(Alliance News) - Direct Line Insurance Group PLC on Wednesday reported a fall in profit and written premiums in the first half as the insurer struggled in a "highly competitive" motor market.
In the six months to June 30, the general insurer's pretax profit declined 11% to GBP261.3 million from GBP292.8 million the year before. Direct Line's total income in the first half slipped 5.7% to GBP1.65 billion from GBP1.75 billion the year before.
The insurer's gross written premiums decreased 1.8% to GBP1.58 billion from GBP1.61 billion. Direct Line's gross written premiums for its own brands fell 2.7% to GBP1.07 billion.
The decrease in premiums was attributed to its Motor business platform, partially offset by growth in Rescue and Commercial whilst Home own brands were stable.
The insurer's Motor business saw profit of GBP153.8 million, down 36% year on year, and a combined operating ratio of 95.1% compared to 86.5% the year before.
Direct Line's net earned premiums decreased 5.1% to GBP1.48 billion with net insurance claims decreasing 5.2% to GBP918.4 million.
"I am pleased with the progress we have made so far this year. We have delivered a good financial performance overall, benefiting from the breadth and diversity of our business. We have maintained our underwriting discipline in a highly competitive motor market and we delivered a strong result in Home, Commercial and Rescue," said Chief Executive Penny James.
Direct Line upped its interim dividend by 2.9% to 7.2 pence from 7.0p the year before.
The insurer's group combined operating ratio decreased to 92.5% in the first half from 92.9% the year before. A combined ratio below 100% still shows Direct Line made a profit from its underwriting.
Direct Line is targeting a combined operating ratio of between 93% to 95% in 2019.
Direct Line's underwriting profit fell slightly to GBP110.6 million.
James added: "There remains much to do, but we are successfully removing costs from the business as well as making good progress on transforming the group's IT systems, for example with the initial launch of our new Motor platform.
"These are designed to significantly strengthen our capabilities, to enable us to be more competitive and to enhance customer experience. We aim to use the faster and more flexible systems to increase the pace at which we transform the business and to enable us to capture the near- and long-term opportunities available to the group."
Shares in Direct Line were down 1.8% in London on Wednesday morning at 318.00 pence each.
Direct Line (DLG)