Geddes: more job cuts to come at Direct Line

Direct Line Group will need to cut more jobs to hit its £100m cost-cutting target, according to chief executive Paul Geddes.

The job cuts will come from the company’s head office.

According to Direct Line Group’s third quarter results, released this morning, the company has already achieved 50% of its cost savings by cutting 891 jobs across the organisation, which included the closure of its Teesside operation, and axing 70 senior management positions.

A further 20% will come from Direct Line Group cutting 10% of its marketing spend next year, leaving a further 30%, or £30m, of costs to be cut before 2014.

Geddes told Insurance Times: “Some of that 30%, though not all of it, will be head count. We have got the leadership structure in place and we need to work through the rest of the head office structure.”

Geddes stressed that Direct Line Group would share the precise nature of the job cuts with staff first, and ensure that they are made in a way that is “fair and right” to its employees.

He added: “We want to make sure we get a structure which is more efficient with fewer accountabilities.”

Direct Line Group announced on Monday that it was cutting 70 senior management positions. Among the departures were group chief operating officer Jonathan Davidson and Solvency II head Sheree Howard, as well as NIG sales and distribution director Dave Parry. NIG is Direct Line Group’s broker-only commercial insurer.

This morning Direct Line Group reported a 36.5% drop in nine-month 2012 profit after tax to £141.8m (9M 2011: £223.3m). This was mainly because of the one-off cost of £136.9m relating to the company’s separation from former parent Royal Bank of Scotland (RBS).

RBS is still a majority shareholder of Direct Line Group after the insurer floated 34.7% of its share capital on the London Stock Exchange last month.