Direct Line's tootling red telephone television advertisements may have been annoying, but they were certainly memorable. The same can also be said for another of Direct Line's insurance brands, Churchill – yes that one, with the nodding dog and the “Oh yes!" catchphrase.
A Collection of Top Insurance & Rescue Brands
Aside from the main Direct Line telephone and online insurance brand, the Direct Line Group also operates the Churchill, Privilege insurance brands, plus the Green Flag breakdown assistance business
All in all, Direct Line is one of the UK's biggest insurers, with a UK personal motor insurance market share of 14%, and a UK home insurance market share of 17%. Overall, this puts Direct Line third in terms of UK insurance business written after Aviva and AXA.
The Direct Line Brand Relaunches with Winston Wolf
Business remains solid despite continued pricing pressures in the property & casualty insurance market. Direct Line's recent brand overhaul should boost new business, with the Winston Wolf character appearing on TV adverts highlighting the improved Direct Line customer offering. It should allow the Company to compete more effectively with the proliferation of insurance price comparison websites like comparethemarket.com. Remember, Direct Line doesn't appear on any price comparison websites.
Impressive Cost Reduction Boosts Profits
The cost base is also being managed impressively, with the company's total costs down 6% over the first 9 months of 2014 compared with the same period in 2013. Continued efforts to reduce costs are a prime driver for profit growth over the next two years, with earnings per share forecast to rise steadily in 2015 and 2016 and dividends following (Figure 1).
1. Direct Line Is Forecast Earnings, Dividend Growth This Year, Next
Source: stockopedia.co.uk
A key feature of Direct Line's restructuring effort is the sale of its international operations to Spanish insurer Mapfre for £430 million, generating a pre-tax gain for the Company of £160 million. Most if not all of these sale proceeds will be returned to shareholders once the deal has completed and the cash hits Direct Line's bank account, representing potentially a bumper dividend.
UK Car Insurance Premia to Go Up By Up to 10%
According to the AA,
The cost of car insurance could rise by up to 10% in the coming year, and home insurance premiums are unlikely…
