Direct Line - Preliminary Results year ended 31 December 2018

[idpickering]

Financial highlights

- Direct own brands premium up 1.8% compared to 2017, driven by growth across all segments. Total Group premium reduced by 5.3% year on year, as a result of the exit from Nationwide and Sainsbury's6 Home partnerships.

- Operating profit decreased by £41.1 million compared to 2017, primarily due to reductions in prior-year reserve releases and investment return as expected. Operating profit included a £55 million benefit from moving to an assumed 0% Ogden discount rate (2017: £49 million benefit relating to Ogden).

- Demonstrating the value in the Group's diversified product base, current-year underwriting profitability was stable despite a reversal of the benign motor conditions in 2017. The expense ratio reduced to 23.4%.

- Profit before tax increased by 8.1% to £582.6 million (2017: £539.0 million) as the decrease in operating profit was more than offset by the non-repeat of finance costs in relation to the debt repurchased in 2017.

- Final ordinary dividend of 14.0 pence per share, an increase of 2.9% on 2017. Special dividend of 8.3 pence per share. Total dividends of 29.3 pence per share. (2017 total dividends of 35.4 pence per share including a special dividend of 15.0 pence per share).

- Strong capital position with solvency capital ratio of 170% (after proposed dividends) reflecting prudence given current political and economic uncertainties.

- Reiteration of financial targets for 2019 and over the medium term of achieving a combined operating ratio in the range of 93% to 95% normalised for weather. In 2019, targeting operating expenses below £700 million. Reiteration of ongoing target of achieving at least a 15% return on tangible equity.

And later;

The Board has recommended a final dividend of 14.0 pence per share (2017: 13.6 pence), an increase of 0.4 pence per share (2.9%), in line with business growth. This reflects the Board's continued confidence in the Group's earnings and the progress the business continued to make.

The Board has also declared a special dividend of 8.3 pence per share. After both dividends the solvency capital ratio will be 170% as at 31 December 2018.

https://www.investegate.co.uk/direct-li ... 00168132R/

[monabri]

Trailing 12 month yield of 5.90% (8.23% including special).

Summary of dividends (historical).

https://www.dividenddata.co.uk/dividend ... y?epic=DLG

[blobby]

Results and presentation are available here:

https://www.directlinegroup.co.uk/en/in ... ports.html

[Ricksure]

DLG have just declared a final dividend of 14p a share and a special dividend of 8.3p a share.

Sorry I do not have further infomation

[Ricksure]

Sorry I see Ian has posted all the info while my Indian internet was still trying to connect

[OZYU]

DLG have just declared a final dividend of 14p a share and a special dividend of 8.3p a share.

Sorry I do not have further infomation

https://www.londonstockexchange.com/exc ... 89837.html

[idpickering]

I hold these, and up unti the recent rise of the share price, I was intending topping up. But for me they’re now a long term hold.

Ian.

[blobby]

I hold these, and up unti the recent rise of the share price, I was intending topping up. But for me they’re now a long term hold.
Ian.

Hi Ian,

DLG are a stalwart of my HYP and have been for years. They seem to tick all the boxes for my HYP investments at the moment (yield, record of dividends, TNAV, market cap), unless there is something better in this sector?

[kempiejon]

Hi Ian,

DLG are a stalwart of my HYP and have been for years. They seem to tick all the boxes for my HYP investments at the moment (yield, record of dividends, TNAV, market cap), unless there is something better in this sector?

Blobby, My bold, I agreed that these look a good prospect I prefer a 5 year history of rising dividends I might allow 4 years and forecast but DLG have only really just nudged into 5 year land for me recently. They'd not have passed my HYP selection criteria earlier than the past couple of years.

[idpickering]

I hold these, and up unti the recent rise of the share price, I was intending topping up. But for me they’re now a long term hold.
Ian.

Hi Ian,

DLG are a stalwart of my HYP and have been for years. They seem to tick all the boxes for my HYP investments at the moment (yield, record of dividends, TNAV, market cap), unless there is something better in this sector?

Cheers for your offering blobby. I'm quite content to sit on these. I bought into the stock over two months last year, and haven't touched them since. That is in keeping with my trying to keep my hands off my HYP. In the overall insurance sector I also hold Admiral Group, Aviva, and Legal & General, all roughly equalled weighted.

Thanks for your input kempiejon too.

Ian.

[idpickering]

Sorry I see Ian has posted all the info while my Indian internet was still trying to connect

No worries Ricksure. I think it's great that other HYPers are paying attention, and getting involved hereabouts.

Ian.

[blobby]

Hi Ian,

DLG are a stalwart of my HYP and have been for years. They seem to tick all the boxes for my HYP investments at the moment (yield, record of dividends, TNAV, market cap), unless there is something better in this sector?

Blobby, My bold, I agreed that these look a good prospect I prefer a 5 year history of rising dividends I might allow 4 years and forecast but DLG have only really just nudged into 5 year land for me recently. They'd not have passed my HYP selection criteria earlier than the past couple of years.

Hi kempiejon,

It is a good spot that as I’ve held DLG for years then I probably bought them when they would not have fulfilled the HYP criteria of many. I bought them soon after they were spun out of RBS. If I remember rightly, at the time I felt they had a very good financial record over many years even though they were not publicly listed. Hence adopting them in my mind as HYP shares, that may be contentious for some so well done for calling me out on that.

Ian,

You keep posting about what you have or have not in your portfolio and whether you think something is a buy or not, but I’m more interested in the evidence of any of these opinions. You say you hold Admiral Group, Aviva, and Legal & General as well as Direct Line (which you don’t want to top up) but none of this helps me. If you could say which you preferred and why using the HPY criteria to justify this then I’d be much more appreciative.