Direct Line Insurance Group plc Trading Update for the third quarter of 2018
Continued progress towards strategic and financial targets
Paul Geddes, CEO of Direct Line Group, commented:
“The Group’s performance during the quarter was robust in a competitive market. We continued to grow our direct own brands2 in-force policies while maintaining discipline on loss ratios. We are delivering our key strategic priorities, including strong growth in our direct Rescue and Commercial businesses, Green Flag and Direct Line for Business, and we are on track to begin rolling out our new personal lines systems in 2019.
“Overall, we are making good progress on our strategic priorities and are on course to meet our 2018 and medium-term financial targets3.”
- Motor in-force policies grew by 1.9% (own brands: 3.0% growth) compared to the prior year, driven by strong retention levels, particularly in Direct Line. Premiums were lower by 1.2% (own brands: 0.5% lower) as a result of lower average premiums, primarily due to changes to propositions in the price comparison website channel, partially offset by positive rate movements. Underlying claims inflation was at the upper end of the Group’s long-term expectation of 3% to 5%.
- Home own brands in-force policies grew by 0.3% and premiums grew by 0.9% compared to the prior year. Retention levels improved in the quarter while new business volumes declined. Premiums in the partnerships channel decreased by £51.3m, primarily due to the exit from the Nationwide and Sainsbury’s partnerships. The Group expects claims inflation to remain within the Group’s long-term expectation of 3% to 5% and that subsidence claims, including those associated with the dry summer weather in the UK, will not materially be above normal annual expectations.
- The Group’s investment in its direct Rescue and Commercial brands, Green Flag and Direct Line for Business, continued to make good progress, as premiums grew by 13.1% and 7.6% respectively. In Commercial, NIG and other premiums fell by 3.2% due, in part, to exiting several larger risks which were not expected to achieve target returns.
For further information, please contact:
Director of Investor Relations
Tel: +44 (0) 1651 831022
Head of External Affairs
Tel: +44 (0) 1651 834211
- Direct Line Group’s Trading Update relates to the three months and nine months ended 30 September 2018, and contains information to the date of publication.
- Direct own brands include Home and Motor under the Direct Line, Churchill and Privilege brands, Rescue under the Green Flag brand and Commercial under the Direct Line for Business brand.
- For 2018 and over the medium-term, the Group targets a 93% to 95% combined operating ratio, assuming a normal level of claims and no change in the Ogden discount rate, supported by reductions in expense and commission ratios and an ongoing target of achieving at least a 15% return on tangible equity. For 2018, the Group expects overall investment income of in the region of £150 million.
Direct Line Insurance Group plc is a public limited company registered in England & Wales, number 02280426. The address of the registered office is Churchill Court, Westmoreland Road, Bromley BR1 1DP.
The Annual Report & Accounts 2017 is available at: www.directlinegroup.com
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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 negotiations relating to the UK’s withdrawal from the European Union, 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.
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