Direct Line Insurance Share Discussion Threads

[yf23_1] 27/2/2023 20:17

Its the other side of the coin
More revenue -> bigger % loss making contracts
bigger % profit making contracts -> Less revenue

[sdt7618] 27/2/2023 16:17

If back on track is increasing their premiums to the level I've just been quoted, wont be long till DLG goes bust. 20% increase in car premium renewal, 5 mins on web, same price as last year with another Ftse 100 company.

[tuftymatt] 27/2/2023 16:01

Yeah the divi stop was only spoken about in terms of a one off. That's not to say they won't shock the market and do it again but I would be surprised as like you say they should be getting back on track 🤞🏻

[encarter] 27/2/2023 14:59

Loss of divi was supposedly due to a cold spell in January. Well its been mild in February so they should be back on track. A divi will be back IMHO.

[fenners66] 27/2/2023 09:14

Seen the payment of small dividends from companies before to ensure they retain their "income" status so would seem prudent to do so here

[stoopid] 27/2/2023 08:58

There won't be any divi payments until the new CEO sorts this mess out, the income funds know this and so will probably have been forced sellers recently. One of the suggested reasons the share price is struggling is that some of the funds holding DLG will be or may be liquidating their holdings because its not paying a divi atm.Analysts suggesting DLG will have to pay an interim divi in August to prevent a shareprice slide but that's by no means certain.

[karv1] 25/2/2023 13:29

So from my limited understanding, you have a core fund of 2 billion of which 1.35b is a legal requirement with 700m excess making 152%, which in one way or another has taken a hit in the last half. which normally contributes to 120m after-tax return every year.
At the same time, the other 180m+ after-tax profits have taken a huge hit on motor/home/business payouts.
So it is like 2 double edge swords premiums/customers fallen, claims raised, surplus fallen, the dividend has a high payout+share buyback has left not a lot of spare cash, when balancing the books. The lack of dividends should sort out the surplus in time with its self-generation, but will the new CEO seeing what happened to the last one, will they want to take a far more cautious approach to the dividends until the numbers look extremely healthy?
Long term as long as they do not lose customers I think DLG is a good choice.
In the real short term if they going to rebase the dividend this is going to be the time to do it unless they play the wait-and-see card.

[karv1] 24/2/2023 12:50

Thanks, wba1

[wba1] 24/2/2023 12:41

karv1; the capital calculations for insurers are one of the most arcane things ever and, for larger insurers will be based on an internal risk model (approved by the regulator) rather than the standard model. However, as a broad rule of thumb, a capital requirement of 75% of premium exposure is not far off for motor so, taking DLG as primarily a motor insurer that would suggest a capital requirement of circa £2.2bn. So a 10% shift in that will not be a million miles away from £200m (perhaps a bit more allowing for earned v written and exposure to some higher risk lines through NIG).

[karv1] 24/2/2023 10:50

Is there any speculation whether the dividend will return at the old rate or will be cut? They must have saved 200m from not paying the dividend out, or 300m if they do a whole year. I know some have suggested a rebase, but if the funds go above 160% what will they do with the profits, also if anyone knows off the top of their heads how much money =10% in that fund ie to get it to 160% 180% 200% with current information.

[cwa1] 17/2/2023 07:46

Yes. Interesting appointment...



Mark's career has spanned financial services, retail, e-commerce, management consultancy and advertising. Most recently, he was Chief Executive of the MoneySupermarket Group, overseeing a period of revenue and profit growth for the UK listed price comparison business. In earlier roles, Mark was the Retail and Online Director for John Lewis and the Managing Director of eBay UK, having started his career producing advertising. Mark is an independent non-executive director of Santander UK plc and a trustee of The Photographers' Gallery.



Danuta Gray, Chair, said: "I am delighted to be welcoming Mark Lewis to DLG's Board. Mark will contribute his deep understanding of the regulated aggregator marketplaces in which DLG's brands operate, as well as his experience of digital marketing strategy and driving improved multichannel customer experience in retail and financial services."



Mark Lewis commented: "I'm excited to be joining Direct Line Group, a fantastic business, supporting millions of customers each year. I look forward to working with such long cherished and trusted brands as the Group transforms its technology capability to deliver even stronger customer experiences in a dynamic industry."

[max euwe] 17/2/2023 07:33

New director with lots of experience to join the board, can only be a positive.

[laurence llewelyn binliner] 16/2/2023 14:24

It is a long way back for sure, but with reinsurance now in place, new leadership a work in progress, risk/premium re-rating starting, I very much look forward to the next update here, dividends may return for H1 now the balance sheet is GBP200M stronger from cancelling the FY2022..

Poor performance often claims a CEO scalp, ULVR, VOD, DLG just for starters in my PF, not the best start to 23.. ;o)

[encarter] 16/2/2023 10:43

No. We've seen the bottom here. Expecting a positive presentation next month and the return of the divi.

[wynterwilde] 16/2/2023 08:34

encarter

did you mean 120...??? :-(

[encarter] 16/2/2023 08:01

Looks like a quick march to 220 coming.

[pete160] 13/2/2023 22:37

If DLG was almost alone in its mismanagement, that should attract either an activist investor or a takeover before too long I would have thought (competition authorities permitting)?And given, when they resume dividends, it won't be anywhere near previous levels, I would welcome a suitor providing my pension with the boost that DLG now won't!

[wba1] 13/2/2023 16:37

For those who missed it, Zurich's UK P&C operation posted a COR of 95.5% for 2022 on Friday. Although this was a significant increase on last years COR it does seem further evidence that DLG is either out of line with the market or that it is suffering badly due to the reliance on motor. But the latter has never before been an issue even in the steepest of motor market downturns in the late 90s and 2008-10. It is fortunate that the brand, ancillary income and market recovery makes this still good value, but Penny James should never be allowed near an insurer in future.

[jubberjim] 13/2/2023 13:30

Thanks
Appreciated

[skinny] 13/2/2023 10:31

Yes - according to the Financial Calendar link in the header.

[jubberjim] 13/2/2023 10:26

Pardon my ignorance

Are dlg still expected to provide Results/Trading update next month on or around the March 7

Thanks

[m w] 10/2/2023 14:58

I would take Barclays rating with a pinch of salt they have a £5 price target on AWE and it's currently trading at 96p

[wba1] 04/2/2023 14:28

I am holding dlg after buying back in after the warning so believe they offer value but.....insurance premium rises occurring now will not have a material impact until 2024 and not be 100% effective until 2025. This is because it takes 12 months to renew the book and 12 months after the last renewal at the new rates to have fully earned at the new rates. So the market recovery takes time - which is why dlg is one to put away for a couple of years or trade in a range.

[laurence llewelyn binliner] 04/2/2023 10:37

#Coxsmn, my thoughts too, new leadership, reinsurance in place, amended risk management, cancelled dividend with +GBP200M retained earnings, cancelled share buyback tranche2, insurance premium rises will filter through from H1, with payout costs decreasing in terms of 2nd hand car prices pulling back, inflation will come down over 2023 but premiums will likely remain elevated above..

It is a hold from me and see how the H2 outlook is then, once the float is back up to strength, dividends will resume..

[coxsmn] 04/2/2023 09:50

LLB
Agree, cancelling the dividend this time is their cash raise. Margins will rebalance over the next 12 months. Future ceo might be prudent to rescale dividend to say 0.5-0.8 x earnings.