1st Aug 2014 08:00
LONDON (Alliance News) - Direct Line Insurance Group PLC Friday reported an increase in first half pretax profit, as a weaker operating profit from ongoing operations after the severe UK winter weather was more than offset by a better result in its run-off segment and lower restructuring costs.
It also said it is thinking of selling its international operations.
In a statement, the insurer said it made a GBP225.1 million pretax profit in the six months ended June 30, compared with GBP208.8 million in the corresponding period last year. Direct Line increased its interim dividend by 4.8% to 4.4 pence and said it will pay a 10.0 pence special dividend to shareholders.
However, the group's operating profit from ongoing operations fell to GBP249.1 million, from GBP286.6 million, because reductions in underwriting profit and instalment and other operating income more than offset an increase in the group's investment return.
The operating figures for ongoing operations include higher weather claims and lower prior-year reserve releases of GBP218.0 million, compared with GBP239.2 million in the corresponding period last year.
Direct Line's run-off segment saw a GBP9.8 million increase in profit, while a fall in restructuring costs to GBP28.0 million, from GBP69.9 million, also contributed to the increase in pretax profit.
The group also said that it is holding discussions with a number of parties regarding a possible disposal of its international division, which consists of its Italian and German operations, following a strategic review. Direct Line said that there is no certainty that a disposal will occur.
"We delivered good results in the first half of 2014, despite major weather events and competitive markets, by maintaining our disciplined underwriting approach and from the continued delivery of our strategic initiatives," Chief Executive Paul Geddes said in a statement.
"Our performance has also allowed us to continue to invest in the future of our business, to enhance our product propositions and improve our customer experience. We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we've made it easier to buy our motor products on smartphones and tablets," Geddes said.
Telematics, also known as black box insurance, refers to devices fitted to cars that collect data on driving behaviour so that insurers can tailor personalised policies.
Direct Line shares were Friday quoted up 3.4% at 294.80 pence.
By Samuel Agini; [email protected]; @samuelagini
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