3rd Nov 2015 07:41
LONDON (Alliance News) - Direct Line Insurance Group PLC on Tuesday reiterated guidance for its combined operating ratio, and reported growth in third-quarter premiums despite highly competitive motor and home insurance markets.
The insurer guided a combined operating ratio for 2015 in the range of 92% and 94% for ongoing operations. A ratio below 100% indicates an underwriting profit, while a ratio above that level indicates a loss.
Direct Line, which joined the FTSE 100 index of blue-chip companies in September 2014, said that gross written premium from ongoing operations was GBP844.5 million in the three months to September 30, compared with GBP819.5 million in the corresponding quarter the prior year.
The insurer said it is managing the trade-off between margin and volumes amid intense competition.
"The motor market overall has seen price rises, but this should be viewed in the context of rising claims costs. Deflation in the home market has continued, while competition was stronger in the rescue market in the third quarter," Direct Line.
Third-quarter operating expenses were down to GBP165.4 million from GBP176.9 million, while claims handling expenses were down to GBP49.7 million from GBP51.3 million.
Third-quarter investment return from ongoing operations was down to GBP42.6 million from GBP54.0 million.
The insurer said it will first consider any return of capital to shareholders alongside its results for 2015, and will partly depend on capital requirements under new insurance rules coming into force across the European Union from January 1, 2016.
Direct Line in August reported higher first-half operating profit, as the motor insurer managed to hold its gross written premiums in a highly competitive market.
"In line with its existing policy, the board will consider current and forecast business developments and capital requirements over a prolonged period," Direct Line said.
Just more than three years have elapsed since Direct Line was admitted to trading on the London Stock Exchange as spin-off from state-backed Royal Bank of Scotland Group PLC, which later was able to complete its divestment of the insurer.
By Samuel Agini; [email protected]; @samuelagini
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