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Trading statements

Direct Line gross written premiums up

03 May 2017 07:25

Direct Line Group's gross written premium for ongoing operations rose by 4.2% in the first quarter with Motor own brands increasing 11.2%.

The group said its multi-brand and multi-channel approach helped successfully grow its Motor own brands in-force policies by 5.9% compared to Q1 2016, while Home own brands in-force policies grew by 2.0% compared to Q1 2016.

The group's Direct Line brand, in particular, delivered continued momentum in the first quarter.

Direct Line for Business also grew in-force policies by 5.3% compared to Q1 2016, as it continued to leverage the brand.

In Motor, the group traded well in the quarter both before and after the Lord Chancellor's decision to reduce the Ogden discount rate.

It said: "While the Ogden decision had little impact on the first quarter trading result, the Group has increased prices in response to the lower discount rate and the anticipated impact on claims inflation and continued to grow in-force policies at, or slightly better than, its target loss ratio.

" Overall for the quarter, average written premiums were up 6.6%, and risk-adjusted prices increased significantly more than that, comfortably ahead of the Group's current view of claims inflation.

"The strong performance in Motor was partially offset by the challenging home market, where the Group slowed its growth.

"Home claims inflation started to increase in 2016 and continued to rise above the Group's long-term expectations in Q1 2017.

"In response, the Group has been increasing prices through recent quarters, resulting in lower new business volumes in Q1 2017 compared to Q1 2016, albeit retention remained strong.

"The Group remains focused on margins and protecting the long-term value of the Home portfolio and is prepared to sacrifice some volume in support of this objective."

The group said the Commercial business had a good quarter, with in-force policies up 5.1% compared to Q1 2016 and pricing movements overall keeping pace with underlying claims inflation.

Strong growth in Direct Line for Business and portfolio mix changes in NIG and other resulted in overall growth of 0.9% in gross written premium.

Rescue premiums grew 3.3% driven by Green Flag premiums which were up 11.5% and more than offset a continued reduction in packaged bank account volumes.

Green Flag grew in-force policies 6.8% as web sales continued to perform well.

Chief executive Paul Geddes said: "Overall, I am pleased with the positive start we have made to the year, continuing the momentum we built in 2016 and supported by continued strong growth in the Direct Line brand.

"We have delivered particularly strong results in Motor and this performance has more than offset the challenging home market. Direct Line for Business and Green Flag have also performed well.

"We reiterate our target of a COR2 in the range of 93%-95% for 2017."

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