Direct Line Insurance Group Robust performance in a competitive market

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Direct Line Insurance Group (LON:DLG), today announced trading update for the third quarter of 2018.

Paul Geddes, CEO of Direct Line Group, commented:

“The Group’s performance during the quarter was robust in a competitive market. We continued to grow our direct own brands2 in-force policies while maintaining discipline on loss ratios. We are delivering our key strategic priorities, including strong growth in our direct Rescue and Commercial businesses, Green Flag and Direct Line for Business, and we are on track to begin rolling out our new personal lines systems in 2019.

“Overall, we are making good progress on our strategic priorities and are on course to meet our 2018 and medium-term financial targets3.”

Results summary: Q3 2018	Q3 2018 £m	Q3 2017 £m	Change
Gross written premium:
Motor	456.4	462.0	(1.2%)
Home: own brands	115.3	114.3	0.9%
Home: partnerships	51.4	102.7	(50.0%)
Of which Nationwide and Sainsbury’s	3.8	51.1	(92.6%)
Rescue and other personal lines	113.4	110.0	3.1%
Commercial	118.0	118.2	(0.2%)
Of which Direct Line for Business	35.3	32.8	7.6%
Total	854.5	907.2	(5.8%)
Of which direct own brands²	610.4	606.6	0.6%
	30 Sep 2018 ‘000	30 Sep 2017 ‘000	Change
In-force policies:	15,183	15,775	(3.8%)
Of which direct own brands²	7,078	6,838	3.5%

Highlights

·Motor in-force policies grew by 1.9% (own brands: 3.0% growth) compared to the prior year, driven by strong retention levels, particularly in Direct Line. Premiums were lower by 1.2% (own brands: 0.5% lower) as a result of lower average premiums, primarily due to changes to propositions in the price comparison website channel, partially offset by positive rate movements. Underlying claims inflation was at the upper end of the Group’s long-term expectation of 3% to 5%.

·Home own brands in-force policies grew by 0.3% and premiums grew by 0.9% compared to the prior year. Retention levels improved in the quarter while new business volumes declined. Premiums in the partnerships channel decreased by £51.3m, primarily due to the exit from the Nationwide and Sainsbury’s partnerships. The Group expects claims inflation to remain within the Group’s long-term expectation of 3% to 5% and that subsidence claims, including those associated with the dry summer weather in the UK, will not materially be above normal annual expectations.

·The Group’s investment in its direct Rescue and Commercial brands, Green Flag and Direct Line for Business, continued to make good progress, as premiums grew by 13.1% and 7.6% respectively. In Commercial, NIG and other premiums fell by 3.2% due, in part, to exiting several larger risks which were not expected to achieve target returns.

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