Direct Line Insurance Share Discussion Threads

[wba1] 10/4/2024 10:30

fllegend; in my experience the Chief Strategy Officer of a group would have no more involvement in reserving than the HR director - limited to whatever discussion took place within the executive team, which would be guided by the CEO and Actuarial Director. The same applies as deputy CFO. Unless that role had specific reserving responsibilities, which seems unlikely, his involvement in the issue would be similarly constrained. Reserving, in my experience, is a black art kept close by CEO's as their main lever for managing profit flow. They will tend to listen only to the key players directly involved in the process (the top actuary and claims person). My focus on the actuary is that it is they who are responsible for the technical work which informs the CEO's decisions on this matter. There are 2 key technical issues; first, are the case reserves being set adequately. Implementing this is for the claims director(s), but the actuaries should spot it if it goes astray. Second is the basic actuarial process of claims development triangulation. If the development pattern changes it should be spotted quickly. If the run off is below assumed levels it should be spotted quickly. This did not happen.
As I said, replace Manser, but the priority lies elsewhere.

[laurence llewelyn binliner] 10/4/2024 10:16

#WBA1, losing the FY2022 and H1-2023 dividend really grated here, but on reflection, our CFO starting in January 2021 could have been the catalyst for addressing the under reserving which resulted in the dividend cut, but as above he was a deputy previously and had a hand in decision making then..

Still very disappointing that we ended up in the weak position that we did, and it is only PJ that has gone so far (until October)..

[fllegend] 10/4/2024 10:08

You omit to mention that he was deputy CFO of the Group from 2018-2020 and Chief Strategy Officer from 2020-2021, doesn't look like the profile of somebody who could wash their hands of the responsibility for under reserving to me, especially as it was corporate strategy to engage in share buybacks to push up the share price and leaving their regulatory capital threadbare when they had to strengthen reserves.

[wba1] 10/4/2024 09:48

Those applauding the replacement of Neil Manser are missing the point. He was only appointed in 2021, long after the under reserving must have begun looking at the prior year strengthening that took place. It is most likely he was a player in exposing it. He also had a decent role in growing NIG, one of the few recent successes. The key responsibility for the under reserving fiasco rests in two places; the previous CEO (which led to her demise) and the most senior actuary responsible for the technical advice to her. As far as I can tell this is Cormac Bradley, who has been Actuarial Director for 10 years or more.
I dislike seeing an incoming CEO bringing in his buddy rather than tackling the key positions which led to the fiasco - Actuarial Director and Claims Director. I had heard from my friends in Aviva that Winslow is someone who dislikes disagreements but it does not sit well that he starts his reign replacing the wrong people. I would have no issue with replacing the entire top team, including Manser, but he should start with the most guilty.

[laurence llewelyn binliner] 10/4/2024 08:11

Another positive appointment to correct the damaging oversights of the last CFO, who was asleep at the wheel and failed to observe the problems the BOD was making for themselves and plan a corrective course of action before the dividend was cut as a result..

[huckers] 10/4/2024 07:49

The clear out begins :-)

[skinny] 04/4/2024 10:29

FWIW :- Berenberg raises Direct Line price target to 220 (195) pence - 'buy'

[laurence llewelyn binliner] 28/3/2024 12:20

The 200 pence milestone coming into view, see if we can crack it 3rd time lucky today.. :o), it does seem the 4 pence dividend was one catalyst, not so good for income holders but it does help shore up the balance sheet with retained earnings while the turnaround strategy is rolled out it comes back on the share price instead..

[carpingtris] 28/3/2024 12:17

Holding up quite well all things considered.

Wonder if anyone else is thinking about 'taking' this out?

[skinny] 28/3/2024 12:08

FWIW :-

Deutsche Bank Research reinitiates Direct Line with 'buy' - price target 240 pence

[alex1621] 26/3/2024 20:36

The ship had electrical issues before it set sail. I'd bet the insurers are looking for get out clauses in the insurance policy?

[wba1] 26/3/2024 18:03

It is days like this that make private motor look reassuringly boring. I would quite like to be a fly on the wall at Britannia Steamship - the lead insurer for the Dali which has just set what I expect to be a new world record for P&I claims by demolishing the Baltimore bridge.

[laurence llewelyn binliner] 26/3/2024 17:41

A strong rebound here after the AGS deal is off the table RNS, see if we can hit 200 pence before Easter.. :o)

Next trading update early May to see how Adam is settling in and delivering the turnaround strategy..

[jubberjim] 26/3/2024 16:33

Thought you were a seasoned Investor WBA

Black horse ???

Very considered response

Good luck

[wba1] 26/3/2024 08:58

Good luck blackhorse. Greencore seems an odd alternative to an insurer. Those of us who worked in insurance know the motor market is highly cyclical and that profit lags the cycle due to earnings pattern so, unless DLG find a way to defy the cycle, profit is already baked in for 2024 and 2025.

[blackhorse23] 25/3/2024 23:21

Company loss is getting wider every year. Loss making company. Money moved to GNC [LSE]

[wba1] 25/3/2024 21:25

elbruss55; the pricing models need to accommodate both new business and renewals in terms of price sensitivity and it has certainly added a complication with the need to price the same. However I am not so sure about new entrants. Renewal business always performs better than new business with the same details. This means a company with a big renewal book has more room to price new business competitively than one without renewals. Of course, the trade off is whether you want to maximise profit by exploiting the renewal book and pricing new business accurately which will mean overpricing renewals (and which will reduce the book over time) or maximise policyholder count by allowing some use of the renewal advantage to subsidise new business. In practice a sensible company will vary the approach depending on the position in the market pricing cycle - but too often that gets ignored. This is obviously simplistic as pricing will also need to accommodate factors such as fixed vs variable costs. An insurer with a multiline account may choose to use part priced marginally and allow fixed costs to be priced in elsewhere. This is one of the strong reasons I would like to see a plan to reduce exposure to motor pricing in the DLG book.

[elbrus55] 25/3/2024 19:06

When you say propensity to buy do you mean propensity to renew? That would make more sense. ( It a customer decides not to buy then there is no cash flow so not relevant, other than opportunity cost.)But even on propensity to renew aren't they severely limited by the FCA restriction to not price new customers differently to renewal customers?It provides a potential advantage to new entrants who don't have an existing insurance book.

[alex1621] 25/3/2024 17:47

The point is that the bid from Ageas was woeful, and that is why they couldn't get Board support. If the bid had been in the 270-300 range the Board would have had to engage, as that would have had institutional support. If we were talking about the Penny James board, I'd be inclined to agree with you. But we have a new CEO, an outsider, with a great opportunity to turn around a poorly performing company. It's not a leader at the top of its game, so there is plenty of scope to make positive changes. Any hint that the new strategy is working will lead to a re rating.

[pander45] 25/3/2024 17:22

I have no issue with people being right but the way you convey being right is equally, if not more, important as being right, or indeed wrong. It's a sign of maturity and intellect.

[zimbtrader] 25/3/2024 17:06

Wouldn't have been a 1p divi, I meant.

[zimbtrader] 25/3/2024 17:05

Not sure what you disagree with but I respect your viewpoint and opinion as you put it with respect and without sarcasm. Unlike some others here!I guess we will see. The key point I made is the BoD have prioritised their protecting their positions. Yes, they now have the opportunity to turn things around. Opportunity is one thing, ability is an altogether different beast. I stick by no interim payout and future dividends, if and when they properly resume being on the conservative side. Had Ageas not been sniffing, there would have been a 1p divi, let alone 4.

[alex1621] 25/3/2024 17:00

It wasn't just the Board. Ageas had no institutional support. I wonder why?

[jason29] 25/3/2024 16:58

Btw I thought DLG got in to trouble originally on the Home Side of things due to Storms of a few years ago?

Right now, imo anyway, they have the Motor side of things messed up trying to catch up. They are losing Customers hand over fist, which won't end well with other Insurers more than happy to take up the slack.

Just my opinion, shoot me down if you like.