Direct Line Profit Rises 28% as Lower Claims Offset Investments
Direct Line Insurance Group Plc (DLG), the U.K.’s biggest home and motor insurer, reported a 28 percent increase in first-half profit as lower claims from major weather events helped mitigate a drop in investment returns.
Operating profit climbed to 286.6 million pounds ($433.3 million) in the six months ended June 30 from 224.2 million pounds in the same period a year earlier, the Bromley, England-based company said today in a statement. That beat the 254.5 million-pound average estimate of four analysts surveyed by Bloomberg. Return from investments fell 33 percent to 97.5 million pounds.
“The group has made good progress across each of its strategic priorities and has delivered an improvement in operating performance,” the company said in the statement. “The group has continued to prioritise underwriting margin over volume growth, whilst reflecting positive claims trends within pricing where appropriate.”
Direct Line, which was split off from Royal Bank of Scotland Group Plc last year, raised its first-half dividend by 5 percent to 4.2 pence. It said it’s “on track” to meet its combined operating ratio target of 98 percent for the full year after adjusting for claims from major weather events.
The final dividend should be at a “similar level” to the first-half payout if current trends continue, the company said.
Direct Line, which is still 49 percent owned by RBS, rose 1.1 percent to 232 pence at 8:04 a.m. in London trading. The shares have risen 7.2 percent this year.
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