Direct Line Insurance Group plc Preliminary result for year ended 31 December 2014

Preliminary results for the year ended 31 December 2014

Financial highlights

  • Gross written premium from ongoing operations1 3.8% lower for 2014 compared with 2013, reflecting disciplined approach to underwriting in Motor and Home. Gross written premium trends improved during the year with gross written premium increasing 0.4% in the fourth quarter compared with 2013
  • Combined operating ratio2 from ongoing operations of 95.0% for 2014, an improvement of 0.2 percentage points on 2013 (95.2%) including stable contribution from prior-year reserve releases of £397.6 million (2013: £395.8 million)
  • Stable operating profit from ongoing operations of £506.0 million for 2014 (2013: £509.9 million); while total Group statutory profit before tax for continuing operations rose 12.2% to £456.8 million (2013: £407.3 million)
  • Return on tangible equity3 of 16.8% for 2014 (2013: 16.0%)
  • 4.8% increase in final4 dividend per share to 8.8 pence per share and second special interim dividend of 4.0 pence per share. Total dividends for 2014 of 27.2 pence per share (2013: 20.6 pence per share)


Strategic and operational highlights

  • All Initial Public Offering and 2014 published targets either met or exceeded: Group combined operating ratio; Commercial combined operating ratio; total cost base5; and return on tangible equity
  • Ongoing investment in capability supporting profitability across Group with all divisions now making a material contribution
  • Announced binding agreement for the sale of International division for €550 million (£430.1 million6)
  • Continued active capital management with 24.6% of Initial Public Offering price already returned to shareholders, rising to 31.9% when the final4 and second special interim dividends are included. This excludes the expected return of capital associated with the sale of the Group’s International division
  • Focus on UK reaffirmed with clear strategic aim of making insurance much easier and better value for customers


Paul Geddes, CEO of Direct Line Group, commented

“At the time of our IPO in 2012 we announced four targets for 2014, and I am delighted to report that we have met or exceeded all of them. After paying the regular and special dividends for 2014, we will also have returned a total of £836 million to shareholders since we began life as a public company.

“We also announced a binding agreement for the sale of our International business for total cash sale proceeds of €550 million (£430 million), as we reaffirmed our strategic focus on the UK market. This is a good result for all our stakeholders, including providing excellent value for shareholders.

“Underlying this performance is the successful delivery of many initiatives to improve the competitiveness of our business and to improve the propositions and experience we offer our customers. We will continue to invest in our brands, our technology and our people with the mission to make insurance much easier and better value for our customers.”

For further information, please contact:

Neil Manser
Director of Corporate Strategy and Investor Relations
Tel: +44 (0) 1651 832183

Jennifer Thomas
Head of Financial Communications
Tel: +44 (0) 1651 831686


  1. Ongoing operations include Direct Line Group’s ongoing divisions: Motor, Home, Rescue and other personal lines, and Commercial. It excludes the International division which is classified as discontinued operations, the Run-off segment and restructuring and other one-off costs. Continuing operations include all activities other than International.
  2. Combined operating ratio (“COR”) is the sum of the loss, commission and expense ratios. The ratio is a measure of the amount of claims costs, commission and expenses compared to net earned premium generated.
  3. Return on tangible equity (“RoTE”) is adjusted profit after tax from ongoing operations and the International division divided by the Group’s average tangible shareholders’ equity. Profit after tax is adjusted to exclude the Run-off segment and restructuring and other one-off costs, and is stated after charging tax (using the UK standard tax rate of 21.5%; 2013: 23.25%).
  4. The Board has resolved this year to pay an interim dividend in lieu of a final dividend, see page 6, and references in this document to ‘final dividend’ for 2014 are to be construed as references to this interim dividend. In this document the second special dividend is referred to separately from the final dividend. This enables more appropriate comparison to the 2013 final dividend. Both the second special interim dividend and the final dividend will be paid together as one payment.
  5. Operating expenses and claims handling expenses from ongoing operations and the International division. It excludes the Run-off segment and restructuring and other one-off costs.
  6. Cash sale proceeds received in Euros have been converted to Pounds Sterling using the rate within the designated foreign currency hedge contract.


Forward-looking statements disclaimer

Certain information contained in this document, including any information as to the Group’s strategy, plans or future financial or operating performance, constitutes “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “aims”, “anticipates”, “aspire”, “believes”, “continue”, “could”, “estimates”, “expects”, “guidance”, “intends”, “may”, “outlook”, “plans”, “predicts”, “projects”, “seeks”, “should”, “targets” or “will” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors concerning, among other things: the Group’s results of operations, financial condition, prospects, growth, strategies and the industry in which the Group operates. Examples of forward-looking statements include financial targets which are contained in this document specifically with respect to RoTE, risk-based capital coverage ratio, the Group’s COR and cost savings. By their nature, all forward-looking statements involve risk and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond the Group’s control.

Forward-looking statements are not guarantees of future performance. The Group’s actual results of operations, financial condition and the development of the business sector in which the Group operates may differ materially from those suggested by the forward-looking statements contained in this document, for example directly or indirectly as a result of, but not limited to, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements or the Ogden discount rate), the impact of competition, currency changes, inflation and deflation, the timing impact and other uncertainties of future acquisitions, disposals, joint ventures or combinations within relevant industries, as well as the impact of tax and other legislation and other regulation in the jurisdictions in which the Group and its affiliates operate. In addition, even if the Group’s actual results of operations, financial condition and the development of the business sector in which the Group operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.

The forward-looking statements contained in this document reflect knowledge and information available as of the date of preparation of this document. The Group and the Directors expressly disclaim any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation. Nothing in this document should be construed as a profit forecast.

Neither the content of Direct Line Group’s website nor the content of any other website accessible from hyperlinks on the Group’s website is incorporated into, or forms part of, this document.

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