REG - Direct Line Ins Grp - Trading Update for Q1 2024

Direct Line InsuranceAnnouncement

08/05/2024 07:00

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RNS Number : 5003N  Direct Line Insurance Group PLC  08 May 2024

DIRECT LINE INSURANCE GROUP PLC

TRADING UPDATE FOR Q1 2024(1)

A POSITIVE START TO 2024 TRADING

8 May 2024

Adam Winslow, CEO of Direct Line Group, commented

"We have seen a positive start to 2024 trading, with double digit gross
written premium growth in our Motor, Home and Commercial businesses and
overall growth for ongoing operations of 15.0%. Claims trends and Motor
margins continue to develop in line with our expectations.

"We have announced a number of significant hires over the last few weeks. I am
confident that with the new leadership team in place, we can deliver run-rate
annualised cost savings of at least £100 million by the end of 2025 and a net
insurance margin, normalised for weather, of 13% in 2026.

"I look forward to sharing our refreshed strategy to deliver higher returns
and the progress we have made against the immediate priorities to improve
performance at our Capital Markets Day on 10th July 2024."

Trading summary

                                                        3 months     3 months     Change to 3 months 2023
                                                        2024         2023
                                                        £m           £m
 Gross written premium and associated fees
 Motor direct own brands(2)                              400.1        352.9        13.4%
 Motor partnerships(3)                                   24.2         5.8         N/A(3)
 Motor                                                   424.3        358.7        18.3%
 Home direct own brands(2)                               110.5        94.4         17.1%
 Home partnerships                                       36.8         34.6         6.4%
 Home                                                    147.3        129.0        14.2%
 Green Flag Rescue                                       20.3         19.4         4.6%
 Other Rescue and other personal lines                   43.2         45.3         (4.6%)
 Rescue and other personal lines                         63.5         64.7         (1.9%)
 Commercial direct own brands(2)                         71.7         62.4         14.9%
 Ongoing operations(4)                                   706.8        614.8        15.0%
 Brokered commercial insurance(4)                        155.1        156.9        (1.1%)
 Run-off partnerships(4)                                 30.3         34.0         (10.9%)
 Total Group                                             892.2        805.7        10.7%
                                                        31 Mar 2024  31 Dec 2023  Change to 31 Dec 2023
 In-force policies - ongoing operations(4) (thousands)   9,268        9,442        (1.8%)

Trading update

-   Gross written premium and associated fees for ongoing operations up
15.0% on Q1 2023 with strong growth in Motor, Home and Commercial direct.

-   In-force policies were 1.8% lower. As expected, Motor volumes were lower
due to the continued repricing of the Motor book, whilst Home own brands
in-force policies saw modest growth.

-   Motor claims trends in line with expectations, with estimated written
margins maintained above 10%.

-   Q1 saw several periods of adverse weather which led to around £33
million of weather claims in Home, of which £24 million was event related,
compared with our annual event assumption in Home of £54 million.

 For further information, please contact
 PAUL SMITH                                                    ALAN OLIVER

 DIRECTOR OF BUSINESS PERFORMANCE AND INVESTOR RELATIONS       GROUP COMMUNICATIONS
 Email: paul.r.smith@directlinegroup.co.uk                     Email: alan.oliver@directlinegroup.co.uk
 Mobile: +44 (0)7795 811263                                    Mobile: +44 (0)7385 481295

 

APPENDIX 1: Gross written premium and associated fees

                                            Q1 2024    Q4 2023    Q3 2023      Q2 2023    Q1 2023
                                            £m         £m         £m           £m         £m
 Gross written premium and associated fees
 Motor direct own brands(2,5)                400.1      422.0      435.1        391.3      352.9
 Motor partnerships(3,5)                     24.2       40.3       391.7        8.7        5.8
 Motor                                       424.3      462.3      826.8        400.0      358.7
 Home direct own brands(2)                   110.5      118.1      107.2        89.1       94.4
 Home partnerships                           36.8       36.3       37.2         34.6       34.6
 Home                                        147.3      154.4      144.4        123.7      129.0
 Green Flag Rescue                           20.3       16.5       27.7         21.5       19.4
 Other Rescue and other personal lines       43.2       42.0       48.5         44.9       45.3
 Rescue and other personal lines             63.5       58.5       76.2         66.4       64.7
 Commercial direct own brands(2)             71.7       58.8       63.0         56.8       62.4
 Ongoing operations(4)                       706.8      734.0      1,110.4      646.9      614.8
 Brokered commercial insurance(4)            155.1      174.7      137.5        196.7      156.9
 Run-off partnerships(4)                     30.3       43.3       34.5         38.3       34.0
 Total Group                                 892.2      952.0      1,282.4      881.9      805.7

 

APPENDIX 2: In-force policies by segment(4) (thousands)

                                        31 Mar      31 Dec      30 Sep      30 Jun      31 Mar

2024
2023
2023
2023
2023
 Motor direct own brands(2)              3,235       3,373       3,441       3,607       3,669
 Motor partnerships(3)                   837         808         795         66          72
 Motor                                   4,072       4,181       4,236       3,673       3,741
 Home direct own brands(2)               1,721       1,706       1,686       1,705       1,731
 Home partnerships                       729         738         748         759         765
 Home                                    2,450       2,444       2,434       2,464       2,496
 Green Flag Rescue                       1,036       1,048       1,062       1,093       1,073
 Other Rescue and other personal lines   1,069       1,124       1,134       1,196       1,275
 Rescue and other personal lines         2,105       2,172       2,196       2,289       2,348
 Commercial direct own brands(2)         641         645         652         645         643
 Ongoing operations(4)                   9,268       9,442       9,518       9,071       9,228
 Brokered commercial insurance(4)        281         286         291         293         287
 Run-off partnerships(4)                 2,543       2,224       2,221       2,199       2,187
 Total Group                             12,092      11,952      12,030      11,563      11,702

 

 

APPENDIX 3: Motor and Home average premium (£)

 £                           Q1 2024   Q4 2023  Q3 2023  Q2 2023  Q1 2023
 New business                 599       594      588      532      478
 Renewal                      515       513      480      412      373
 Motor direct own brands(6)   541       537      507      445      401
 New business                 238       212      214      204      188
 Renewal                      261       259      257      249      230
 Home direct own brands       257       249      250      243      224

 

Notes:

1.    The Trading Update relates to the three months ended 31 March 2024
and contains information to the date of publication.

2.    Direct own brands include in-force policies for Motor under the
Direct Line, Churchill, Darwin, Privilege and By Miles brands, Home under the
Direct Line, Churchill and Privilege brands and Commercial direct policies
under the Direct Line and Churchill brands.

3.    Motor partnerships includes the Motability partnership, which started
on 1 September 2023, and resulted in significant growth in the third quarter
of 2023. From 2024, the majority of Motability gross written premium is
recognised twice a year on 1 April and 1 October. As the Motability contract
is a fleet contract, customer numbers are used to allow a more representative
presentation of the Group's in-force policies.

4.    Ongoing operations - the Group's ongoing operations result excludes
the results of the brokered commercial business, that it sold to RSA Insurance
Limited in 2023, and the Rescue and other personal lines partnerships that the
Group first excluded from its 2022 results. Relevant prior-year data has been
restated accordingly.

5.    Gross written premiums for the By Miles brand which were previously
reported within Motor partnerships have been reallocated to Direct Own Brands.
There is no impact on in-force policies.

6.    Excluding the By Miles brand.

Forward-looking statements disclaimer

Certain information contained in this document, including any information as
to the Group's strategy, plans or future financial or operating performance,
constitutes "forward-looking statements". These forward-looking statements may
be identified by the use of forward-looking terminology, including the terms
"aims", "ambition", "anticipates", "aspire", "believes", "continue", "could",
"estimates", "expects", "guidance", "intends", "may", "mission", "outlook",
"over the medium term", "plans", "predicts", "projects", "propositions",
"seeks", "should", "strategy", "targets", "vision", "will" or "would" or, in
each case, their negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, future events or
intentions. These forward-looking statements include all matters that are not
historical facts. They may appear in several places throughout this document
and include statements regarding intentions, beliefs or current expectations,
including of the Directors, concerning, among other things: the Group's
results of operations, statement of financial position, financial condition,
prospects, growth, net insurance margin, insurance service result, strategies,
the industry in which the Group operates and the Group's approach to
climate-related matters. Examples of forward-looking statements include
financial targets which are contained in this document with respect to return
on tangible equity, solvency capital ratio, net insurance margin, combined
operating ratio, percentage targets for current-year contribution to operating
profit, prior-year reserve releases, cost reductions, reduction in net expense
ratio, investment income yield, net realised and unrealised gains, capital
expenditure and risk appetite range; and targets, goals and plans relating to
climate and the Group's approach and strategy in connection with
climate-related risks and opportunities. By their nature, all forward-looking
statements involve risk and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future and/or are
beyond the Group's control and/or they rely on assumptions that may or may not
transpire to be correct. Forward-looking statements are not guaranteeing
future performance.

The Group's actual results of operations, financial condition and the
development of the business sector in which the Group operates may differ
materially from those suggested by the forward-looking statements contained in
this document, for example directly or indirectly as a result of, but not
limited to:

-   United Kingdom ("UK") domestic and global economic business conditions;

-   the Trade and Cooperation Agreement between the UK and the European
Union ("EU") regarding the terms of the trading relationships between the UK
and the EU and its implementation, and any subsequent trading and other
relationship arrangements between the UK and the EU and their implementation;

-   the terms of trading and other relationships between the UK and other
countries following Brexit;

-   the impact of the FCA's PPR regulations and Consumer Duty regulations
and of responses by insurers, customers and other third parties and of
interpretations of such rules by any relevant regulatory authority;

-   market-related risks such as fluctuations in interest rates, exchange
rates and credit spreads, including those created or exacerbated by the war in
Ukraine following the Russian invasion and/or the conflict in the Middle East
involving Israel and Gaza;

-   the policies and actions and/or new principles, rules and/or
regulations, of regulatory authorities and bodies, and of changes to, or
changes to interpretations of, principles, rules and/or regulations (including
changes made directly or indirectly as a result of Brexit or related to
capital and solvency requirements or related to the Ogden discount rates) and
of changes to law and/or understandings of law and/or legal interpretation
following the decisions and judgements of courts;

-   the impact of competition, currency changes, inflation and deflation;

-   the timing, impact and other uncertainties of future acquisitions,
disposals, partnership arrangements, joint ventures or combinations within
relevant industries; and

-   the impact of tax and other legislation and other regulation and of
regulator expectations, requirements, interventions, enforcements, fines and
requirements and of court, arbitration, regulatory or ombudsman decisions,
judgements and awards in the jurisdictions in which the Group and its
affiliates operate.

In addition, even if the Group's actual results of operations, financial
condition and the development of the business sector in which the Group
operates are consistent with the forward-looking statements contained in this
document, those results or developments may not be indicative of results or
developments in subsequent periods.

The forward-looking statements contained in this document reflect knowledge
and information available as of the date of preparation of this document. The
Group and the Directors expressly disclaim any obligation or undertaking to
update or revise publicly any forward-looking statements, whether because of
new information, future events or otherwise, unless required to do so by
applicable law or regulation. Nothing in this document constitutes or should
be construed as a profit forecast.

Neither the content of Direct Line Group's website nor the content of any
other website accessible from hyperlinks on the Group's website is
incorporated into, or forms part of, this document.

 

LEI: 213800FF2R23ALJQOP04

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