1st Mar 2016 07:49
LONDON (Alliance News) - Direct Line Insurance Group PLC on Tuesday lifted its total annual dividend and reported higher pretax profit in 2015, helped by higher than expected reserve releases.
Pretax profit rose to GBP507.5 million in 2015, up from GBP456.8 million the prior year, ahead of analyst expectations of a GBP451.0 million pretax profit.
The motor and home insurer lifted its total dividend for 2015 to 50.1 pence per share, which included a previously declared 27.5p special payment following the sale of its international operations, up from 27.2p the prior year. Analysts had expected a 48.4p dividend.
Direct Line said higher-than-expected reserve releases, which relate to the money an insurer has to meet claims, helped earnings. Reserve releases fell to GBP378.9 million from GBP397.6 million.
"Growth in own brands policies has contributed to overall premium growth and, alongside lower costs, has again allowed us to deliver an improved financial performance for the year. Operating profits are up and return on tangible equity is well ahead of our target, despite the bad weather at the end of the year. We've also continued to grow regular dividends and announced another special dividend," Chief Executive Officer Paul Geddes said.
The insurer said it aims to cut total costs in absolute terms in 2016, though the rate of reduction is expected to be lower than in 2015.
Direct Line guided for a combined operating ratio - a measure of underwriting profitability - in the range of 93% to 95% for ongoing operations in 2016, assuming a "normal" level of claims from bad weather. In 2015, the ratio fell to 94.0% from 95.0%, an improvement given that a percentage below 100% indicates underwriting profitability.
By Samuel Agini; [email protected]; @samuelagini
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