Direct Line profits suffer as insurance giant weathers ‘challenging market’
Insurer Direct Line reported humble growth this morning as the group feels the sting of inflation.
Whilst operating profit increased to £582m, driven by an increase in underwriting, its profit before tax of £446m was £5.4m lower than 2020.
The focus seemed to be on cost cutting for Direct Line; the firm reduced its operating expense base by £18m in 2021, and reiterated its target of a 20 per cent expense ratio in 2023.
Chief of Direct Line Penny James said: “I am delighted by the Group’s strong performance and proud of the way we have navigated the complexities of a challenging market
She also said Direct Line would launch a £100m share buyback programme, and capitalise on recent tech investments.
However, shares fell up to four per cent today, with some analysts questioning company strategy.
Hargreaves Lansdown equity analyst Sophie Lund-Yates said Direct Line’s targets “are ambitious but not achievable”, and explained how there was too much riding on technology.
She added: “Direct Line has a strong offering in a difficult market”, but said the share price could make a bounceback.