- Gross written premiums up 27% to £3.1bn
- In-force policies broadly flat at 9.4mn (own brand Motor down 383,000)
- Motor premiums up 37% in Q4
- 4p dividend announced
Matt Britzman, equity analyst, Hargreaves Lansdown:
“Direct Line has brought back its dividend. This will be a welcome relief to investors who’ve had to wait for performance to improve before the board felt comfortable reinstating the dividend. Things have picked up, but there’s a long way to go before this turnaround is complete. It’s no secret that Direct Line has struggled over the past few years to deal with a challenging motor insurance market. With a new CEO and an improving market, there are early signs that it’s back to writing profitable business, and changes are underway to try to keep it that way. But getting to this stage has come at a cost, motor premiums were up 37% over the final quarter, and customers of own-brand products voted with their feet, some 383,000 walking out the door. It’s been a necessary evil to get profitability back, but that trend needs to reverse over the coming quarters.
Recent takeover news has propped up the shares, and they’ve remained at those elevated levels despite the board rejecting the offer. Yes, performance is improving and guidance at least offers a glimpse of hope for better things to come. But there’s still a question about whether that’s more to do with a better market in general, than Direct Line’s own doing. Restoring investor confidence doesn’t happen overnight, but there have been some early steps in the right direction.”
