Direct Line Group recovers from 2020 dip with improved year-end financials

Direct Line Group (DLG) has reported an 11.4% increase in its operating profit in 2021 to £581.8m – up from £522.1m in 2020, according to its full-year financial results, published today (8 March 2022).

The uplift in operating profit was driven by an improved combined operating ratio (COR) of 90.1%, compared to 91% for the full year ending 2020.

DLG’s gross written premium (GWP) decreased by 0.3% last year to £3,171.6m – down from £3,180.4m in 2020.

Profit before tax, however, was £5.4m lower in 2021 than 2020 at £446m – this was offset by the group investing £61.1m to restructure its property portfolio, as well as purchasing the lease of its Bromley office for £83.9m.

DLG’s investment back into the business was further reflected in its net assets, which decreased by £149.5m to £2,550.2m last year – down from £2,699.7m in 2020 - after paying its 2020 final dividend, 2021 interim dividend and completing a £100m share buyback programme.

The group’s final ordinary dividend therefore improved by 2.7% to 15.1p per share, contributing to a total payout to shareholders of 22.7p per share.

Direct Line Group chief executive Penny James said: “I am delighted by the group’s strong performance and proud of the way we have navigated the complexities of a challenging market.

“2021 has been a year of significant strategic progress.”

‘Improved competitiveness’

In DLG’s motor book, its gross written premium reduced by 3.5% to £1,560.8m last year – down from £1,616.9m in 2020.

Following rolling out its motor platform in June 2021, James added that the group’s latest partnership with charity Motability Operations is expected to welcome over 640,000 new customers in 2023, adding to its 0.3% in force policy uptick in 2021.

GWP in its home book, meanwhile, increased marginally to £577.8m – up from £577.9m in 2020.

The business has also extended its home partnership with NatWest Group until 2027.

James continued: “I can’t thank my colleagues enough. This year’s success is due to the sheer dedication of our brilliant people who have continued to deliver despite the challenges of a pandemic.

“This is a fantastic business, with great brands, a customer obsessive mindset and an exceptional claims service where we are harnessing the best of technology to meet customer needs.

“The capability we have built is already delivering improved competitiveness and we believe there is plenty more to come in 2022.”