Direct Line Q1 premiums up on price hikes

8th May 2024 07:40

(Sharecast News) - UK insurer Direct Line on Wednesday reported a large rise in first-quarter written premiums as it hammered consumers with price hikes.

Total group gross written premium and associated fees rose 10.7% to £892.2m, adding that motor claims trends were in line with expectations, with estimated written margins maintained above 10%.

The increase was helped by double-digit gross written premium growth across its home and commercial divisions, with the motor division posting an 18.3% rise to £424.3m.

In-force policies were 1.8% lower, while motor volumes also fell "due to the continued repricing of the motor book, whilst home own brands in-force policies saw modest growth" Direct Line added.

The company reiterated plans to save £100m in costs as it looks to fend off takeover interest from Belgium's Ageas, which in March had a cash-and-stock proposal worth 237p-a-share, or about £3.2bn, rejected.

"We have announced a number of significant hires over the last few weeks. I am confident that with the new leadership team in place, we can deliver run-rate annualised cost savings of at least £100m by the end of 2025 and a net insurance margin, normalised for weather, of 13% in 2026," said new chief executive Adam Winslow.

Matt Britzman, equity analyst, Hargreaves Lansdown said Direct Line's "mammoth price hikes continued over the first quarter".

"Strip out the relatively new partnership with Motabilty, and Direct Line saw 434,000 motor customers walk out the door. It's not too hard to see why. The headline figure of a 35% rise in average premiums is somewhat flattered by better rates being offered to new customers," he said.

"Anyone looking to renew motor insurance over the quarter was whacked with a 38% price hike. These are necessary for Direct Line to get its motor insurance operations back to sustained profitability, and with a new CEO and an improving market, the motor business looks to finally have a footing from which it can grow. But that's little consolation to policyholders."

Reporting by Frank Prenesti for Sharecast.com