Direct Line: Shares rise as insurer credits ‘pricing actions’ for strong motoring growth
Direct Line reports a strong third quarter as it credits its “pricing actions” coming through as growth in gross written premium rose by 27.6 per cent.
The insurance firm generated over £820m for its motor gross written premiums, up 115.4 per cent on the same period last year. While its home gross written premiums had a much smaller increase of 3.9 per cent in the third quarter of 2022 as it reported over £140m.
Direct Line‘s gross written premiums rose 58.9 per cent to over £1.28bn.
Following its strong set of results, Direct Line’s share price spiked by almost 8 per cent to 170.5p this afternoon.
Back in May, the company warned that rising motor claims would put pressure on earnings after it posted its first quarter results. It reported a 9.7 per cent rise in first-quarter underlying gross written premiums to £805.7m
Jon Greenwood, acting CEO of Direct Line Group, said:”Throughout third quarter we have continued to address our three key priorities: to restore our capital resilience, improve our performance in motor and maintain our performance in our other businesses.”
He added: “In motor, we can see the pricing actions we have taken come through in strong premium growth during the quarter and we believe we are writing profitably, consistent with a 10 per cent net insurance margin.”
Direct Line posted a £45m loss for the year 2022 leading Penny James to step down as CEO in January.
The group sold its brokered commercial business to RSA Insurance for £520m which was received on 26 October. Greenwood said: “The sale of our brokered commercial business to RSA Insurance strengthens our business strategically and financially.”
The strong performance has resulted in Direct Line’s stock rising up to 163.5p this morning, an increase as it dropped to 151.3p last Tuesday.