Direct Line Insurance Group PLC Trading Update for the third quarter of 2018 (4078G)

TIDMDLG

RNS Number : 4078G

Direct Line Insurance Group PLC

06 November 2018

 
                           Trading Update for Q3 2018(1) 
                                                                   6 November 2018 
                     On track to deliver strategic and financial targets 
 Paul Geddes, CEO of Direct Line Group, commented: 
  "The Group's performance during the quarter was robust in a 
  competitive market. We continued to grow our direct own brands(2) 
  in-force policies while maintaining discipline on loss ratios. 
  We are delivering our key strategic priorities, including strong 
  growth in our direct Rescue and Commercial businesses, Green 
  Flag and Direct Line for Business, and we are on track to begin 
  rolling out our new personal lines systems in 2019. 
  "Overall, we are making good progress on our strategic priorities 
  and are on course to meet our 2018 and medium-term financial 
  targets(3) ." 
 Results summary: Q3 2018                  Q3 2018   Q3 2017 
                                              GBPm      GBPm    Change 
----------------------------------------  --------  --------  -------- 
  Gross written premium: 
  Motor                                      456.4     462.0    (1.2%) 
  Home: own brands                           115.3     114.3      0.9% 
  Home: partnerships                          51.4     102.7   (50.0%) 
    Of which Nationwide and Sainsbury's        3.8      51.1   (92.6%) 
  Rescue and other personal lines            113.4     110.0      3.1% 
  Commercial                                 118.0     118.2    (0.2%) 
    Of which Direct Line for Business         35.3      32.8      7.6% 
----------------------------------------  --------  --------  -------- 
  Total                                      854.5     907.2    (5.8%) 
    Of which direct own brands(2)            610.4     606.6      0.6% 
----------------------------------------  --------  --------  -------- 
                                            30 Sep    30 Sep 
                                              2018      2017    Change 
                                              '000      '000 
----------------------------------------  --------  --------  -------- 
  In-force policies:                        15,183    15,775    (3.8%) 
    Of which direct own brands(2)            7,078     6,838      3.5% 
----------------------------------------  --------  --------  -------- 
 
   Highlights 
 
 
 
 --   Motor in-force policies grew by 1.9% (own brands: 3.0% growth) 
       compared to the prior year, driven by strong retention levels, 
       particularly in Direct Line. Premiums were lower by 1.2% (own 
       brands: 0.5% lower) as a result of lower average premiums, 
       primarily due to changes to propositions in the price comparison 
       website channel, partially offset by positive rate movements. 
       Underlying claims inflation was at the upper end of the Group's 
       long-term expectation of 3% to 5%. 
 --   Home own brands in-force policies grew by 0.3% and premiums 
       grew by 0.9% compared to the prior year. Retention levels improved 
       in the quarter while new business volumes declined. Premiums 
       in the partnerships channel decreased by GBP51.3m, primarily 
       due to the exit from the Nationwide and Sainsbury's partnerships. 
       The Group expects claims inflation to remain within the Group's 
       long-term expectation of 3% to 5% and that subsidence claims, 
       including those associated with the dry summer weather in the 
       UK, will not materially be above normal annual expectations. 
 --   The Group's investment in its direct Rescue and Commercial 
       brands, Green Flag and Direct Line for Business, continued 
       to make good progress, as premiums grew by 13.1% and 7.6% respectively. 
       In Commercial, NIG and other premiums fell by 3.2% due, in 
       part, to exiting several larger risks which were not expected 
       to achieve target returns. 
 
 
 For further information, please contact: Andy Broadfield                  Lisa Tremble 
   Director of Investor Relations   Head of External Affairs 
   Tel: [phone]          Tel: [phone] 
 
 
  Notes: 
 1. Direct Line Group's Trading Update relates to the three months 
  and nine months ended 30 September 2018, and contains information 
  to the date of publication. 
  2. Direct own brands include Home and Motor under the Direct Line, 
  Churchill and Privilege brands, Rescue under the Green Flag brand 
  and Commercial under the Direct Line for Business brand. 
  3. For 2018 and over the medium-term, the Group targets a 93% 
  to 95% combined operating ratio, assuming a normal level of claims 
  and no change in the Ogden discount rate, supported by reductions 
  in expense and commission ratios and an ongoing target of achieving 
  at least a 15% return on tangible equity. For 2018, the Group 
  expects overall investment income of in the region of GBP150 million. 
 
 
 Results summary: 9 months to 30 September            9 months    9 months 
  2018                                                    2018        2017      Change 
                                                          GBPm        GBPm 
-------------------------------------------------  -----------  ----------  ---------- 
  Gross written premium: 
  Motor                                                1,296.2     1,286.4        0.8% 
  Home: own brands                                       309.7       307.5        0.7% 
  Home: partnerships                                     147.7       297.6     (50.4%) 
    Of which Nationwide and Sainsbury's                    9.5       148.7     (93.6%) 
  Rescue and other personal lines                        323.3       323.3           - 
  Commercial                                             387.9       386.6        0.3% 
    Of which Direct Line for Business                     99.3        92.9        6.9% 
-------------------------------------------------  -----------  ----------  ---------- 
  Total                                                2,464.8     2,601.4      (5.3%) 
    Of which direct own brands(2)                      1,709.4     1,670.5        2.3% 
-------------------------------------------------  -----------  ----------  ---------- 
 Corporate information 
 Direct Line Insurance Group plc is a public limited company registered 
  in England & Wales, number 02280426. The address of the registered 
  office is Churchill Court, Westmoreland Road, Bromley BR1 1DP. 
 The Annual Report & Accounts 2017 is available at: www.directlinegroup.com 
 Forward-looking statements disclaimer 
 Certain information contained in this document, including any 
  information as to the Group's strategy, plans or future financial 
  or operating performance, constitutes "forward-looking statements". 
  These forward-looking statements may be identified by the use 
  of forward-looking terminology, including the terms "aims", "ambition", 
  "anticipates", "aspire", "believes", "continue", "could", "estimates", 
  "expects", "guidance", "intends", "may", "mission", "outlook", 
  "over the medium term", "plans", "predicts", "projects", "propositions", 
  "seeks", "should", "strategy", "targets" or "will" or, in each 
  case, their negative or other variations or comparable terminology, 
  or by discussions of strategy, plans, objectives, goals, future 
  events or intentions. These forward-looking statements include 
  all matters that are not historical facts. They appear in a number 
  of places throughout this document and include statements regarding 
  the intentions, beliefs or current expectations of the Directors 
  concerning, among other things: the Group's results of operations, 
  financial condition, prospects, growth, strategies and the industry 
  in which the Group operates. Examples of forward-looking statements 
  include financial targets and guidance which are contained in 
  this document specifically with respect to the return on tangible 
  equity, solvency capital ratio, the Group's combined operating 
  ratio, prior-year reserve releases, cost reduction, reductions 
  in expense and commission ratios, investment income yield, net 
  realised and unrealised gains and risk appetite range. By their 
  nature, all forward-looking statements involve risk and uncertainties 
  because they relate to events and depend on circumstances that 
  may or may not occur in the future or are beyond the Group's control. 
 Forward-looking statements are not guarantees of future performance. 
  The Group's actual results of operations, financial condition 
  and the development of the business sector in which the Group 
  operates may differ materially from those suggested by the forward-looking 
  statements contained in this document, for example directly or 
  indirectly as a result of, but not limited to, UK domestic and 
  global economic business conditions, the negotiations relating 
  to the UK's withdrawal from the European Union, market-related 
  risks such as fluctuations in interest rates and exchange rates, 
  the policies and actions of regulatory authorities (including 
  changes related to capital and solvency requirements or the Ogden 
  discount rate), the impact of competition, currency changes, inflation 
  and deflation, the timing impact and other uncertainties of future 
  acquisitions, disposals, joint ventures or combinations within 
  relevant industries, as well as the impact of tax and other legislation 
  and other regulation in the jurisdictions in which the Group and 
  its affiliates operate. In addition, even if the Group's actual 
  results of operations, financial condition and the development 
  of the business sector in which the Group operates are consistent 
  with the forward-looking statements contained in this document, 
  those results or developments may not be indicative of results 
  or developments in subsequent periods. 
 The forward-looking statements contained in this document reflect 

  knowledge and information available as of the date of preparation 
  of this document. The Group and the Directors expressly disclaim 
  any obligations or undertaking to update or revise publicly any 
  forward-looking statements, whether as a result of new information, 
  future events or otherwise, unless required to do so by applicable 
  law or regulation. Nothing in this document should be construed 
  as a profit forecast. 
 Neither the content of Direct Line Group's website nor the content 
  of any other website accessible from hyperlinks on the Group's 
  website is incorporated into, or forms part of, this document. 
 
 

LEI: 213800FF2R23ALJQOP04

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November 06, 2018 02:00 ET (07:00 GMT)