8th May 2019 08:37
LONDON (Alliance News) - Direct Line Insurance Group PLC said Wednesday its total gross written premiums decreased in the first quarter in a "tough trading environment".
The FTSE 100-listed general insurer reported a 2.1% decrease in total written premiums to GBP753.9 million from GBP769.9 million. The company's own brands total written premiums fell 1.9% to GBP520.6 million.
Direct Line's written premiums in its motor division decreased 4.2% to GBP386.9 million from GBP404.0 million.
The company said its group pricing initiatives helped "mitigate some of the pressure from market premium inflation not reflecting claims inflation" in the Motor market.
The low average premiums in the Motor market were attributed to reduced risk, which arose from the company's pricing initiatives.
Claims inflation in the Motor division was at the upper end of the company's long-term expectations of between 3% to 5%, attributed to high third-party damage costs.
The insurer's own brands Home written premiums were marginally higher at GBP96.6 million but its Home partnership written premiums decreased 5.7% to GBP44.6 million. The continued run-off of partnership contracts was blamed for the decrease.
Direct Line's own brands Home premiums performance was attributed to the "benign" weather in the first quarter compared to the "major weather" year before in the UK.
Direct Line's Rescue & other personal lines written premiums increased 1.7% to GBP105.4 million. The company's own brand, Green Flag, saw its premiums jump about 16%.
Commercial written premiums increased 1.2% to GBP120.4 million, with Direct Line for Business premiums growing 8.1%.
The insurer's in-force policies fell slightly in the period to 14,920, of which Direct Line's own brands holds 7,165 - which increased marginally in the first quarter.
"The first quarter was characterised by significant operational progress in a tough trading environment. The motor market remained highly competitive, with market premiums failing to keep pace with claims inflation. Our response, as usual, was to focus on achieving our target loss ratios and continuing to improve pricing effectiveness. The home market has been slightly less challenging than motor but remained competitive. Elsewhere, Green Flag and Direct Line for Business continued their growth, increasing premiums by 15.8% and 8.1%, respectively," said Chief Financial Officer & Chief Executive-designate Penny James.
Direct Line said it is on track to meet its operating expenses target of less than GBP700 million. The insurer also reiterated its 2019 combined operating ratio target of between 93% to 95%.
"As we said at the full year results, 2019 is a pivotal year for the delivery of our technology transformation programme and I'm delighted that we've had a successful start with the launch of our new price comparison website focused brand Darwin and the start of the roll-out of our new Motor and Travel systems. We are in the early stages of our plan to progressively roll out the new systems across our brands, products and channels so as to improve our competitiveness and customer experience," added James.
Shares in Direct Line were down 1.5% Wednesday morning at 312.60 pence each.
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