Direct Line Group Half Year Report 2020

To see the Half Year results 2020 infographic, click here


PENNY JAMES, CEO of Direct Line Group, commented

“I am very proud of what we have achieved so far this year. We have launched initiatives with an estimated investment of £80 to £90 million to support our customers, people and local communities through the uncertainty caused by Covid-19. When the Covid-19 pandemic hit, we prioritised phone lines for existing customers, created new online journeys and offered additional value through various initiatives including mileage refunds and payment deferrals. We did not access Government support and chose to protect all roles and salaries at the Group through to the autumn and our Community Fund is providing £3.5million to help people in communities across the UK.

“Despite the significant disruption caused by Covid-19 we have continued the trading momentum we saw at the end of 2019, growing direct own brands by 2% and improving the quality of our earnings with an improved current-year loss ratio. We have also demonstrated financial resilience in the face of Covid-19 disruption, which has enabled us to declare our 2020 interim dividend as well as a catch-up of our cancelled 2019 final dividend.

“We have seen just how quickly people change their behaviour and I am proud that we’ve been able to adapt rapidly whilst still making good progress on our strategic transformation. We still have a huge amount to do, both operationally and technically, but even in the midst of a pandemic we have made excellent progress on our technology transformation. Delivering so much change whilst over 9,000 of our people worked from home was an exceptional achievement.

“I would like to thank Mike Biggs, who after eight years stands down as Chairman today, for all of his support, wisdom and for building the dynamic Board that we have today. I would also like to welcome Danuta Gray as our new Chair, who brings with her a wealth of experience and a deep understanding of the Group, and look forward to working with her and the Board to help realise the immense potential of the Group.”



H1 2020

 H1 2019


In-force policies (thousands)




Of which: direct own brands1,2,3 (thousands)




Gross written premium




Of which: direct own brands1,2




Operating profit




Combined operating ratio4




Profit before tax




Return on tangible equity annualised5




Dividend per share

– interim (pence)6





– special (pence)



30 Jun

31 Dec


Solvency capital ratio7,8




Financial highlights

–    Direct own brand in-force policies grew 2.0% with continued growth across Motor, Green Flag and Commercial direct own brands, with Home broadly stable. Total policies reduced by 1.7% as partnership volumes reduced.

–    Gross written premium was broadly steady as strong momentum in Q1, with growth of 4.7%, was largely offset by lower new business shopping in Motor and Rescue in Q2 due to Covid-19.

–    Operating expenses before restructuring and one-off costs of £372.0 million were £9.0 million higher than H1 2019 following investment in initiatives to support our customers, people and society through the Covid-19 uncertainty. Despite an increase in levy costs of £3.0 million, underlying operating expenses were broadly stable. The Group reiterates its target of delivering a 20% expense ratio by 2023.

–    Across the Group the impact of Covid-19 on operating profit was broadly neutral, as the additional travel and business interruption claims, alongside a reduction in investment asset returns and higher operating expenses, were offset by favourable claims frequencies in Motor and Commercial. The net impacts of Covid-19 on travel and business interruption claims are unchanged from Q1 and estimated at £25 million and £10 million respectively.

–    Operating profit of £264.9 million was £9.4 million lower than H1 2019 mainly due to increased weather costs of £30.4 million, partially offset by the change in the Ogden discount rate to minus 0.25% in H1 2019 (H1 2019: £16.9 million). There was continued improvement in current-year profitability, offset by reduced prior year reserve releases.

–    Profit before tax of £236.4 million was £24.9 million lower than H1 2019 following the reduction in operating profit alongside £15 million of restructuring and one-off costs as the Group invests £60 million in cost saving initiatives across 2019 and 2020 as outlined at the Capital Markets Day in November 2019.

–    Interim ordinary dividend of 7.4 pence per share, an increase of 2.8% over the interim dividend announced at H1 2019, alongside a special interim dividend of 14.4 pence per share reflecting a full catch-up of the cancelled 2019 final dividend.

–    Strong capital position with a solvency capital ratio of 192% after dividends.

Strategic and operational highlights

–    Strong Churchill new business growth, increased share of new business in the price comparison website (“PCW”) channel across Motor and Home.

–    Darwin now live on four PCWs helping fuel rapid policy growth.

–    Further enhancements made and continued progress towards starting the roll-out of Direct Line and Churchill on our new IT platform before the end of 2020, which aims to deliver operational efficiencies, improved customer experience and pricing capability.

–    All Privilege Motor new business now sold on the Group’s new IT platform with renewals underway.

–    Launched a new Green Flag claims system and updated the customer ‘Rescue Me’ App, enabling an increasing proportion of claims to be serviced digitally.

–    Launched a new counter fraud operating system and accelerated roll-out of digital self-service for claims journeys.

–    Successfully moved to remote working while continuing to serve and support our customers and deliver our change agenda at pace.

–    Achieved our 2020 climate targets and now intend to set Science Based Targets (“SBT”). From this year we will become a 100% carbon neutral business by offsetting our emissions whilst working towards reducing our emissions over time and aim to be Task Force for Climate-related Financial Disclosures (“TCFD”) compliant by the end of this year.

–    Launched initiatives with planned investment in the region of £80-90 million to support our customers, people and wider society through the uncertainty caused by Covid-19 with around half of this recognised in H1 2020.

For further information, please contact





Group corporate affairs and sustainability director

Tel: +44 (0)1651 831756


Tel: +44 (0)1651 834211

Mobile: +44 (0)7795 811263


Mobile: +44 (0)7795 234801



1.    Direct own brands include in-force policies for Home and Motor under the Direct Line, Churchill, Darwin and Privilege brands, Rescue policies under the Green Flag brand and Commercial under the Direct Line for Business and Churchill brands.

2.    Commercial direct own brands include Direct Line for Business and commercial products sold under the Churchill brand that were previously reported within NIG and other. Prior periods have been re-presented accordingly.

3.    In-force policies, including direct own brands, as at 30 June 2019 have been restated to include 52,000 Green Flag policies omitted from previously reported amounts.

4.   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 pages 48 to 50 for definitions.

5.    See glossary on pages 48 to 50 for definitions and appendix A – Alternative performance measures on pages 51 to 54 for reconciliation to financial statement line items.

6.   The Group’s dividend policy includes an expectation that generally one-third of the regular annual dividend will 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.

7.    Estimates based on the Group’s Solvency II partial internal model.

8.   The solvency capital ratio as reported at 31 December 2019 is after taking into account the then expected 14.4p final dividend and the £150 million share buyback declared on 3 March 2020. The impacts of the cancellation of the dividend (as announced on 8 April 2020) and the suspension of the share buyback programme (as announced on 19 March 2020) would have added 24 percentage points to the ratio as reported to give an adjusted solvency capital ratio of 189%.

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 several 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 and guidance which are contained in this document specifically with respect to the return on tangible equity, solvency capital ratio, the Group’s combined operating ratio, percentage targets for current-year contribution to operating profit, prior-year reserve releases, cost reduction, reductions in expense and commission ratios, investment income yield, net realised and unrealised gains, capital expenditure 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 and/or are beyond the Group’s control. Forward-looking statements are not guaranteeing 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:

–    United Kingdom (“UK”) domestic and global economic business conditions;

–    the direct and indirect impacts and implications of the coronavirus Covid-19 on the economy, nationally and internationally, on the Group, its operations and prospects, and on the Group’s customers and their behaviours and expectations;

–    the outcome of discussions between the UK and the European Union (“EU”) regarding the terms, following Brexit, of any future trading and other relationships between the UK and the EU;

–    the terms of future trading and other relationships between the UK and other countries following Brexit;

–    market-related risks such as fluctuations in interest rates and exchange rates;

–    the policies and actions of regulatory authorities and bodies (including changes related to capital and solvency requirements or the Ogden discount rate or rates or in response to the Covid-19 pandemic and its impact on the economy and customers) and changes to law and/or understandings of law and/or legal interpretation following the decisions and judgements of courts;

–    the impact of competition, currency changes, inflation and deflation;

–    the timing, impact and other uncertainties of future acquisitions, disposals, partnership arrangements, joint ventures or combinations within relevant industries; and

–    the impact of tax and other legislation and other regulation and of regulator expectations, interventions and requirements and of court, arbitration, regulatory or ombudsman decisions and judgements (including in any of the foregoing in connection with Covid-19) 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 because of new information, future events or otherwise, unless required to do so by applicable law or regulation. Nothing in this document constitutes or 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.

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. The person responsible for arranging the release of this announcement on behalf of Direct Line Insurance Group plc is Tim Harris, Chief Financial Officer.