Direct Line Group (DLG) CEO Penny James (pictured) is stepping down from her role with immediate effect.
The breaking news from the British motor insurer closely follows the trading update it delivered earlier in January which included the update that a final dividend for the 2022 financial year had been cancelled. The market’s reaction to the news led to a rapid dip in its share price.
James, who first joined Direct Line as CFO in late 2017, took over as CEO in May 2019. A report from the Financial Times indicated that CFO Jon Greenwood has taken on the role of acting chief executive.
“It has been a privilege to lead Direct Line Group for nearly four years,” said James. “While the business was impacted by significant headwinds at the end of 2022, the group has continued to make strategic progress.
“I am proud of what the business has delivered for customers, where our technology transformation has seen improved digital capability in our core business areas, setting the group up for the future. I wish Jon and the team every success and have no doubt they will build on the underlying strengths of the business.”
James’ resignation follows comments she made to The Sunday Times about the financial results posted by the insurer, during which she emphasised that the drop in share price is not a reflection of the insurer’s intrinsic value but rather a result of surprisingly high weather claims for 2022. The losses were estimated at about £140 million, more than double the initial expected sum of £73 million.
“It’s incredibly frustrating to have had such a challenging end to last year…” James told the publication. “The frustration is that our shareholders won’t be receiving a dividend this year, but it’s also because we thought we had positive momentum coming into the fourth quarter.”
In a Press release published by DLG, the group revealed that it is initiating a process to identify and appoint a successor CEO. Greenwood will serving as acting CEO until that process is complete, and will also join the board, subject to any additional regulatory approvals.
Meanwhile, James who is also stepping down as a director as well as CEO, will assist with the process of transition to ensure a smooth handover of responsibilities.
Danuta Gray, chair of Direct Line Group, thanked James on behalf of the board for her “contribution, dedication and commitment to the company” during her tenure as CFO and subsequently as CEO.
“During her time as CEO, Penny has overseen significant strategic progress, transforming the technology and capability across the business, accelerating the digitalisation of customer journeys and helping to set the company up for the future,” Gray said. “She also deserves great credit for the way she led the business through the pandemic, in a very challenging market, ensuring that we continued to serve our customers.”
Gray added that she and the board are grateful to Greenwood for agreeing to serve as acting CEO, citing his track record in leading DLG’s commercial business. As chief commercial officer, he has a deep understanding of the group, she said, and the board will work closely with him as he focuses on the group’s priorities of driving performance and restoring balance sheet resilience, following the significant headwinds the business faced in recent months.
“Yesterday we announced new strategic reinsurance arrangements,” Gray said, “which are expected to increase the Group’s year-end 2022 solvency capital ratio by around 6 percentage points, and we will continue to focus on rebuilding our capital position.”
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