Direct Line Insurance Group plc Half Year Report for the first half of 2017

Strong H1 results, rebasing dividend and refreshing targets

Paul Geddes, CEO of Direct Line Group, commented

“The Group delivered another strong first half performance, as we continued to focus on giving customers what they want. In particular, we are pleased with the continued momentum in our Direct Line brand, which shows that customers value the great service and unique insurance propositions we are offering in both Personal Lines and Commercial Lines.

“Today the Board is rebasing the Group’s regular dividend upwards to reflect its confidence in the Group’s earnings and the progress the business has made since the IPO nearly 5 years ago when the Group’s dividend policy was previously set. We aim to grow the regular dividend in line with business growth, which we expect to be in the region of 2% to 3% per annum over the medium term.

“The investments we have made and continue to make in our business have delivered value for our customers and shareholders. As a result, we reiterate our 93% to 95% combined operating ratio target for 2017 and also extend this ambition over the medium term.”

Results summary

Highlights and outlook

  • Motor continued to grow gross written premiums, up 10% with Direct Line driving the growth
  • Commercial launched the first of its flexible and bespoke business insurance policies, a part of our digital transformation, leveraging our strong Direct Line brand and our goal of making insurance much easier and better value for our customers
  • The Board is rebasing the regular dividend up 38.8%, increasing the interim dividend to 6.8p3. In addition, the Group expects to operate around the middle of its Solvency II capital coverage ratio range of 140% to180%, in the normal course of business
  • Reiterate the current financial targets for 2017: combined operating ratio in the range of 93% to 95% and investment income yield at 2.4%
  • In addition, management targets maintaining a 93% to 95% combined operating ratio over the medium term, reflecting its ambition to maintain strong annual financial performance

For further information, please contact:

Andy Broadfield
Director of Investor Relations
Tel: +44 (0) 1651 831022

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


1. A reduction in the ratio represents an improvement as a proportion of net earned premium, while an increase in the ratio represents a deterioration. See glossary on page 37 for definition.

2. See glossary on page 37 for definitions and appendix A – Alternative performance measures on page 39 for reconciliation to financial statements line items.

3. The Group’s dividend policy states its expectation that one-third of the annual dividend will generally be paid in the third quarter as an interim dividend and two-thirds will be paid as a final dividend in the second quarter of the following year.

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”, ”ambition”, “anticipates”, “aspire”, “believes”, “continue”, “could”, “estimates”, “expects”, “guidance”, “intends”, “may”, “mission”, “outlook”, “over the medium term”, “plans”, “predicts”, “projects”, ”propositions”, “seeks”, “should”, “strategy”, “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 the return on tangible equity, Solvency II capital coverage ratio, the Group’s combined operating ratio, prior-year reserve releases, cost reduction, investment income yield, net realised and unrealised gains, results from the run-off segment, restructuring costs, and risk appetite range. 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, the result of the referendum and the negotiations relating to the UK’s withdrawal from the European Union, the result of the UK general election, 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.

Inside information

Prior to publication, this document contained inside information for the purposes of Article 7 of European Union Regulation 596/2014.

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