Direct Line chief hails ‘good start’ despite 0.9% GWP drop in Q1

Direct Line Group reported gross written premiums (GWP) of £746.5m in the first quarter of 2015, down 0.9% on the £753.3m it write in the same quarter last year.

But chief executive Paul Geddes said that the insurer had got off to a “good start” in 2015 with “stable” trading performance in competitive markets and “good momentum” on delivering strategic priorities.

He said: “We continued to invest in technical and digital capabilities to improve our customer propositions and satisfaction, whilst maintaining our focus on efficiency.

“This progress in the first quarter gives us confidence that we are well positioned to meet our 2015 financial objectives.”

GWP breakdown

Motor premiums were almost flat at £326.4m (Q1 2014: £326.9m), while home GWP fell 4.8% to £210m (Q1 2014: £220.5m).

Commercial GWP also fell, reducing 2.4% to £115.1m (Q1 2014: £118m).

But rescue and other personal lines enjoyed GWP growth of 8.1% to £95m (Q1 2014: £87.9m).

The insurer cut its cost base for the quarter by 10.1% to £220.7m (Q1 2014: £245.4m) and says it is aiming to reduce its cost in absolute terms in 2015 as a whole.

The company also expects to report a combined operating ratio of between 94% and 96% for continuing operations for 2015, excluding any large weather claims.

Motor rates

Direct Line Group said that its risk-adjusted motor rates increased by 3.6% in the first quarter of 2015, while the risk mix reduced by 2%.

It also said the motor trading environment “improved modestly” in the latter part of the quarter after experiencing “seasonally competitive pressures” earlier in the quarter.

But the company added that at a market level, there has been “no significant evidence” of sustained rate rises to match long-term claims inflation.

Strategic objectives

Direct Line Group said it had made progress on its strategic objectives in the first quarter of 2015.

Among these the company said it had continued to invest in its digital capabilities with the roll-out of a new quote-and-buy capability for its home insurance products.

Work associated with implementing “next generation” customer systems continued and the initial phase of deployment is expected in the first half of 2016.

The company also said it expects to complete the sale of its international division to Spanish insurer Mapfre in the second quarter of 2015.

On completion of the sale the company will pay a special dividend.