4th Sep 2024 09:46
(Alliance News) - Direct Line Insurance Group PLC on Wednesday restored the dividend and returned to profit in the first half of 2024 as it reported strong premium growth.
In the six months to June 30, the London-based insurer posted a pretax profit of GBP61.6 million, swinging from a loss of GBP76.3 million a year prior.
Gross written premiums rose 54% to GBP1.84 billion from GBP1.20 billion. This was largely as a result of the Motability partnership which began in September 2023, the firm explained. Excluding Motability, growth was just over 11%, supported by rating action across Motor, Home, Commercial Direct and Rescue.
Chief Executive Adam Winslow said: "In the first half of the year we delivered strong premium growth and returned to profitability. The actions we have taken are beginning to make a difference but there is more to do. We will continue to drive business transformation during the second half of 2024 and into 2025."
Net insurance margin picked up to 1.8% from negative 8.8% a year ago. Motor margin improved to negative 3.0% from negative 25.6% a year ago. Non-motor margin fell to 11.6% from 19.7%.
The improved margin picture helped the Motor division return an operating profit of GBP3.1 million compared to a loss of GBP180.4 million a year ago.
In contrast, the non-Motor unit saw operating profit fell 30% to GBP60.6 million from GBP86.7 million before.
Weather event related claims in non-Motor were GBP24 million, rising from GBP11 million a year prior. Direct Line assumes a full year figure of GBP62 million.
Winslow highlighted an improved solvency capital ratio during the first half to a "strong" 200% pre-dividend from 192% a year prior.
This, alongside positive capital generation, "gives us confidence to announce a dividend payment of 2.0 pence per share," he said. Last year, Direct Line passed on an interim dividend payout.
Direct Line expects Motor's net insurance margin to improve during the second half of 2024 as written margins of above 10% continue to earn through.
In non-Motor, the firm expects continued growth, in line with its target of 7% to 10% compound annual growth in gross written premium and associated fees between 2023 and 2026.
"The group believes there is significant opportunity to create further value and, as previously announced, is targeting a net insurance margin, normalised for event weather, of 13% in 2026," the company added.
Shares in Direct Line fell 1.0% to 191.10 pence in London on Tuesday. The wider FTSE 250 was down 0.7%.
By Jeremy Cutler, Alliance News reporter
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