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(Alliance News) - Direct Line Insurance Group PLC on Tuesday said half year pretax profit climbed 11% from the same period last year, amid claims frequency, new car sales and new drivers entering the market remaining "below normal level".
Pretax profit for the six months ended June 30 climbed to GBP261.3 million from GBP236.4 million in 2020, helped by "benign" weather conditions and fewer motor accident and travel claims.
The Kent, England-based home, motor and pet insurer's combined operating ratio dropped to 84.2% from 90.3% for the half year, meaning underwriting profitability improved.
It anticipates combined operating ratio of 90% to 92% for 2021, normalised for weather and accounting for lower-than-normal motor claims frequency and prior-year reserve releases. Mid-term target is 93% to 95%.
Insurance claims recoverable swung to profit of GBP57.3 million, having been a loss of GBP130.8 million last year. In total, net insurance claims narrowed to a loss of GBP757.1 million from GBP869.0 million.
In addition, the FTSE 250 insurer rolled out new platform for Motor insurance for its biggest brands Direct Line and Churchill to improve "pricing sophistication" and the firm's digital offering.
"This is an exciting and pivotal point for the business, we've completed the majority of our tech transformation and we're starting to reap the benefits of what the new systems offer us. This is driving real momentum and means we are entering the second half of the year with ambition and confidence," said Chief Executive Penny James.
"Commercial has shown through its sustained growth what can be achieved when we add this new technology capability to our existing core strengths in claims management and customer service, underpinned by agile ways of working."
James added that Direct Line is "firmly into" its business transformation phase.
Direct Line declared an interim dividend of 7.6 pence, up 2.7% from 7.4 pence last year.
It is launching in early August the GBP50 million second tranche of its GBP100 million share buyback programme. Capital generation during the first half produced a solvency ratio after dividends of 195%.
Shares in Direct Line were up 4.6% at 313.20 pence in London on Tuesday morning trading.
By Josie O'Brien; josieobrien@alliancenews.com
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