Direct Line Insurance Group PLC Trading Update for the first quarter of 2019 (2903Y)
May 08 2019 - 1:00AM
UK Regulatory
TIDMDLG
RNS Number : 2903Y
Direct Line Insurance Group PLC
08 May 2019
Trading Update for Q1 2019(1)
8 May 2019
Operational delivery on track
Penny James, CFO and CEO-designate of Direct Line Group, commented:
"The first quarter was characterised by significant operational progress
in a tough trading environment. The motor market remained highly competitive,
with market premiums failing to keep pace with claims inflation. Our
response, as usual, was to focus on achieving our target loss ratios
and continuing to improve pricing effectiveness. The home market has
been slightly less challenging than motor but remained competitive. Elsewhere,
Green Flag and Direct Line for Business continued their growth, increasing
premiums by 15.8% and 8.1% respectively.
"As we said at the full year results, 2019 is a pivotal year for the
delivery of our technology transformation programme and I'm delighted
that we've had a successful start with the launch of our new PCW focused
brand Darwin and the start of the roll-out of our new Motor and Travel
systems. We are in the early stages of our plan to progressively roll
out the new systems across our brands, products and channels so as to
improve our competitiveness and customer experience.
"We remain on track to achieve our 2019 operating expenses target of
less than GBP700m and we reiterate our target to achieve a 93% to 95%
combined operating ratio in 2019 and over the medium term(2) ."
Results summary Q1 2019 Q1 2018
GBPm GBPm Change
---------------------------------- -------- -------- ---------
Gross written premium:
Motor 386.9 404.0 (4.2%)
Home: own brands 96.6 96.0 0.6%
Home: partnerships 44.6 47.3 (5.7%)
Rescue and other personal lines 105.4 103.6 1.7%
Commercial 120.4 119.0 1.2%
---------------------------------- -------- -------- ---------
Total 753.9 769.9 (2.1%)
Of which direct own brands(3) 520.6 530.5 (1.9%)
---------------------------------- -------- -------- ---------
31 Mar 31 Dec
2019 2018 Change
'000 '000
---------------------------------- -------- -------- ---------
In-force policies: 14,920 15,032 (0.7%)
Of which direct own brands(3) 7,165 7,132 0.5%
---------------------------------- -------- -------- ---------
Highlights
-- Motor in-force policies were flat quarter on quarter as the Group's
pricing initiatives helped mitigate some of the pressure from
market premium inflation not reflecting claims inflation. Lower
Motor average premiums were primarily due to reduced risk mix
arising from these pricing initiatives. Overall gross written
premium reduced by 4.2% year-on-year. Claims inflation was at
the upper end of the Group's long-term expectations of 3% to
5%, primarily due to the continuation of higher Motor third-party
property damage costs.
-- Home own brands premiums were broadly stable compared with prior
year. Q1 weather was benign compared to the major weather in
Q1 2018. Home partnerships premiums reduced by 5.7% year-on-year,
primarily as a result of the continued run-off of certain partnership
contracts.
-- Rescue and other personal lines premiums grew by 1.7% year-on-year,
with the Group's direct own brand Green Flag growing premiums
by 15.8%. The new Travel IT system started to roll out in April
supporting the Group's partnerships and enabling the Group's
first fully automated Travel claim payment.
-- Commercial premiums grew by 1.2% year-on-year, reflecting 8.1%
growth in the Group's direct brand, Direct Line for Business,
partially offset by a 1.3% reduction in NIG & Other.
-- The Group reiterates its target of achieving a combined operating
ratio in the range of 93% to 95%, normalised for weather, in
2019 and over the medium term. The Group is also on track to
achieve its target of operating expenses of less than GBP700
million in 2019.
Notes:
(1.) Direct Line Group's Trading Update relates to the three months
ended 31 March 2019 and contains information to the date of publication.
(2.) Target to achieve a 93% to 95% combined operating ratio in 2019
and over the medium term normalised for weather.
(3.) Direct own brands include in-force policies for Home and Motor
under the Direct Line, Churchill and Privilege brands, Rescue
policies under the Green Flag brand and Commercial policies under
the Direct Line for Business brand.
For further information, please contact:
Andy Broadfield Lisa Tremble
Director of Investor Relations Head of External Affairs
and Capital
Tel: +44 (0)1651 831022 Tel: +44 (0)1651 834211
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 2018 is available at: www.directlinegroup.co.uk
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 outcome of discussions within the UK parliament
and discussions between the UK and the European Union regarding
the manner and terms, if any, on which the UK leaves the EU (usually
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as fluctuation 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.
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as a profit forecast.
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is incorporated into, or forms part of, this document.
LEI: 213800FF2R23ALJQOP04
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