Direct Line profits rise amid fewer disasters

Direct Line Insurance said first-half highlights included a refresh of its Churchill brand with a new advertising campaign, cutting fees on some Direct Line products and the launch of a seven-day auto fix service.

“With the completion of the global disposal, we are now totally focused on UK general insurance, and our capital and reserves remain strong”.

The combined operating ratio performance helped the FTSE 100 insurer to report that operating profit from ongoing operations increased to GBP335.8 million in the half from GBP235.7 million in the same period past year.

Direct Line Insurance Group PLC on Tuesday improved its guidance for a key measure of underwriting profitability in 2015, as it recorded higher-than-expected reserve releases from prior years in the first half and reported improved profit figures.

Pretax profit from continuing operations increased to GBP315.0 million in the half, compared with GBP211.7 million in the prior year period.

Direct Line said it would pay an interim dividend of 4.6 pence, from 4.4 pence past year.

Chief executive Paul Geddes said: ‘Customers have reacted positively to the refreshed propositions for Direct Line and Churchill, as well as better customer service.

The Group’s markets remained highly competitive in the first half of 2015; the motor market overall has seen modest price rises and the home market has seen further price deflation.

Against this backdrop, the Group continues to adopt a disciplined approach to managing the trade-off between margin and volumes.

He added: “We must again give management considerable credit for the turnaround delivered to date despite intense competition and growing regulatory focus”.

The update follows that of smaller rivals Admiral and Esure, with both reporting falling profit earlier this year.

Chancellor George Osborne announced in last month’s summer budget that insurance premium tax will be increased from 6 per cent to 9.5 per cent from November.