportunity to thank Diane, our Head of Investor Relations. For the last three years, she's been really crucial in helping us in preparing day like this and much more. I think her life is bringing her in a different place, but we are very thankful for the great support she gave us so far. So now back to Admiral. First half, So we had a strong start of the implementation of the strategy we set out at year end with many progress across different area of the group.

1:43 Few key message from me to start with, agility and discipline deliver excellent underwriting results in our largest business, U. K. Motor, despite a very competitive market. And at the same time, we kept growing margin and profit in our other lines of business. We have a very strong capital position with a solvency ratio of 190% after the investment in FLOC, and we deliver attractive shareholder returns that now will also include share buybacks announced at year end. We continue to invest in our capabilities. We evolved our customer propositions and set up good foundation to capturing more of the benefit of the new technologies. Having anticipated the market and acted earlier on rates, as typical of ADMREL, we end the first part of this year in a strong position to capture more growth when the cycle turns.

2:37 And we remain fully confident in our ability to deliver on our growth ambition across products. Let's look now into the results a bit more in detail. So we added the €600,000 more risk, driven mainly by U. K. Motor staying largely stable with double digit growth elsewhere. Turnover was flat year on year, but up more than 10% versus last half, reflecting high single digit rate increase in U. K. Motor, which will continue to earn through over the coming months, plus continued growth in other parts of the business. Profit of £429,000,000 down 18% versus H1 last year, but very close to H2 last year.

3:23 This underpinned by combined ratio of 78.5%, generally excellent, better than our historical leverage, despite the market being softer for longer than expected. But what I'm most proud of is that the strong underwriting performance reflects underwriting improvement across all our major lines of business and the trend is expanding across products as we transfer our key competitive advantage into different lines of business. A market leading return on equity of 45%, we returned GBP $259,000,000 to our shareholders in H1, an equivalent of GBP 80 per share and that include GBP 45,000,000 of share buyback to start in H2 and a dividend of 70 per share.

4:11 In addition, we finally submitted our internal model for approval. More importantly, we're very proud of the progress we made on our customer promise, improving journeys and experience with a strong focus on outcomes that is reflected in great feedback scores and strong retention. So let's look now at our main business a bit more closely, starting with U. K. Motor on the left side of the slide. You can see two lines on this chart, risk count on top, market premium change on the bottom. So different units, but they move almost as mirror image of each other. So why is that? It's because we tend to grow our market share where margins are attractive and we hold back or even shrink as happened in 2022, 2023 when margins were weaker.

5:02 This time we stay stable rather than shrinking in the soft part of the cycle. This is core to our strategy to consistently underwrite at higher margin than market. As we said at year end, our plan for UK Motor is to keep growing across cycles as we've done in every single cycle since we launched and to do so at the right time, while protecting a very strong combined ratio advantage. Our discipline in the first half of this year, including increasing rates earlier and harder than most, puts us again in a good position to capture more growth at the right time and improve earnings as this price increase earn through. Now on the right side, our other personal lines. This include household pet and travel in U.

5:47 K. Insurance, Admiral Money and European Motor Insurance. Slightly different story here as this business still benefits from economy of scale, we're working to build further and therefore continue to grow across cycles every year. As you can see, we've continued to grow our risk base up to around 10% in H1 versus last year, while at the same time, we increased margins up more than 50% versus H1 last year. As we said at year end, our ambition for this business is to keep growing both top and bottom line together over time. And while we recognize that these businesses are still small and therefore more volatile than U. K. Motor, we remain confident that we'll materially increase their contribution to group profit over time. We're also very pleased with the progress on strategic priorities we set at year end.

6:38 First, growing selectively and profitably. Alistair and Constantino will expand more on this later. But overall, it's great to see some of our business maturing and consolidating similar competitive advantage to U. K. Motor. L'Olivier in France, unsecured personal loans in Admiral Money, household in U. K. Insurance are indeed running at a very strong margin, broadly in the range of 20%, while we continue while continuing growing at the same time. We also continue to improve our product proposition with the launch of a new household product under the More Than brand. There are pleasing progress in car finance, where we launched from day one a consumer friendly transparent product into a market contest that is still adapting to new disclosure regulation.

7:25 In commercial lines to new tax offering, including the insurance of WAVE robotaxi proposition. WAVE, as a reminder, is a U. K.-based autonomous vehicle company piloting in London as we speak. Second pillar, continue to evolve our core capabilities and competitive advantage, increasing customer lifetime value over time. There's so much progress here that I'll start to summarize in a few minutes. But what I would call out is 8% growth in a customer holding two or more products, driven by improvement to our app, our digital journey, an area with real excitement, but also plenty of runway. Continued expansion in Predictive AI, that's one of our biggest source of competitive advantage with more models in production and better performance from them. Heavy experimentation in Gen AI, now scaling several pilots across distribution, claim settlement, customer service, including voice to voice, now life, both in U. K. And in Italy, plus strong embedding of these tools across our software development life cycle.

8:28 Third pillar is amplifying our long term impact, building sustainable product and service that are fit for the future with real positive impact on our communities. We've seen electric vehicles uptake rise almost 10% year on year, exciting area where we believe we have good advantage over the market, as Alister will explain later. We continue to invest in our people, our most important asset, delivering more than ten thousand hours of data and AI training in H1, building a community of over 1,000 people across our markets. We won several recognition in the data and AI space and we're among the first signatory of the Financial Service Skills Compact. Underpinning of this, of course, is our restless commitment strong commitment to our customer.

9:15 That is reflected in extremely high net promoter score over 50% and our strong culture. With that in mind, I will hand over to Rachel for more detail on our financial performance. Thank you, Milena. Good morning, everyone. I'm pleased to be speaking to you today in my first half year results as Group CFO. I'm really proud to be taking the baton from Geraint. I've seen firsthand the evolution of the business and how Admiral has gone from strength to strength. It is a privilege to be here representing the business and finance teams that I've been a part of for the last twenty years. We've delivered another strong group first half performance, maintaining underwriting discipline, a prudent reserving approach, very healthy solvency position, at the same time as returning capital to shareholders through dividends and a share buyback.

10:14 Let's start with the group financials. An important feature of the first half result is the quality of the underwriting performance. A group combined ratio of 78.5 is an excellent result by any measure, only modestly higher than last year's exceptional 77.7% and achieved in a period of lower U. K. Motor earned premium. The group's loss ratio remained stable at 57%, reflecting strong underwriting discipline. Continued cost focus and efficiency helped to partially absorb the impact of lower average premiums to deliver an expense ratio of 21%. Against that backdrop, group profit before tax was €429,000,000 18% lower than the first half of twenty twenty five and broadly in line with the second half of twenty twenty five.

11:06 This reflects another strong period of performance against a record prior year comparator. U. K. Insurance profit was €485,000,000 compared with €584,000,000 in H1 twenty twenty five. That reduction was driven by U. K. Motor, where lower earned premiums and a higher reinsurance charge reflected the softer market conditions. Household, Travel and Pets continued on a very positive trajectory with profit increasing to $28,000,000 up 12% compared to the same period last year. Europe is an important part of our growth ambition, and we are focused on growing the business profitably. The first half showed encouraging progress with improved underlying profitability and further portfolio growth across our markets.

11:55 Profit before tax was €17,000,000 which included around €13,000,000 of one off benefits arising primarily from a change in accounting for acquisition costs. From 2026, these costs are deferred and earned over the life of the policy rather than recognized immediately, which better matches costs to the premium they generate. The transition benefit is one off this year and does not alter the economics of the business. Separately, we have replaced our country level quota share contracts with pan European reinsurance arrangements as we seek to optimize terms and capital efficiency. It reflects how we increasingly manage Europe as one integrated business and means the reinsurance result is now generated at a European level.

12:41 For that reason, given the accounting changes, we have presented Europe on an aggregated basis. Excluding the one off items, underlying European Motor profit improved to around €5,000,000 and risks grew 5% over the year. Costi will cover performance and strategic progress in more detail shortly. Admiral Benet continued to improve its underlying profitability, delivering profit of $13,000,000,000 while growing its lending portfolio to $2,500,000,000 and maintaining strong credit discipline. Profit increased year on year, excluding the impact of a larger back book sale contribution in the prior period, reflecting continued growth and effective cost management. Credit performance remained stable, supported by disciplined underwriting and prudent provisioning.

13:29 We have a strong foundation for further profitable growth, supported by third party capital arrangements that optimize balance sheet capacity. Stepping back, this is a strong group result in the context of an exceptionally good first half of twenty twenty five and the softer U. K. Motor cycle. It demonstrates the value of Admiral's disciplined model, maintaining reserve strength and continuing to invest for sustainable long term growth. Turning now to U. K. Motor, where we continue to deliver disciplined cycle management. Profit before tax was $457,000,000 around $100,000,000 lower than the first half of twenty twenty five. Excluding the estimated Ogden benefit in 2025, the profit was $87,000,000 lower half on half, but broadly in line with the second half of twenty twenty five.

14:18 Turnover was 5% lower than H1 twenty twenty five, with the vehicle base largely flat. And turnover was up 11% versus H2 twenty twenty five, reflecting strong rating action taken in the first half of this year, which will earn through over 2026 and 2027 as well as the usual seasonality. The underwriting result was €338,000,000 compared with €441,000,000 last year. This reflects the strong core combined ratio on the lower earned premium. In addition, we had a higher reinsurance charge with favorable loss ratio movements on the 2025 underwriting year, leading to a reversal of the reinsurance recovery asset. Investment income was stable at €91,000,000 with the underlying yield on the group investment portfolio a little over 4%.

15:08 Finance expenses increased slightly to $54,000,000 reflecting the impact of higher rates in recent years. Co insurer profit commission increased to $45,000,000 from $39,000,000 and that's mainly from the 2024 underwriting year. Finally, the strong core combined ratio of 78.8% is two percentage points higher than the first half of twenty twenty five, with the impact of lower average premiums on both current period loss ratio and expense ratio, partly offset by the more favorable prior year development. Let's now look at the strength and consistency of our reserving approach. Ultimate loss ratios have developed favorably across all recent underwriting years as expected.

15:55 For 2026, our estimated burn cost inflation is mid single digits, broadly in line with 2025. The first discounted book loss ratio for the 2026 underwriting year is 78%, which is in line with the 2025 underwriting year at the end of twenty twenty five. The U. K. Motor risk adjustment at the end of the first half sits at the ninety third percentile, down slightly from the ninety fourth of full year 2025. We continue to expect to move towards the middle of the risk adjustment corridor over time, subject to ongoing experience. Reserve releases were 17 points percentage points of a lower earned premium or $247,000,000 compared with $197,000,000 in H1 twenty twenty five.

16:44 Around half of the $50,000,000 increase relates to high releases from the best estimate, following continued favorable development and half attributable to the reduction in risk adjustment percentile. To summarize, claims experience continues to develop positively. We remain prudent in the way we book and release reserves. That gives us confidence in the quality of the result and in the resilience of the balance sheet. Turning now to our capital management framework and shareholder returns. There is no change to the capital management framework that we shared with you at our full year results. We typically retain around 10% of post tax earnings to fund growth, with the excess around 90% allocated as follows: firstly, ordinary dividends at 65% of post tax profits then share purchases for the employee plans.

17:41 A reminder that by purchasing shares for the employee plans, we have stopped earnings dilution of around 1% per year. In the first half of twenty twenty six, we purchased around 1,500,000 shares, and we expect to purchase at around that run rate, roughly 3,000,000 shares per year for the employee plans going forward. Next, we will invest in M and A if thresholds are met. And then finally, we will return surplus capital to shareholders through buybacks or special dividends. At half year 2026, this will be a buyback, and we also expect to buy back shares at full year 2026. Take a look at what this means for the first half of twenty twenty six. We're returning $259,000,000 to shareholders, representing a 79% payout ratio.

18:32 That is made up of a 70.5p interim ordinary dividend per share, reflecting 65% of post tax profits and a $45,000,000 share buyback relating to H1, which will start shortly. As I just shared, we also purchased 1,500,000 shares for the employee plans in the first half at a cost of 51,000,000 In aggregate, the interim dividend, employee share plan purchases and the planned buyback totals £310,000,000 and comprises 94% of post tax profits, modestly higher than the historic 90% average, given the strong solvency position that I'll come to shortly. Our capital framework remains disciplined and flexible.

19:17 It allows us to support growth, maintain a strong capital position, invest where we see attractive strategic and financial returns and continue to deliver strong shareholder distributions. Turning now to the strong solvency position. We maintained a very comfortable solvency ratio after the distributions and the Flock acquisition. Solvency ratio was 190% at half year compared with 193 of full year 2025, broadly consistent surplus capital of $870,000,000 Own fund generation added 41 percentage points in the first half, split between current year and prior year contribution. That generation was largely offset by capital distributions and the Flock acquisition.

20:06 Flock reduced the ratio by eight percentage points, the interim dividend by 22 points and purchases for the employee share plans by five points. The share buyback has a further five point impact, taking the closing solvency position to a very healthy 190%. We're also pleased to have submitted our internal capital model application to regulators in Q2. Subject to approval, we expect to transition to the upper end of a 150% to 170% target solvency range over a number of periods. Admiral remains strongly capitalized with a rock solid balance sheet, while continuing to invest in growth and returning capital to shareholders. So the first half demonstrated the strength and resilience of the group's business model.

20:58 We delivered disciplined underwriting performance and further demonstrated the flexibility and efficiency of our capital framework, deploying $80,000,000 to acquire Flock whilst enabling $259,000,000 of capital distribution and maintaining a strong capital position. Looking forward, we anticipate stronger group profitability in H2 relative to H1, supported by continued positive underlying trends across our other personal lines businesses and a lower reinsurance charge in UK Motor, all subject of course to weather and other claims volatility. We remain on track to deliver our medium term ambitions. Thank you. And I look forward to taking your questions later. I'll now hand over to Alastair on U.

21:44 K. Insurance. Thank you, Rachel. Good morning. I'm pleased to take you through our U. K. Insurance results. In the first half of 'twenty six, we've achieved strong results in competitive markets driven by sustained pricing discipline, customer focus, retention outperformance and continuous improvement in our capabilities and propositions. So let's start with the headlines. UK insurance now has 9,700,000 insured risks, up around 400,000 in the last twelve months. Turnover was 2,500,000,000, slightly lower than the first half of 'twenty five, but up 11% versus the second half due to above market rate increases in motor and household in the first half of 'twenty six.

22:38 Overall, profit before tax was $485,000,000 Motor profit was below the first half of 'twenty five, but in line with the second half as rate reductions from early 'twenty five earned through. Other personal lines are now 41% of risks and six percent of profits as U. K. Insurance matures as a personal lines portfolio. These results were against the backdrop of 2025 market price reductions with continued competitiveness in 'twenty six to date. I'm pleased that we've navigated competitive motor and home markets with pricing discipline and strong retention, whilst also continuing to grow risks and customers in Travel and Pet. This combination helped increase customers holding two insurance or lending products by 8% to 1,600,000.

23:32 Customers holding more products means better data, improved risk selection, excellent retention and is an efficient source of growth. Our overall purpose is to help customers. In 2016, this included support for customers affected by Middle East travel disruption, the launch of a new household proposition under the More Than brand and continued leadership in telematics and electric vehicles. Customer outcomes are strong with Admiral still number one on Trustpilot and achieving an NPS above 50. We continue to see a more predictable regulatory landscape, and we have no significant concerns. Let's turn to the motor market. The claims environment remains relatively benign.

24:20 Frequency is broadly flat compared to 25, and severity is in line with normal historic averages of mid single digits. Our expectation is that these trends continue, although we are monitoring geopolitical and macroeconomic risks very carefully. Market pricing is now showing signs of turning. Market prices are up by low single digits since the end of 'twenty five, making them broadly flat year on year. This is a positive change from the reductions we saw through the second half of 'twenty four and through 'twenty five. Latest forecast is for a 26% motor market combined ratio of 108%.

25:05 This shows that market prices need to increase further to protect market profitability and that any loss of momentum in price increases will create additional pressure on market combined ratio. Turning to Admiral Motor. In the first half, we made high single digit rate increases earlier and larger than the market. Those increases will continue to earn through over the second half of 'twenty six and into 'twenty seven. This reflects our long term approach of disciplined cycle management, which Milena outlined earlier. We respond to claims trends and market conditions even if that means sacrificing growth in the short term because it maximizes value and growth over the medium term.

25:55 Despite increasing prices ahead of the market, the motor portfolio and our share of new business have been flat. That reflects strong retention supported by pricing optimization, multi and improvements to customer online journeys. We're extending our advantage in market segments with growth potential, including telematics, where our share of new business market was up 17% year on year and electric vehicles or EV. Let's look more closely at EV, a segment which we lead by being highly competitive whilst delivering good loss ratios. In '26, we continue to grow in EV through competitiveness with top on price comparison twice as often for EV as we are overall and through strong proposition.

26:43 That includes new initiatives such as the Zoom EV benefit that helps customers with charging costs at home and away. This growth is enabled by claims expertise in EV. We achieve high repairability with a dedicated team of in house engineers, testing capabilities in our partnership repair networks and close relationships with OEMs. Overall, our outlook is unchanged. We'll stay disciplined, monitor macroeconomic trends, reserve prudently and be ready to grow when the time is right. Let's move to household travel and pet. These businesses continue to grow profitably in competitive markets. Total risks across Household Travel and Pet reached $4,000,000 up 11% year on year with profits up 12%.

27:36 The household market has continued to soften, once again supported by benign weather. We note similar to last year, the hot weather is leading to an increased subsidence risk. Market pricing outlook remains uncertain, but it seems likely that a turn soon will need the trigger of a weather event. We continue to be disciplined with rate increases in the first half. Strong retention supported continued growth of household risks. Looking forward, our new More Than proposition creates strong opportunities for growth in customer segments where Admiral has previously been less competitive. Another excellent household combined ratio reflects our discipline and like last year, a first half benefiting from benign weather with just one exception, elevated subsidence risk.

28:30 Travel achieved strong customer growth, 26% year on year, despite a shift in demand caused by Middle East disruption in the first half. We supported around 2,000 customers through that uncertainty and went over and above at the onset by waiving policy exclusions with an estimated claims impact of around 3,000,000. Travel loss ratios are performing well. Pet continued healthy customer growth, 17% year on year. After accelerated growth in 'twenty four and 'twenty five, we continued to see the More Than acquisition perform well, and we are now balancing growth and margins in a more competitive market. So in summary, U. K. Insurance has delivered a strong first half.

29:18 In motor, we've taken pricing action early and remain well positioned for a market turn. In household travel and pet, we continue to grow profitably with discipline and attractive margins. We enter the second half of 'twenty six confident in our ability to continue delivering sustainable, profitable growth over the medium term. Now I'll hand over to Costi for Europe. Thank you, Al, and good morning, everyone. Before diving into the H1 results, I want to connect back to our message from the full year presentation a few months ago. The combined profitability across our European operations demonstrates our commitment to support the Group's broader diversification strategy.

30:11 Our objective now is to build on this foundation to sustainably increase our scale and improve our earnings. And in the first half of the year, we have made good progress on all fronts. Profitable growth is our main focus and I'm pleased with the improvements in loss ratios across all markets and the increased scale of the intermediary distribution in Spain and Italy. European customer preferences are evolving fast. To drive growth, we are pairing operational efficiency with a faster time to market. We will continue to deliver high quality of futures quickly, keeping us directly aligned with what our customers value. This is why we are delivering tangible synergies by integrating our tech and data platforms across Europe.

30:58 Right now more than 300 experts are actively building scalable assets including a unified data platform, generative AI capabilities and modernized pricing engines. We also reinforced our central pricing and AI team accelerating machine learning and predictive AI deployment across risk selection and claims. These joint efforts reinforces our foundations and speeds up execution and we remain fully focused on expanding these synergies across all Europe. On reinsurance, we have made we moved to a new multi year arrangements across Europe to improve capital efficiency and align our structure more closely with The UK reinsurance model. Overall, we maintain full confidence in our trajectory of continuous progress in profitable growth.

31:51 Moving to our performance. Total risks grew by 5% to CHF2 million, while total turnover grew by 11%. This spread between risk growth and turnover growth clearly demonstrates our disciplined underwriting, strict focus on profitability and cautious market positioning. Looking at the individual markets. In France, L'Olivier continues to deliver strong performance with solid double digit risk growth in motor alongside continued growth in household, supported by ongoing loss ratio improvements reaffirming our ability to deliver solid double digit margins. In Italy, Conte portfolio remained largely stable in H1 supported by high customer retention and an increase in turnover as previous rate increases are not through.

32:40 Italy is focused on recovering its technical equilibrium and stabilizing portfolio quality, positioning Conte to resume stronger growth when market timing is optimal. And in Spain, Admiral Seguros is delivering solid growth in both risks and turnover, driven by prior rating actions. Our direct business continues to trade at healthy margins and I'm pleased to see good progress in our broker proposition. Across all markets, customer satisfaction remains very high, supported by seamless digital experiences. Turning to our profit performance on the lower half of the slide. Reported motor profit reached €21,000,000 benefiting from €15,000,000 of one off accounting impacts as Rachel explained before.

33:29 On an underlying basis, excluding these one offs profit increased to €6,000,000 up from €1,000,000 last year, while the combined ratio stands at 95%. It is worth noting that the underlying motor profit gross of reinsurance stands at €20,000,000 meaning Admiral is currently capturing just one fourth of the total and we expect our share to increase over time as the insurance arrangements mature and loss ratios continue to improve. This performance was driven primarily by a four percentage point loss ratio improvement across all market backed by prudent reserving approach. It's the direct result of disciplined risk selection, strict pricing and as mentioned before targeted investments in technology and talented people.

34:20 Looking ahead, we will continue to navigate market conditions with discipline, prudence and ambition. We have built strong foundations across our European businesses and we are fully confident in our trajectory. Thank you. I now hand it over to Milena for the wrap up. Thank you, Kosti. So stepping back, there is so much happening around us in the world. Geopolitical pressure, competitive market, technology breakthrough, energy cost jump, another real challenge for people like weather, travel disruption and broader cost pressure. But we evolve, we adapt. And fundamentally, how we run the business and how we shop for our customer hasn't changed.

35:10 We continue to deliver very strong underwriting results across the market independently from market condition. We stayed agile and disciplined in U. K. Motor, while delivering profitable growth across other business. We have continued to anticipate market trend, and this puts us in a strong position to capture growth at the right moment. We've continued to deliver exceptional capital efficiency and attractive shareholder returns, now in the form of share buybacks, too. We've continued to do what we believe is right for our customer, and I'm proud on how we continue to help them when in need. We have continued to innovate in predictive and generative AI, new mobility, and we're excited about the potential of the new technology as this plays to our strength in data and database decision making and translates into stronger customer experience.

36:07 Just as importantly, we continue investing in our people and our culture, so our competitive advantage keeps evolving as the world and our business do. So to conclude, we remain confident in our ability to keep delivering strong profitable growth across cycles and confident that ADMiral remains a differentiated resilient business model for the future. Thank you very much, and we are now happy to take your questions. So I think it was Will and here then. I think you need to hold the button and limit to two questions each, so we give chance to everybody. Very much. Will Hart, Castle, UBS. Questions on U. K. Motor. You've put through high single digit rate increases in the first half and the benefit gets reflected in that exit loss ratio essentially 84% undiscounted.

37:00 Is that a margin level that you're willing to maintain and therefore anything beyond if the industry ticks up, we should think about you growing harder? Or is there still a bit of extra margin you'd ideally like before putting the foot down on growth? And then what are the factors that give you may be confidence is the wrong word, but you flagged the combined ratio at the industry level. But are there other indicators that give you confidence that the market must kick on from here? Is there any sort of competitor backdrop stuff happening that's increasing your confidence on that? I'll do. Great. So on the first question in terms of the business that we've written in the first half, yes, we put through high single digits in the first half.

37:46 As you mentioned, we're very happy with that first pick. We think we're in a good position. In terms of what happens going forward, as ever, that's going to depend on market conditions. We're going to look carefully at claims trends and at the market conditions in order to look at what's the best thing to do to maximize value and longer term opportunities for growth. So we'll see how that plays through. In terms of the combined ratio, yes, we referenced the 108 because it uses a lot of market data, and we think it's broadly sensible. I think the way that we think about it is if you look at prices, they've come down through the second half of twenty four through 2025.

38:32 And through that period, we've seen ongoing claims inflation. Yes, it's moderated more recently, but it's still ongoing claims inflation. So the conclusion that are coming to looks very logical in terms of the need to turn. In terms of the timing, well, different players have different strategies. There's still reserve releases on '24. So, again, we'll be watching that carefully. We will continue to take our disciplined approach knowing, Milena outlined earlier, that in the past, that's worked very well for us, and it means that we're in a good position to grow when the time is right. It's Derek Go from Jefferies. A couple of questions. So the reinsurance harmonization in Europe, could you sort of spell out what the benefits are? Is it on spend, capital, sort of any kind of numbers that we could think about?

39:26 And then more broadly, question to you, Rachel, being a new CFO. Are there any other sort of operational or capital refinements, you call it, that you're looking at? You. Cos, you want to take the first and Rachel? Yes. And then Rachel, if you want to build on my so it's pretty simple because we move contracts at European level to take benefit of really larger scale, lower volatility and better diversification. And this has resulted in improved terms and better capital efficiency. Now these contracts need time then to mature and to translate into improved earnings for ADMiral, but we expect this to happen over time, clearly also supported by the continuous improvement in the underlying business performances.

40:20 Rief, on the second? I'm very pleased, obviously, to be in the new role. I've been in ADMOR for many years. I've worked very closely with Milena, Geraint and team, very supportive of the strategy and so on. So I wouldn't suggest any dramatic changes, just a real continuation. And I'll come back and talk about whether there are any particular areas of opportunity that I'm keen to push forward on when the time is right. Right. We'll go here and here. Hi, it's Ivan from Barclays. My first question would be just a small follow-up on what Will was asking. As we think about July and August trends with the market perhaps putting through a little bit of price, I was just wondering how is your time stop changing, whether there's anything you can suggest on how the hardening is materializing or not? Second one, I think it's a bit of a broad base, but you mentioned the wave opportunity that was launched in the first half. How do you think more broadly about the revenue opportunity from the autonomous vehicles that you're looking at? Maybe you can share something about the economic terms of how you cooperate.

41:31 And the third question, I think it's regarding to the partial internal model and the move towards 170. I mean, can you give a little bit more color about how this transition to the top end might work? Could that involve distribution over 100% of profits? Is there just acceleration of SCR growth organically or inorganically that you're considering? And maybe on the timing of when is the next kind of deadline for the regulator to respond on the capital model? Al, do you want to comment on recent Yes. So I don't think we go into detail on a month by month basis. I think I'd reiterate what we saw in the first half, which was we've put in high single digits.

42:21 We saw the market go low single digits, and we think it needs to go further. And in terms of how the second half plays out, we'll wait and see, but we're well positioned to respond either way. The second question on AV. I think AV is a great technology. We are very keen to keep learning, to be very close to the key market maker. So we collaborate with OEM, we collaborate with the AV specialists like WAVE that we've been ensuring since the launch in 2018. We think it's an interesting area that play to strengthen precise underwriting based on a lot data from connected vehicles. But it's really too early. We presented a bit of our view of the market and mentioned at year end that we don't expect this to be 4% in personal lines by 2035. So it's really, really an end full of vehicles at the moment.

43:18 And I think all the economics will be seen in the next few years. It's very early, but exciting space to watch out. Do you want to Into the model? Yes. Yes. On obviously, we submitted the application in Q2, which is a nice milestone for us. The team has worked incredibly hard, and we continue to discuss with the regulator. Those conversations are progressing well, but no comments on timing. And we'll come back and let you know when we know more. And similar on transition to the target solvency range and reconfirming things that we've said in the past, and we'll come back and let you know at the right time what that will look like. Yes? Morning, everyone. Yudis Chigori, Autonomous Research.

44:08 Earlier this year, when you presented the full year results, you talked about flattish profits for 2026. I was wondering whether that guidance still stands considering profits were down by double digits at the half year? That's my first question. And then secondly, if I could come back on the partnership you have with Wave. Can you tell us exactly what are you actually ensuring there? Because I suppose there's not much data in that field at the moment. So if you could just give us a sense of what kind of what the coverage involves, that would be helpful. Yes. Just on the wave, as I mentioned, at the moment is what you may expect in terms of the motor element of it. So we're talking about the motor insurance element of it, not the product or anything related to that. Your first question was on guidance. I think we said last year that at year end, we expect profit for 2026 to be broadly in line with 2025, and we don't have much to add at this stage. Having a stronger second half than first half, I think, is a natural reflection of where we are in the cycle because we're earning more premium of 2025 in this first half that we're on a lower base.

45:14 We'll earn premium that are higher earned premium in the second half. So that's a kind of a natural reflection of the cycle. There is volatility to be considered, weather volatility in claims experience, of course. So we cannot be more precise than that at this stage, but nothing more to add. Sorry, no, think we are there first and then we go here. Thomas Bateman from BNP Paribas. A similar question on the outlook actually, I think at the full year you gave guidance of CAGR above 7.6%. I was just wondering, still happy with that guidance, it feels like there's been good results, but maybe just a clarification on that point.

46:03 And then the second one is just could you give us some more color on the five percentage points SCR headwind to the solvency ratio? Is that just growth or is there anything else going on in there? So maybe I'll take the first one. So I think what we said at year end is that in the last five years, we delivered a CAGR of 7.6%. We expect to have similar or stronger earnings in the next cycle. We always we also mentioned that it's going to be a bit of an hockey stick because this year, for the answer to the previous questions, was expecting to be more flattish compared to the future, and we don't have anything more to add, feel comfortable. As I said, we did a strong progress on the strategic priorities in the different area of the business. We'll comment a bit more on that at year end. On the SCR movement, yes, growth primarily, particularly in businesses outside of UK Motor and Admiral Money.

47:06 Ben Conant at RBC here. I had two questions, please. The first was on the point that Rachel made about the benefit from reducing the percentile of reserving. I think that calculates to be about 125,000,000 from in the first half, which was one point. So I guess if you go then to sort of 90 points, does that suggest that there's sort of €375,000,000 of profit to kind of to take through? And could you give us some sense in terms of the time line in doing that? And the second question was, I think you also said that you've yet to recognize profit commission on the 2025 underwriting year. Now given that, that was a reasonably good year, maybe not as good as 2024, could you give us some indication in terms of the quantum of profit that you might receive there? Thank you.

48:01 Okay. On the risk adjustment, actually, talked about a £50,000,000 increase period on period for the prior year development. Risk adjustment reduction in percentile contributed around half of that $50,000,000 increase. So actually smaller numbers than the one you speak to. We've said that we'll continue to move to the middle of that risk adjustment corridor subject to experience. We show some sensitivities in the pack. The movements aren't linear, but hopefully, all the information is there on that one. The second question was profit commission on 2025. But yes, we expect to earn profit commission on 2025. It's not there yet. The combined ratio needs to develop further just on the cusp quantum wise, I think in line with expectations.

48:56 Thank you. I think we are here and then here. The rest in CDB, I think, on the appendix, by the way. This is Vasco Salia from Goldman Sachs. Have a couple of questions. One, just looking at you talk about share of telematics new business up 17% year over year. Could you give us a sense of the starting point as in what was your share to begin with because 17% obviously sounds really good, but want to get a better sense of that? Second, on the profit commissions, but a different year. So I think somewhere in your release, you talk about underwriting year 2021, 2022 becoming better and probably something might come out of that in the future years. But again, could you give us a sense of what kind of numbers are we looking at?

49:51 And third, probably just a clarification. So you mentioned the SCR growth coming from UK Motor Admiral money. If I heard that correctly though, I just want to clarify if your number of policies or number of cars underwritten in one ish twenty six is lower HoH and your pricing is better, which means your margin is better, why would you have a higher SCR charge for U. K. Motor? You. Do you want to take on the EV? And then we go to Rachel on the solvency. In terms of telematics, telematics is something that we've been leading in for some time. It's particularly always been particularly important for the younger driver segment that we've been very competitive in.

50:37 We've seen that share grow, as I mentioned, which we're pleased with because I think motor affordability has been a key topic. And so for younger drivers, it's a really strong proposition. And also, we believe that the learnings that we get from telematics and all the data that we've collected over the years and and keeping that strong is is very valuable when we're looking forward to connected cars and how that may play out in the future. Okay. And on profit commission, think, was the first question. Yes, 2020 we haven't recognized anything on 2021, 2022, 2023. Those years are all developing favorably and nicely. 2022 at the moment is the one year that's not below 100% on the combined ratio basis.

51:27 And to a certain extent, that will slightly hold back profit commission on 2023 as a result. The quantums will relate to the extent of the favorable development on those years, really. And then can I just clarify the SCR question? I spoke about Yes. Growth So I think in one of the previous questions, you answered that the SCR growth seen in 1H twenty six was driven by U. K. Motor. But I was just curious to understand if the number of policies you've written is lower half over half and your margins are better, why would you have a higher SCR charge for U. Motor? I think a reference actually the businesses outside of U. K. Motor for the growth. Sorry, that wasn't clear. Good. And yes, we're here.

52:19 Anybody can provide a mic? No worries. Hello? Yes. Yes. Sorry, it's Shanti from Bank of America. So on the capital management framework slide, you increased, I guess, the importance of M and A in the story for Admiral. In the past, it seems like that relationship has been driven with Admiral Pioneer, and it's been a kind of step relationship with any businesses you've moved to acquire. Is there anything that you're sort of interested in looking at the moment, any jurisdictions or particular products, for example? Where are you going with that just directionally? Thanks. So I would say the intent of the slide is really to reflect in a more clear way what has been our philosophy. So from that point of view, I would say the only difference versus the past is the share buyback consideration versus special dividends.

53:18 And as you know, our story is mainly a grow organic organic growth story and our plan are based on organic growth, but we have been more active recently. We did the RSA acquisition. We acquired Flock and completed integration proceeding well. So we remain interesting in exploring option that needs to fit our strategy ambition, and we've been quite explicit on the strategy ambition and continue to diversify the business and expanding in Europe and other personal lines in The UK as well as have very strong financial arbels. So we're not seeing really anything at this point. We'll continue to focus on organic growth, but explore if there's anything that can on our strategy. Yes. Thank you. It's Ivan from Barclays again. A couple more follow ups, if I can.

54:09 Maybe one question about The U. K. Household market. I think you mentioned that prices need to go up there as well. Can you maybe talk about what your combined ratio this year looked like excluding weather benefits and how do you expect it to develop? And one more question just about the loans. You haven't had any sales in this six months. How is the pipeline looking for any further securitizations? Thank you. Yes. In terms of The U. K. Household market, as I mentioned, we've seen continued some modest reductions in terms of households, so not in the same position as motor. We've increased prices in the first half, but we still have grown due to strong retention. We've still got the lever of multi.

54:59 And as I mentioned, the new More Than proposition gives us a new opportunity for growth in some of those new customer segments. So we're not anticipating that the market is necessarily going to turn in the home market, but we've still got levers for continued growth. Do you want to take loans? On the loans, we have done some more sales in the first half of this year, a back book and a forward flow arrangement. It's just that the initial back book sale in the first half of twenty twenty five had a larger contribution to profit than this time around. And we expect that use of third party capital to continue to be a feature. Thomas Bateman from BNP Paribas again. Just a question on the regulatory landscape. It feels for the first time in a long time, it's much more stable. So your presentation to the select committee and it felt, I'd say, more comfortable than maybe previous ones.

56:06 Do you think that, that reading is fair? Or is there anything else that you'd highlight on the regulatory landscape that's coming up that we should be aware of? You want to take this one? Yes. I think that's fair. I think the regulator has made clear that consumer duty is the main focus, the desire to be predictable. Consumer duty, good customer outcomes is very in line with our philosophy of looking after our customers. And so at the moment, I'd say, yes, I think it feels in a good position relative to some of the things that we were talking about in terms of the uncertainty a couple of years ago. I'll just add that maybe we welcome the focus on growth that has been recently carried on both from regulator and the government and stability.

56:55 And there is an intention to continue to support growth and stability over time that is positive for the sector as well. Good. There are no further questions. And thank you very much for your time. We'll be around in case you have other questions. Thank you.