4th May 2022 10:26
(Alliance News) - Direct Line Insurance Group PLC said on Wednesday the year-on-year decline in trading during the first quarter was "broadly in line with expectations".
The Bromley, London-based insurer said total gross written premium & service fees fell 2.4% in the first quarter to GBP734.3 million from GBP752.3 million the year before.
Drops in Motor, Home, and Rescue of 5.4%, 9.9% and 2.2% respectively, were slightly offset by a 12% gain in Commercial premiums.
Shares in Direct Line fell 6.7% to 238.50 pence each in London on Wednesday morning.
In the Motor division, Direct Line noted the claims inflation that has persisted over the last 18 months, due to elevated used car prices and supply chain disruption.
"Against this backdrop we remained disciplined and held back marketing whilst still increasing customer retention. This, together with the effect of 2021 premium reductions, reflecting lower claims frequency expectations, resulted in a 5.4% reduction in gross written premium," it said.
In Home, the insurer said Financial Conduct Authority's price reforms hit its trading performance, as customer retention was offset by lower new business volumes.
Commercial inflation managed to remain ahead of claims inflation during the quarter.
"National Insurance and Guarantee Corp continued to see benefits from its improved pricing capability and strong broker relationships, whilst Direct Line for Business and Churchill's business brand made good progress in building the micro and small to medium enterprise market," the company said.
Direct Line said the strong growth in Commercial has continued into April.
Looking ahead to the full year and medium term, it reiterated its target of a combined operating ratio between 93% and 95%, normalised for the weather.
"Looking forward, we are focused on driving benefits from our new Motor platform and continue to deliver significant new pricing capability, including machine learning models, with more to come through the rest of the year," said Chief Executive Officer Penny James.
By Elizabeth Winter; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Direct Line