Direct Line Insurance Group PLC (DLG)

[monabri]

From The Telegraph today.

"Direct Line, Britain’s largest motor insurer, has promoted chief financial officer Penny James to become its new boss"

"....appointment comes seven months after Paul Geddes announced he would be stepping down. Mr Geddes had run the motor insurer for a decade and lead its separation from taxpayer-backed RBS in 2012"

"Direct Line, which also owns the Churchill, Green Flag and Privilege brands, has begun a search for a new finance chief."

https://www.telegraph.co.uk/business/20 ... executive/

(Edited 26/2 to add link. Raptor. )

[csearle]

Don't know Penny James but I presume she has much merit. Personally I am against positive discrimination and think that people should be appointed on their abilities regardless of pretty much everything else. So, on the assumption that she is the best person for the job I welcome her in. C.

[idpickering]

Prelims highlights here; viewtopic.php?f=15&t=16586

[idpickering]

Trading Update;

Highlights
•

Motor in-force policies were flat quarter on quarter as the Group's pricing initiatives helped mitigate some of the pressure from market premium inflation not reflecting claims inflation. Lower Motor average premiums were primarily due to reduced risk mix arising from these pricing initiatives. Overall gross written premium reduced by 4.2% year-on-year. Claims inflation was at the upper end of the Group's long-term expectations of 3% to 5%, primarily due to the continuation of higher Motor third-party property damage costs.

•

Home own brands premiums were broadly stable compared with prior year. Q1 weather was benign compared to the major weather in Q1 2018. Home partnerships premiums reduced by 5.7% year-on-year, primarily as a result of the continued run-off of certain partnership contracts.
•

Rescue and other personal lines premiums grew by 1.7% year-on-year, with the Group's direct own brand Green Flag growing premiums by 15.8%. The new Travel IT system started to roll out in April supporting the Group's partnerships and enabling the Group's first fully automated Travel claim payment.
•

Commercial premiums grew by 1.2% year-on-year, reflecting 8.1% growth in the Group's direct brand, Direct Line for Business, partially offset by a 1.3% reduction in NIG & Other.
•

The Group reiterates its target of achieving a combined operating ratio in the range of 93% to 95%, normalised for weather, in 2019 and over the medium term. The Group is also on track to achieve its target of operating expenses of less than £700 million in 2019.

https://www.investegate.co.uk/direct-li ... 00032903Y/

[idpickering]

Half Yearly Report here; https://www.investegate.co.uk/direct-li ... 00162807H/

[idpickering]

Direct Line Group appoints new CFO

Direct Line Insurance Group plc (the 'Company') announces that Tim Harris will join the Company as Chief Financial Officer ('CFO') and the Board as an Executive Director on 1 October 2019.

Tim was Deputy Chief Executive and Group Finance Director of the Royal London Group until 12 July 2019. He joined Royal London as Group Finance Director in May 2014 and was additionally appointed as Deputy Chief Executive in January 2018. Before joining Royal London, Tim had been Group CFO of Torus Insurance, Deputy Group CFO and Chief Capital Officer of Aviva plc and a Partner in the Global Capital Markets practice of PricewaterhouseCoopers.

https://www.investegate.co.uk/direct-li ... 00173528M/

[blobby]

Direct Line issued their prelims today which can be found here:

https://www.directlinegroup.co.uk/en/investors.html

The results are fairly dull. There has been a slight drop in business as various partnerships have been finished, which is partially offset by a small increase in own brand sales.

They have been in my HYP since the beginning and I remain happy.

Risks from flooding corvid-19 seem to be under control:

The recent storms Ciara and Dennis in February have shown how important it is to be with the right insurer and we are proud with how we supported our customers during these difficult times. We estimate that the claims costs of these storms will be in the region of £35 million, net of Flood Re recoveries, across our Home and Commercial businesses compared to an expected annual weather cost of around £64 million. It is too early to assess any additional claims from Storm Jorge. In addition, the Coronavirus outbreak (specifically the disease COVID-19) has the potential to impact the 2020 result of our Travel business. We have Travel reinsurance protection to mitigate the cost of an event over a 28 day period to £1 million up to a limit of £10 million. The full coverage, if utilised, can be reinstated once on the same terms.

Currently, incurred claims are around £1 million. Like all businesses, we are subject to the consequences of disruption to financial markets and global supply chains which, over time, could impact the performance of our investments and the cost and speed of fulfilling customers’ claims.

Increased dividend and currently on 6.6% yield with plans to buyback shares.

[monabri]

No mention of the lack of any special dividend.

" The Board may revise the dividend policy from time to time. The Company may consider a special dividend and/or a repurchase of its own shares to distribute surplus capital to shareholders."

They've gone down the buyback route.

"The final dividend will be paid on 21 May 2020 to shareholders on the register on 14 April 2020. The ex-dividend date will be 9 April 2020."

[idpickering]

Dividend update

https://www.investegate.co.uk/direct-li ... 00051366J/

[monabri]

With ref to their previous dividend history - below.

DLG have paid out specials for the last few years. I expected the special to be culled as a result of C19 but now they have also cancelled the final. I really do think that they are using this as an excuse to rebaseline dividends.

[idpickering]

Trading Update for Q1 2020 and Covid-19 Update

PENNY JAMES, CEO of Direct Line Group, commented

"In these difficult times our focus has been to support our customers, protect our people and do what we can to help the communities we serve. I am grateful to the team for their fantastic response which enabled us to move quickly to home working for almost all our people, except a limited number who are repairing cars for those with essential travel needs. We expect to incur £70 million across a range of measures to offer additional value to our customers with particular focus for those in financial difficulty, to give our people job security and to work with local authorities and charities to target funding towards those supporting the most vulnerable.

"We are a strong business with a clear strategy and operational momentum. We've traded well during Q1 and continue to make progress on our strategic transformation. Our solvency position is strong, partly as a result of the difficult decision to cancel our final dividend for 2019 and also because of our resilient business model. Acknowledging the importance of dividends to shareholders we will review our dividend position alongside our half year results and on an ongoing basis once it is possible to have a better understanding of the impact of Covid-19."

https://www.investegate.co.uk/direct-li ... 00060351M/

[Dod101]

No refunds for those like me who insure with them and have driven about 10 miles in the lest 7 weeks or so?

Dod

[dealtn]

No refunds for those like me who insure with them and have driven about 10 miles in the lest 7 weeks or so?

Dod

If you wanted to you could have cancelled a policy you felt you didn't need any more and got a part refund, or adjusted your "expected mileage". Have many people considered, or done this?

[Dod101]

My car sits on my driveway and I use it very occasionally so cancelling the policy is not an option. Changing the expected mileage will incur a service charge probably as much as any refund in premium. I was only being half serious but Admiral has apparently refunded policyholders and it seems reasonable that Direct Line should do the same.

Dod

[videoman]

If you want to cancel a policy with Direct Line they will charge you £48.16 as an administration fee so for most people if you intend to insure your vehicle again once all this is over you will not save much in the long run.

[monabri]

Trading Update

https://www.investegate.co.uk/direct-li ... 00077491E/

"We are currently on track to deliver a combined operating ratio slightly below our target range of 93% to 95% in 2020, normalised for weather. "

From The Times, yesterday
https://www.thetimes.co.uk/article/fewe ... -d09j3x70v

"People have bought fewer new cars and not as many newly qualified drivers are taking to the road, leading to subdued premiums for Direct Line."

''Direct Line said that its combined operating ratio target remained at between 93 per cent and 95 per cent. The ratio has to be below 100 to denote profitability."

[idpickering]

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

Here; https://www.investegate.co.uk/direct-li ... 00134096R/

[monabri]

https://www.investegate.co.uk/direct-li ... 00073249H/

"HALF YEAR REPORT 2021

STRONG FINANCIAL PERFORMANCE, MOMENTUM IN STRATEGIC TRANSFORMATION"

Direct own brands in-force policies grew by 1.3% with growth across Commercial direct own brands, Green Flag and Home more than offsetting declines in Motor. Total policies reduced 1.1% as lockdown restrictions impacted partnership volumes in Travel.

- Gross written premium reduced by 1.5% as continued growth in Commercial, Home and Green Flag Rescue was offset by declines in Motor and Travel. During H1, we focused on maintaining the quality of our Motor book resulting in some lost competitiveness and saw reduced risk mix from lower new car sales and fewer new drivers entering the market, with Motor gross written premium falling 6.2%. The reduction was lower in Q2, as pricing in the motor market stabilised and risk mix trends started to reverse. Overall, gross written premium increased by 1.6% in Q2 compared to Q2 2020, demonstrating the benefits of our diversified business model.

- Motor's current-year attritional loss ratio was relatively stable at 66.9% (H1 2020: 65.5%), driven by claims frequency remaining below normal levels together with lower premium. In July, claims frequency returned close to the level assumed in our pricing and consequently we expect our Motor current-year attritional loss ratio in H2 to return closer to underlying 2020 levels, which we estimated was around 79%.

- Operating profit increased by £105.0 million to £369.9 million benefiting broadly equally from benign weather conditions, strong prior-year reserve releases, the non-repeat of Covid-19 impacts on Travel claims and the reversal of investment losses. Progress continued on underlying profitability following a reduction in operating expenses and good current-year trading across the book.

- Profit before tax of £261.3 million was £24.9 million higher than H1 2020 following the increased operating profit partially offset by £91.5 million of restructuring and one-off costs which primarily relate to the Group's site strategy announced with the full year 2020 results.

- Proposed interim ordinary dividend of 7.6 pence per share, an increase of 2.7% over H1 2020. On or about 4 August 2021, we expect to commence the second £50 million tranche of the £100 million share buyback programme announced in March 2021. There was strong capital generation during H1 with a solvency ratio after dividends of 195%.

- We reiterate our medium-term target of achieving a combined operating ratio in the range of 93% to 95%, normalised for weather. For 2021, following lower than normal claims frequency in Motor and strong prior-year reserve releases, we expect a combined operating ratio in the range of 90% to 92%, normalised for weather.

[monabri]

DLG Prelims

https://www.investegate.co.uk/direct-li ... 00059385D/


"We are pleased to declare a final dividend of 15.1 pence per share, up by 2.7% over 2020, and also announce a further share buyback programme."

- Direct own brands in-force policies grew 1.0% with growth across Commercial direct (7.5%), Green Flag Rescue (5.8%) and Home (2.3%). Motor direct own brands in-force policies were stable in H2 2021 with a reduction of 1.9% over the year. Direct own brands gross written premium was 0.8% lower and grew 0.7% in H2 2021.

- Operating profit increased to £581.8 million (2020: £522.1 million) driven by an increase in underwriting profit and a strong investment return result. Current-year contribution to operating profit, normalised for weather, was 53% (2020: 65%), in line with the Group's 2021 target of at least 50%.

- Combined operating ratio improved to 90.1% (2020: 91.0%). Normalised for weather, the combined operating ratio was 91.1%, ahead of our medium-term target of 93% to 95% and in line with the expectation of between 90% and 92% for 2021 we stated at half year.

- Profit before tax of £446.0 million was £5.4 million lower than 2020 as the increase in operating profit was offset by a £62.1 million increase in restructuring and one-off costs primarily reflecting restructuring of the property portfolio, including the purchase of the Bromley office in early 2021 as previously announced.

- Proposed final ordinary dividend of 15.1 pence per share, making a total of 22.7 pence per share, an increase of 2.7% over the 2020 total ordinary dividend, and announcing a £100.0 million share buyback programme. Strong capital position with an adjusted solvency capital ratio of 160%.

[idpickering]

Trading update.

Penny James, Chief Executive Officer, said:

"Today's trading update follows a period of heightened volatility across the UK motor insurance market, in which we have seen claims inflation in motor in the first half of 2022 spike above the levels assumed in our pricing. As a result, we are revising our combined operating ratio target range for 2022 to 96-98%.

We have already taken actions including increasing prices and deploying new pricing capability to restore margins, which mean we expect our 2023 combined operating ratio will improve to around 95% and we reiterate our medium-term target range of 93-95%.

This, combined with our diversified business model, our strong balance sheet and our continuing actions to further improve resilience, gives us confidence in the sustainability of our regular dividends for this year and as we look ahead."

Current trading

The motor insurance market experienced significant levels of severity inflation in H1, primarily resulting from higher used car prices, and amplified by higher third party claims costs, longer repair times and inflation in the cost of car parts. Market premium inflation has continued to lag the increases in claims inflation.

Whilst the Group has been pricing claims inflation over the last 12 months, experience has been in excess of the levels assumed. The Group now estimates overall motor claims severity inflation for 2022 of around 10%.

As a result, the H1 2022 current year motor loss ratio is now expected to be in the region of 86%. Due to conservative reserving during 2021, the Group's prior year reserve releases in the first half remain in line with expectations.

The Group's other business units are performing largely in line with expectations, demonstrating the benefit of the Group's diversified business model. Overall, the Group expects a combined operating ratio for the first half of 2022 of around 96.5%, normalised for weather, and gross written premium of approximately £1,520 million.

2022 outlook

The Group has taken action in the second quarter to restore margins through increased prices to reflect higher than expected claims inflation. In addition, the Group has recently launched an updated motor risk pricing model which it believes materially improves risk selection.

Given the higher current year loss ratio, the Group now expects the full year 2022 combined operating ratio to be in the range of 96% to 98%, normalised for weather.

https://www.investegate.co.uk/direct-li ... 00077340S/

Ian.