Direct Line Group posts COR of 106.4% for H1 2023

Direct Line Group (DLG) has posted a combined operating ratio (COR) of 107.2% for the six months ended 30 June 2023.

Minus discontinued operations, the insurer’s COR remained above 100% – for a total of 106.4%

In its H1 2023 financial results, published yesterday, the insurer revealed that the COR for its motor lines reached a whopping 125.6%, while home sat at 87% and commercial achieved 90.7%. 

While underwriting at a loss across the group, DLG also reported a gross written premium (GWP) figure of £1.6bn – £759m of this was generated by motor, with a further £473m generated by commercial lines underwriting. 

The insurer’s results also revealed that, for H1 2023, the business made an operating loss of £94.4m. However, DLG clarified that the operating loss for ongoing operations was smaller, at £78.3m.

This operating loss for ongoing operations represented a dramatic year-on-year swing from profit to loss – H1 2022 saw DLG report £197m of profit, with this figure falling by £275.3m year-on-year to H1 2023.

DLG’s statement explained that this decline was primarily a result of ”lower earnings in motor”.

Decisive action

Jon Greenwood, DLG’s acting chief executive prior to newly appointed chief executive Adam Winslow’s arrival in Q1 2024, said: ”Over the last six months we have taken decisive action to put the group back on a more stable footing. 

”In March, we set out that our key priorities were to restore capital resilience, to improve motor performance and to maintain the performance of our non-motor business.” 

In DLG’s statement announcing the proposed sale of DLG’s brokered commercial insurance business to RSA, which was announced late on Wedsneday night (6 September 2023), the business said that the consideration would provide a significant uplift to the group’s solvency capital ratio (SCR) equivalent to around 45% percentage points on completion of the deal.

Greenwood said that this would cover the group’s first priority. He added: “Our second priority this year has been to improve margins in motor. We have made good progress and with increased pricing, together with other underwriting actions, delivered gross written premium growth of 7%.

“We now believe that we are underwriting profitably, consistent with a 10% net insurance margin. This has taken longer than expected and will take time to flow through into reported earnings.”