* 2020 profit falls 4.5%
* But motor insurance earnings jump
* Co raises dividend and announces buyback
(Adds executive comments, share move)
By Muvija M
March 8 (Reuters) - Direct Line posted a fall in
full-year profit on Monday as weather-related costs weighed on
its home insurance business, overshadowing a boost to its motor
insurance line from fewer claims during coronavirus lockdowns in
2020.
Britain's largest motor insurer also announced a 100 million
pound ($138.10 million) share buyback plan in addition to a 2.1%
rise in its final dividend to 14.7 pence per share, encouraged
by 2.2% growth in its own-brand policies to 7.5 million.
"The results have been affected by the usual variability
around weather events but the addition of the factors
surrounding COVID-19 make them more difficult to navigate than
in previous years," Direct Line said.
Shares, which fell immediately after the opening bell,
reversed course to stand 0.9% higher at 3.23 pounds by 0825 GMT.
Direct Line, whose brands include Churchill, Green Flag,
Shotgun, Privilege and Darwinalso, said operating profit at its
motor business jumped 20% to 363.5 million pounds for the 12
months ended Dec. 31 as virus-related restrictions kept people
off the roads.
But it recorded 27 million pounds in weather-related costs
during the year. As a result, operating profit at its home
insurance business fell by 49.2 million pounds to 101.4 million
pounds, dragging overall operating profit down by 4.5% to 522.1
million pounds.
Gross written premiums dipped 0.7% to 3.18 billion pounds.
Rival Admiral posted a 20% jump in earnings last
week but warned that an expected rise in claims when lockdowns
ease and people start driving more would increase its loss ratio
this year.
Direct Line said its combined operating ratio improved to
91% from 92.2% a year earlier, but it expects it to be between
93% and 95% in the current year and over the medium term. A
ratio below 100% means the insurer earns more in premiums than
it pays out in claims.
($1 = 0.7241 pounds)
(Reporting by Muvija M and Pushkala Aripaka in Bengaluru;
Editing by Aditya Soni, Kirsten Donovan)
Admiral (ADM)
