3rd Mar 2015 07:39
LONDON (Alliance News) - Direct Line Insurance Group PLC Tuesday warned that the UK motor and home insurance markets are still highly competitive, with the opening months of the new year showing signs of more pressure in motor and "broad stability" in the home market.
Insurers operating in the motor market have been combating intense competition, which has been putting pressure on premiums, but Direct Line said it has the ability to deal with the tough environment.
"The UK motor and home markets remain highly competitive with recent market conditions characterised by periods of market price deflation and of stability. Early 2015 has seen some additional, potentially seasonal, market pressure in motor and broad stability in the home market," Direct Line said in a statement.
"Against this backdrop the group will continue to adopt a flexible, but disciplined, approach to managing the trade-off between margin and volumes. Meanwhile the group is investing in building future capability and continues to identify opportunities to improve efficiency," the group added.
The group's update came within annual results showing that pretax profit for continuing operations rose to GBP456.8 million in 2014, compared with GBP407.3 million in the prior year. Operating profit from ongoing operations crept down to GBP506.0 million from GBP509.9 million.
The group's combined operating ratio, a measure of underwriting performance under which a value below 100% represents a profit, improved by 0.2 percentage point to 95.0%. For 2015, the group said it expects to achieve a combined operating ratio in the range of 94% to 96% for ongoing after normalising for claims from major weather events.
"The range reflects uncertainty surrounding claims inflation versus market pricing in motor," Direct Line said.
Direct Line increased its total dividend for 2014 to 27.2 pence from 20.6 pence in 2013, boosted by a 4.8% increase in the final dividend to 8.8 pence per share and a second special interim dividend of 4.0 pence per share.
By Samuel Agini; [email protected]; @samuelagini
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