Direct Line Insurance Group PLC Trading Update for the third quarter of 2018 (4078G)
November 06 2018 - 1:00AM
UK Regulatory
TIDMDLG
RNS Number : 4078G
Direct Line Insurance Group PLC
06 November 2018
Trading Update for Q3 2018(1)
6 November 2018
On track to deliver strategic and financial targets
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 brands(2)
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
targets(3) ."
Results summary: Q3 2018 Q3 2018 Q3 2017
GBPm GBPm 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 brands(2) 610.4 606.6 0.6%
---------------------------------------- -------- -------- --------
30 Sep 30 Sep
2018 2017 Change
'000 '000
---------------------------------------- -------- -------- --------
In-force policies: 15,183 15,775 (3.8%)
Of which direct own brands(2) 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 GBP51.3m, 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.
For further information, please contact: Andy Broadfield Lisa Tremble
Director of Investor Relations Head of External Affairs
Tel: +44 (0)1651 831022 Tel: +44 (0)1651 834211
Notes:
1. Direct Line Group's Trading Update relates to the three months
and nine months ended 30 September 2018, and contains information
to the date of publication.
2. Direct own brands include Home and Motor under the Direct Line,
Churchill and Privilege brands, Rescue under the Green Flag brand
and Commercial under the Direct Line for Business brand.
3. For 2018 and over the medium-term, the Group targets a 93%
to 95% combined operating ratio, assuming a normal level of claims
and no change in the Ogden discount rate, supported by reductions
in expense and commission ratios and an ongoing target of achieving
at least a 15% return on tangible equity. For 2018, the Group
expects overall investment income of in the region of GBP150 million.
Results summary: 9 months to 30 September 9 months 9 months
2018 2018 2017 Change
GBPm GBPm
------------------------------------------------- ----------- ---------- ----------
Gross written premium:
Motor 1,296.2 1,286.4 0.8%
Home: own brands 309.7 307.5 0.7%
Home: partnerships 147.7 297.6 (50.4%)
Of which Nationwide and Sainsbury's 9.5 148.7 (93.6%)
Rescue and other personal lines 323.3 323.3 -
Commercial 387.9 386.6 0.3%
Of which Direct Line for Business 99.3 92.9 6.9%
------------------------------------------------- ----------- ---------- ----------
Total 2,464.8 2,601.4 (5.3%)
Of which direct own brands(2) 1,709.4 1,670.5 2.3%
------------------------------------------------- ----------- ---------- ----------
Corporate information
Direct Line Insurance Group plc is a public limited company registered
in England & Wales, number 02280426. The address of the registered
office is Churchill Court, Westmoreland Road, Bromley BR1 1DP.
The Annual Report & Accounts 2017 is available at: www.directlinegroup.com
Forward-looking statements disclaimer
Certain information contained in this document, including any
information as to the Group's strategy, plans or future financial
or operating performance, constitutes "forward-looking statements".
These forward-looking statements may be identified by the use
of forward-looking terminology, including the terms "aims", "ambition",
"anticipates", "aspire", "believes", "continue", "could", "estimates",
"expects", "guidance", "intends", "may", "mission", "outlook",
"over the medium term", "plans", "predicts", "projects", "propositions",
"seeks", "should", "strategy", "targets" or "will" or, in each
case, their negative or other variations or comparable terminology,
or by discussions of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements include
all matters that are not historical facts. They appear in a number
of places throughout this document and include statements regarding
the intentions, beliefs or current expectations of the Directors
concerning, among other things: the Group's results of operations,
financial condition, prospects, growth, strategies and the industry
in which the Group operates. Examples of forward-looking statements
include financial targets and guidance which are contained in
this document specifically with respect to the return on tangible
equity, solvency capital ratio, the Group's combined operating
ratio, prior-year reserve releases, cost reduction, reductions
in expense and commission ratios, investment income yield, net
realised and unrealised gains and risk appetite range. By their
nature, all forward-looking statements involve risk and uncertainties
because they relate to events and depend on circumstances that
may or may not occur in the future or are beyond the Group's control.
Forward-looking statements are not guarantees of future performance.
The Group's actual results of operations, financial condition
and the development of the business sector in which the Group
operates may differ materially from those suggested by the forward-looking
statements contained in this document, for example directly or
indirectly as a result of, but not limited to, UK domestic and
global economic business conditions, the negotiations relating
to the UK's withdrawal from the European Union, market-related
risks such as fluctuations in interest rates and exchange rates,
the policies and actions of regulatory authorities (including
changes related to capital and solvency requirements or the Ogden
discount rate), the impact of competition, currency changes, inflation
and deflation, the timing impact and other uncertainties of future
acquisitions, disposals, joint ventures or combinations within
relevant industries, as well as the impact of tax and other legislation
and other regulation in the jurisdictions in which the Group and
its affiliates operate. In addition, even if the Group's actual
results of operations, financial condition and the development
of the business sector in which the Group operates are consistent
with the forward-looking statements contained in this document,
those results or developments may not be indicative of results
or developments in subsequent periods.
The forward-looking statements contained in this document reflect
knowledge and information available as of the date of preparation
of this document. The Group and the Directors expressly disclaim
any obligations or undertaking to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, unless required to do so by applicable
law or regulation. Nothing in this document should be construed
as a profit forecast.
Neither the content of Direct Line Group's website nor the content
of any other website accessible from hyperlinks on the Group's
website is incorporated into, or forms part of, this document.
LEI: 213800FF2R23ALJQOP04
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END
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