Direct Line’s Special Dividend Helps Erase Brexit Share Declineby
Direct Line Insurance Group Plc shares climbed after the company announced a special 10-pence dividend, and have now recouped losses following the Brexit referendum.
The extra payment comes even as the U.K. car and home insurer said operating profit fell 12.2 million pounds ($16.1 million) to 323.6 million pounds in the six months through June after lower investment returns and setting aside money for a flood levy, according to a statement Tuesday. That beat the 263 million-pound average estimate of 15 analysts compiled by Direct Line.
The shares climbed 5.5 percent to 374.5 pence by 8:27 a.m. in London, helping the insurer to recover from the selloff after Britain voted to leave the European Union on June 23. Chief Financial Officer John Reizenstein said the referendum had little impact on the insurer and they “weren’t too worried” about growth.
Direct Line reported a Solvency II capital ratio of 184 percent, taking into account the special payment to shareholders and a 4.9 percent interim dividend. That takes the insurer’s total payout in the first half of 204.9 million pounds.
Gross written premiums increased 3.9 percent, boosted by motor insurance which saw a 9.5 percent increase in rates. Direct Line’s combined operating ratio was little changed at 89.6 percent and the insurer said the full-year would likely come in at the lower end of its 93 percent to 95 percent range. A measure below 100 indicates profitability.