4th Aug 2020 10:11
(Alliance News) - Direct Line Insurance Group PLC on Tuesday said it will make a special shareholder payout alongside an increased interim dividend, despite an almost 10% fall in first half profit.
The insurer said that the impact of Covid-19 on profit has been broadly neutral, as the additional travel and business interruption claims, alongside a reduction in investment returns and higher operating expenses, were offset by favourable claims frequencies in Motor and Commercial lines.
Shares in the FTSE 250-listed company were up 7.7% at 331.30 pence each in London.
For the six months to June 30, the London-based company recorded pretax profit of GBP236.4 million, down 9.5% from GBP261.3 million, on a total income of GBP1.60 and GB1.65 billion, respectively. Operating profit slipped 3.4% to GBP264.9 million.
The drop in profit was attributed to GBP15 million in restructuring and one-off costs.
Gross earned premiums dipped 0.4% in the first half to GBP1.58 billion. The company's total in-force insurance policies fell 1.7% to 14.6 million.
First half combined operating ratio - a key profit measure for insurers - reduced to 90.3% from 92.5%.
A ratio below 100% indicates that the company is making an underwriting profit, so the lower the better.
Direct Line declared an interim dividend of 7.4 pence per share, up 2.8% year-on-year. In addition, it has decided to pay a special interim dividend of 14.4p per share, reflecting a full catch-up of its cancelled 2019 final dividend.
For 2020, the company continues to expect a combined operating ratio of 93% to 95%, normalised for weather and anticipate restructuring costs of GBP60 million over 2019 and 2020.
By Tapan Panchal; [email protected]
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