Direct Line Insurance Group PLC Trading Update for the first quarter of 2019 (2903Y)

TIDMDLG

RNS Number : 2903Y

Direct Line Insurance Group PLC

08 May 2019

 
                          Trading Update for Q1 2019(1) 
                                                                      8 May 2019 
                          Operational delivery on track 
 Penny James, CFO and CEO-designate of Direct Line Group, commented: 
  "The first quarter was characterised by significant operational progress 
  in a tough trading environment. The motor market remained highly competitive, 
  with market premiums failing to keep pace with claims inflation. Our 
  response, as usual, was to focus on achieving our target loss ratios 
  and continuing to improve pricing effectiveness. The home market has 
  been slightly less challenging than motor but remained competitive. Elsewhere, 
  Green Flag and Direct Line for Business continued their growth, increasing 
  premiums by 15.8% and 8.1% respectively. 
 
  "As we said at the full year results, 2019 is a pivotal year for the 
  delivery of our technology transformation programme and I'm delighted 
  that we've had a successful start with the launch of our new PCW focused 
  brand Darwin and the start of the roll-out of our new Motor and Travel 
  systems. We are in the early stages of our plan to progressively roll 
  out the new systems across our brands, products and channels so as to 
  improve our competitiveness and customer experience. 
 
  "We remain on track to achieve our 2019 operating expenses target of 
  less than GBP700m and we reiterate our target to achieve a 93% to 95% 
  combined operating ratio in 2019 and over the medium term(2) ." 
 
 
 Results summary                     Q1 2019   Q1 2018 
                                        GBPm      GBPm     Change 
----------------------------------  --------  --------  --------- 
  Gross written premium: 
  Motor                                386.9     404.0     (4.2%) 
  Home: own brands                      96.6      96.0       0.6% 
  Home: partnerships                    44.6      47.3     (5.7%) 
  Rescue and other personal lines      105.4     103.6       1.7% 
  Commercial                           120.4     119.0       1.2% 
----------------------------------  --------  --------  --------- 
  Total                                753.9     769.9     (2.1%) 
    Of which direct own brands(3)      520.6     530.5     (1.9%) 
----------------------------------  --------  --------  --------- 
                                      31 Mar    31 Dec 
                                        2019      2018     Change 
                                        '000      '000 
----------------------------------  --------  --------  --------- 
  In-force policies:                  14,920    15,032     (0.7%) 
    Of which direct own brands(3)      7,165     7,132       0.5% 
----------------------------------  --------  --------  --------- 
 
 
 Highlights 
 
 
            --   Motor in-force policies were flat quarter on quarter as the Group's 
                  pricing initiatives helped mitigate some of the pressure from 
                  market premium inflation not reflecting claims inflation. Lower 
                  Motor average premiums were primarily due to reduced risk mix 
                  arising from these pricing initiatives. Overall gross written 
                  premium reduced by 4.2% year-on-year. Claims inflation was at 
                  the upper end of the Group's long-term expectations of 3% to 
                  5%, primarily due to the continuation of higher Motor third-party 
                  property damage costs. 
            --   Home own brands premiums were broadly stable compared with prior 
                  year. Q1 weather was benign compared to the major weather in 
                  Q1 2018. Home partnerships premiums reduced by 5.7% year-on-year, 
                  primarily as a result of the continued run-off of certain partnership 
                  contracts. 
            --   Rescue and other personal lines premiums grew by 1.7% year-on-year, 
                  with the Group's direct own brand Green Flag growing premiums 
                  by 15.8%. The new Travel IT system started to roll out in April 
                  supporting the Group's partnerships and enabling the Group's 
                  first fully automated Travel claim payment. 
            --   Commercial premiums grew by 1.2% year-on-year, reflecting 8.1% 
                  growth in the Group's direct brand, Direct Line for Business, 
                  partially offset by a 1.3% reduction in NIG & Other. 
            --   The Group reiterates its target of achieving a combined operating 
                  ratio in the range of 93% to 95%, normalised for weather, in 
                  2019 and over the medium term. The Group is also on track to 
                  achieve its target of operating expenses of less than GBP700 
                  million in 2019. 
 
   Notes: 
 (1.)            Direct Line Group's Trading Update relates to the three months 
                  ended 31 March 2019 and contains information to the date of publication. 
 (2.)            Target to achieve a 93% to 95% combined operating ratio in 2019 
                  and over the medium term normalised for weather. 
  (3.)            Direct own brands include in-force policies for Home and Motor 
                   under the Direct Line, Churchill and Privilege brands, Rescue 
                   policies under the Green Flag brand and Commercial policies under 
                   the Direct Line for Business brand. 
 

For further information, please contact:

 
 Andy Broadfield                  Lisa Tremble 
 Director of Investor Relations   Head of External Affairs 
  and Capital 
 Tel: [phone]          Tel: [phone] 
 
 
 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 2018 is available at: www.directlinegroup.co.uk 
 
 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 outcome of discussions within the UK parliament 
  and discussions between the UK and the European Union regarding 
  the manner and terms, if any, on which the UK leaves the EU (usually 
  called "Brexit") and the terms in due course of any future trading 
  relationship between the UK and the EU, market-related risks such 
  as fluctuation 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 because 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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May 08, 2019 02:00 ET (06:00 GMT)