Direct Line’s premiums slump amid challenging market backdrop

The new boss at Direct Line is bringing forward his plans for turning around the business in an attempt to rebuff a £3.1bn takeover bid from Belgian insurers Ageas.

Direct Line’s adjusted gross premiums have slumped slightly against a challenging market backdrop.

In the nine months ended 30 September, the insurer’s total group premiums were £2.3bn – down 3.5 per cent on last year’s levels.

Its Motor and Home markets went down 8.9 per cent and 10.1 per cent respectively, while Direct Line delivered a strong growth in its Commercial unit.

“The pricing actions we have taken to restore margins in Motor led to a reduction in new business sales; however, we were encouraged to see this improve steadily across the quarter as the market hardened,” said chief executive Penny James.

“Having restored our Motor targeted written loss ratios, based on our claims assumptions, we maintained these throughout the third quarter, with inflation developing in line with our expectations.”

To restore the resilience of its balance sheet, the insurer reduced its exposure to credit risk, as well as costs.

“In these challenging economic conditions, the business is strong and actions we have taken continue to underpin the Group’s future earnings power.”

Despite inflationary pressures, Direct Line said its underwriting performance would be around 98 per cent “or moderately above,” while 2023 targets remained unchanged.