Direct Line Q1 average renewal premiums rise

(Sharecast News) - Direct Line said on Tuesday that average renewal premiums rose in the first quarter but warned that rising claims in its motor segment will put pressure on earnings. Total group adjusted gross written premium income rose 8.4% during the quarter to £771.7m. The motor segment saw 3.3% growth to £358.7m, while home saw a 2.1% increase to £129m.

The company said average renewal premiums increased 19% in Q1 as it hiked prices in the motor division to improve margins. In the commercial segment, Direct Line said the "strong" premium growth seen last year continued into the first quarter, with gross written premium growth of 27.6%, driven by both direct own brands and NIG and other.

In Home, meanwhile, it highlighted "significant" price increases across the market.

However, Direct Line also said it had seen further adverse claims developments late last year and earlier this year in the motor segment, including commercial, particularly in relation to damage.

"This is expected to put pressure on earnings in 2023 including from prior-year reserve releases," it cautioned.

Acting chief executive Jon Greenwood said: "Trading has been positive over the first quarter with premium growth across Motor, Home and Commercial and this trend has continued into April.

"Our focus continues to be on restoring the capital strength of the group and improving Motor margins, where we have made good progress. Whilst 2023 earnings outlook continues to be challenging, the group has many strengths, and we continue to take the actions required to drive business performance. Our ambition over time to generate a net insurance margin of above 10% remains."