Direct Line Insurance Share Discussion Threads

[wba1] 07/9/2023 09:41

I am always a little suspicious of trading in insurance shares as, generally, they are better held or sold on a longer term due to their accounting patterns and market cycles. Is there a possibility of some volatility in these shares - yes. Is the downside substantial (over 20% say) - I doubt it.

Cycles are a fact of life in insurance and affect commercial business at least as much as they affect retail business. DLG have sold NIG (and other bits) at or near the peak in the commercial cycle. They retain the retail business (and other direct business which is less cycle exposed) as that cycle is improving. It seems like decent timing to me. Do I expect DLG to recover to over 300p again - no. The business is a bit smaller and the regulation of direct business has tightened. But does that mean that DLGs direct retail business should be valued at substantially less than half of the price paid for ESure and Hastings similar businesses - also no.

The interesting unknown is Winslow. I wonder what, if any, input he had to this sale and - if he did have input - whether it suggests he will follow the Blanc model of streamlining the business. If so that further reduces risk.

[tuftymatt] 07/9/2023 09:28

I agree wba1,
I hold at a 206 average so while happy to see the jump today I do think there is a long way to go yet. Hopefully future updates show this is finally moving in the right direction again and then 225+ could be possible.

Good luck all 👍🏻

[stevensupertrader] 07/9/2023 09:15

this Commercial Insurance business represents about 17% of the yearly Revenue . This is no small beer and would affect the bottom line figure going forward although the margin of the remaining businesses have improved This sale needs shareholders approval . The current share price of £1.71 will not hold once the figures are looking into. BIG SELL

[wba1] 07/9/2023 09:02

I come back to previous comment that the DLG market cap made (and still makes) little sense. Before the announcement the market cap was almost exactly £2bn. They have sold most of the commercial business (not all) for over a quarter of that. They have other non-core assets (assets that other retail direct insurers sold in recent years such as Hastings and ESure did not have). These are the likes of the rescue service, bodyshops, substantial pet and direct small commercial accounts. I would value these at another £500m. That leaves the core direct retail operation valued at circa £1bn in an improving market. Esure and Hastings direct retail operations were sold for multiples of this value based on £ per £ of GWP - despite carrying even bigger issues than DLG at the time of sale. Unlike others commenting here I see nothing in the interims that raises alarms (other than the need for the reviews and provisions). The trajectory of results improvement is inevitably hidden at this point by the renewal and earnings patterns of insurance and will not be fully clear until the 2024 results are declared in early 2025.

I see absolutely nothing to change my view that this is a share which should return above 200p with only the timing unclear. As discussed before I agreed 230p in 2025 seemed reasonable. I would certainly expect to return above 200p in the next 12 months absent a market meltdown.

[dope007] 07/9/2023 09:02

A lot of people on here missing the point completely. These are valued to not recover. Today showed they have a plan and it is being acted upon. Stock has risen but will still tread water, maybe at this higher level until more positive progress is reported

[the imperialist] 07/9/2023 09:00

BUY BUY BUY!!!!!

[the imperialist] 07/9/2023 09:00

Looks like a few shorters are pulling out all the stops to unsettle a few shares. An obvious buy in my opinion. Loading up for the turnaround story of 2023/24.

[stevensupertrader] 07/9/2023 08:58

H1 losses increased from £11m to £76m - no H1 dividend . 😞 Given the situation no full year dividend too - forecast Some daylight in 2024. - BIG SELL

[zimbtrader] 07/9/2023 08:52

Yup. The LSE is completely bonkers. Results that are a bag of poo? City: Woo hoo, up 10%!Reasonably good results, dividend payment slightly reduced and prudent action being taken to guide the company through a few uncertain years ahead? City: Nah, 10,% down.

[garycook] 07/9/2023 08:51

SST, New CEO has been appointed.

[stevensupertrader] 07/9/2023 08:35

Big Sell - selling the family silver .
Need a new strategy or change the CEO

[thepopeofchillitown] 07/9/2023 08:30

You think selling part of your business for 500m shouldn't have a positive effect on the share price??

[skinny] 07/9/2023 08:25

Well done to patient holders here.

[cwa1] 07/9/2023 08:23

Guys

They announced they sold the commercial insurance business for over £500M this morning!!

[kasamavic] 07/9/2023 08:22

Since when has the market made any sense??

[kibes] 07/9/2023 08:17

Dreadful results with no gleam of hope but price is up? I am not convinced.

[ajr171166] 07/9/2023 08:15

Up 21.5p ?

[younasm] 07/9/2023 08:11

Nice move up - sold at 170p

[laurence llewelyn binliner] 07/9/2023 07:49

1st skim makes for grim reading, but the nuts and bolts of building a platform for recovery is there, pricing/margins growth, and recovering the SCR, but it will be 2024 before we see any progress in the bottom line numbers and chance of the dividend returning..PJ oversaw a basket of failures there, and was unable to mitigate the risks..That said, they were caught out by a massive inflation spike caused by war/oil, and total loss payouts price rises during the pandemic on previously written policies with not a big enough cushion to ride through it..

[the imperialist] 07/9/2023 07:47

All positive stuff.

[dope007] 07/9/2023 07:36

They are going in the right direction

[zimbtrader] 07/9/2023 07:36

That's a pretty grim report reading through very quickly. A more detailed look may lighten my mood but I'm not holding my breath.Expecting these to tank on the opening bell.

[farrugia] 07/9/2023 07:35

the sale of the Commercial Insurance Business for a chunky amount?

[fenners66] 07/9/2023 07:34

Quick glance those results look absolutely awful - hope there is something in the detail I have not read yet ...