7th Sep 2023 10:01
(Alliance News) - Direct Line Insurance Group PLC on Thursday reported a widened loss in the first half of 2023, as its net insurance margin turned to a loss, while it also announced the disposal of a business line.
The Bromley, England-based motor and home insurer said gross written premiums and associated fees grew 9.8% to GBP1.62 billion in the six months that ended June 30 from GBP1.47 billion a year before.
However, pretax loss widened to GBP76.3 million from GBP11.1 million. Direct Line swung to an insurance service loss of GBP93.4 million from a GBP166.5 million profit. This was partially offset by net investment income rising to GBP78.9 million from GBP53.8 million.
Direct Line reported a net insurance margin of negative 6.4% compared to positive 11% a year prior. Direct Line is targeting a net insurance margin of above 10% over time.
It proposed no dividend payment, having paid out 7.6 pence a year ago.
The company aims to restart dividends once two conditions are met: firstly, when capital coverage improves to the upper end of its agreed range; and secondly, when it returns to organic capital generation in its Motor insurance division.
Direct Line announced the sale its brokered commercial insurance business to RSA Insurance, a subsidiary of Intact Financial Corp, for a GBP520 million initial payment, with a potential further payment of up to GBP30 million.
The company also estimates a capital release of up to GBP270 million. The sale will allow the firm to "focus on retail, personal and direct small business commercial lines, restore the resilience of its capital position and drive the long-term value potential for its customers and shareholders," it said.
Looking ahead, Direct Line warned of the continuing adverse effects on operating profit from the earn-through of previously written Motor business in 2023, but said improved motor margins should help support operating profit improvement in 2024.
Direct Line Insurance shares were up 16% to 174.35 pence each on Thursday morning in London.
By Tom Budszus, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Direct Line