Bromley-headquartered insurance company Direct Line Insurance Group (Direct Line) has today published a trading update for Q3 2021.
Among the key financial figures released, the group reported an increase in total gross written premium (GWP), which is up 0.7% to £857.1 million from £851.5 million in Q3 2021. Broken down by sector, this includes a slight decrease in GWP compared to Q3 2021 in combined motor lines (down 1.4%), home (down 1.1%), rescue and other personal lines (down 3%) and a sizeable increase in commercial GWP (up 12.4%).
The group experienced weather event claims in Q3 of £7.5 million in home and £9.5 million in commercial. Year to date total weather events are estimated at £20 million compared to its annual budget assumption of £69 million for 2021.
Looking to the nine months ended September 30, 2021, Direct Line reported a 0.8% drop in overall GWP, down from £2,432.3 million in the prior year period to £2,413.6 million in 2021. This included a decrease in GWP across motor and rescue and other personal lines alongside an uptick in GWP in home and a significant uptick in GWP in commercial, which rose 15% during the nine months.
Reflecting on the success of its commercial business, Direct Line noted that this continues to see the benefits of its transformation, with strong growth across both direct own brands and NIG and other.
Direct Line reiterated its medium-term target of achieving a combined operating ratio in the range of 93% to 95%, normalised for weather. For 2021, following lower than normal claims frequency in motor and strong prior-year reserve releases, the group continues to expect a combined operating ratio in the range of 90% to 92%, normalised for weather.
Reflecting on the results achieved, Penny James, CEO of Direct Line, stated that the group is pleased with its Q3 2021 trading performance which saw its direct own brand policy count grow overall, while stabilising in motor.
“We have made strong progress in executing our strategy and have begun to see improved pricing competitiveness in motor as a result of the capability delivered by our new platform,” she said. “We have also successfully launched an electric vehicle proposition for our Direct Line brand, which helps make the switch to electric easier for our customers and builds on our expertise in this growing market.”
James added that the group is also on track to implement the FCA’s new pricing practices regulations at the start of next year. She noted that while market pricing in the first few months of 2022 is likely to be volatile as the market resets, Direct Line’s brands, customer focus and diversified business model mean it remains confident.
“Our transformation progress, delivery of new propositions and improved competitiveness,” she said, “combined with our focus on disciplined underwriting, mean we are well placed as we look ahead and we reiterate our combined operating ratio target of 93% to 95% over the medium term.”
