Direct Line premiums slide as motor claims increase
The insurer saw overall premiums decline by 2.1% to £753.9 million.
Insurance premiums fell at Direct Line in the first three months of the year amid “tough” competition.
The insurer saw overall premiums decline by 2.1% to £753.9 million in the first quarter, as growth in its motor insurance business failed to keep up with higher claims from customers.
The “highly competitive” trading environment kept premiums low despite increasing compensation payouts.
The motor insurance division saw premiums slide 4.2% to £386.9 million, down from £404 million in the same quarter last year.
The first quarter was characterised by significant operational progress in a tough trading environment Penny James
Direct Line’s home insurance business, which includes the Churchill and Privilege brands, remained stable, reporting a 0.6% rise in premiums to £96.6 million.
However, home partnerships dropped by 5.7% to £44.6 million as it blamed a “continued run-off on certain contracts”.
It saw strong growth for its Green Flag and Direct Line for Business arms, which reported increases in premiums of 15.8% and 8.1% respectively.
Green Flag’s growth boosted the rescue division, which saw premiums increase by 1.7% to £105.4 million.
Direct Line’s commercial division also delivered growth, as premiums rose by 1.2% to £120.4 million for the period.
Current CFO Penny James will start her tenure as chief executive on Thursday, taking over from outgoing boss Paul Geddes, who is leaving the firm after 10 years.
Ms James said: “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.
“The home market has been slightly less challenging than motor but remained competitive.”
The insurance group remains on target to keep operating expenses for the year below £700 million as it looks to pare back costs, it added.
Shares in the company fell by 1.8% to 311.8p in early trading on Wednesday.