Direct Line Insurance Share Discussion Threads

[essentialinvestor] 27/2/2017 16:41

A further sell off tomorrow tomorrow and intend to add.

[essentialinvestor] 27/2/2017 15:42

It's -.75?, unless I misread the news.

Interesting post, worked in insurance many moons ago, not in that area though.

[wllmherk] 27/2/2017 15:40

Can't DLG and other insurers simply hike premiums ?


wllm

[leedskier] 27/2/2017 15:35

I can help on the impact of the discount rates change.

Back in the day the discount rate was 4.5%.

Anyone would have scoffed if someone had argued a discount rate of 3%, let alone 0.75%.

So how are these discount rates used?

There is a road traffic accident and a passenger is left with serious permanent disability requiring full time carers.

Let it be assumed that the life expectancy of the victim is 25 years and the annual costs of care are £50K.

25 x £50000 = £1,250,000.

That sum is then discounted by the 'discount rate' over the projected period. There are tables to help with the calculations. What is produced by the tables is a number which is used as the 'multiplier'.

The difference between a 2.5% discount rate and the proposed discount rate of 0.75% will be significant on a case by case basis, but the overall effect should be limited.

Why limited, because such claims are few and far between.

[essentialinvestor] 27/2/2017 13:45

LMAO, yeah well )) - sold a few more but kept a few, that's the long term bit.

[speedsgh] 27/2/2017 13:37

That was a long term hold, EI! ;-)

[essentialinvestor] 27/2/2017 12:53

Lovely, sold half.

[essentialinvestor] 27/2/2017 11:53

Never say never, however that level would surprise me.

[nicksoj] 27/2/2017 11:20

Sorry. Meant to say life expectancy.A 2 handle on this stock? I suppose it is possible if results are bad.

[essentialinvestor] 27/2/2017 11:09

Nick, try saying that after a few drinks!, you clearly know the sector.

[nicksoj] 27/2/2017 11:04

I can't remember a time Shore have been anything but short GI's. Big issue with incremental/ancillary income life cycle.

[skinny] 27/2/2017 10:56

Peel Hunt Hold 336.90 365.00 365.00 Reiterates

Shore Capital Sell 336.90 - - Reiterates

[essentialinvestor] 27/2/2017 10:49

Just trying to look at some upside potential here, the -75 was worse
than about any prior expectations, so you could make a case
this is as bad as it gets.

That view may be hopelessly optimistic, however it does occur to me.

Now whether it's factored in the share price today is another matter.

[nicksoj] 27/2/2017 10:49

We've just come off Brexit lows here. Perhaps storm Doris also hitting speculators decision making in GI's.From memory, 24th June 2016 DLG lows were 328. That was full crisis mode, glancing at 8.01.Results will be solid here as previously described in recent rns, COR in the lower end of the range 93-95%.Long DLG from here...imho

[essentialinvestor] 27/2/2017 10:33

Did not see 3.28, 331.11 was my lowest, may well go lower, around 9%
off the market cap discounts a lot - no pun intended )

Any '17 special gone imv, hopefully a maintained FY divi.

[nicksoj] 27/2/2017 10:30

Testing 328... but failed.Yes. In DLG perhaps we're seeing full factor taking hold as a result of dividend/results uncertainty.As for ADM. I see further downside to sub 17 once the results dust settles. We're currently adding in the weaker sterling story following a possible 2nd Scottish indi vote. Perhaps Nic Sturgeon will invite in Cambridge analytica to run her independence campaign?Lots of perhaps...Imo dyor

[essentialinvestor] 27/2/2017 10:25

Added another small amount, as mentioned the market did not like that statement!.

[essentialinvestor] 27/2/2017 08:59

Appears significantly less reassuring than the Admiral statement, market may
not like that, lets see.

[skinny] 27/2/2017 08:37

27 February 2017

Direct Line Insurance Group plc (the "Group") is updating the market following today's announcement by the Lord Chancellor regarding the discount rate for calculating personal injury damages awards. The new discount rate to be used is -0.75% ("New Discount Rate"). The Group notes that the Government has said it will review the framework under which the rate has been set today by the Lord Chancellor.

The Group expects to recognise the New Discount Rate in its financial statements and also within its Solvency 2 ratio calculation for the year ended 31 December 2016. The Group has previously disclosed in its 2015 Annual Report that its claims liabilities, at that time, were calculated using a discount rate of 1.5%.

The Group currently estimates that the impact of moving to the New Discount Rate of
-0.75% on the 2016 reported financials would be to:

· reduce profit before tax by between £215 million and £230 million after reinsurance recoveries (including the impact on both ongoing and run-off business);
· increase the Combined Operating Ratio ("COR") for ongoing business by approximately 6ppts; and
· reduce the Group's year end Solvency II capital coverage ratio before dividends, to towards the higher end of the Group's target range of 140-180%. As at 30 June 2016, the Group's Solvency II coverage ratio was 184% after interim dividends.

The Lord Chancellor's recent announcement has left open the possibility of further changes to the process by which the rate is set, and therefore the rate itself. The implications of this uncertainty have not, at this stage, been included within the Group's solvency calculation.

Before adjusting for the New Discount Rate, the Group confirms it expects to achieve its guidance of a combined operating ratio of towards the lower end of the 93%-95% range adjusted for normal weather for the year ended 31 December 2016.

The Group is committed to ensuring claimants receive appropriate compensation. The Group is disappointed at the Lord Chancellor's decision, but will take the time to review the full statement of reasons given. The Group welcomes the consultation to consider options for reform to achieve a better and fairer framework for claimants and defendants.

The Group's capital and reserve strength, coupled with its leading brands, differentiated propositions and excellent service mean it is well positioned despite higher claims costs arising from the New Discount Rate.

The Group will provide further details in its preliminary full year results announcement scheduled for 7 March 2017, including its estimated Solvency II position as at 31 December 2016.

This document contains inside information for the purposes of Article 7 of European Union Regulation 596/2014.

-ENDS-

[essentialinvestor] 27/2/2017 08:32

Bought a very small amount.

[sporazene2] 27/2/2017 08:28

not the greatest news, ADM have maintained their 2016 dividend in a statement this morning. hoping that DLG will do the same and that we hold this 340p support. there should be a statement later.

[essentialinvestor] 27/2/2017 08:15

Very nearly bought Friday, crumbs.

Have I read that correctly -.75??

[nicksoj] 10/2/2017 09:50

Sweet DLG x