Direct Line posts 30% decline in 2016 profit
Direct Line Insurance has reported a 30% decline in its full year 2016 profits after taking a charge of over £217m due to the changes brought by the UK government in the calculation of personal injury claims.
The British insurer reported profits before tax of £353m for 2016, compared to £507.5m it registered in 2015.
For ongoing operations, the company's gross written premium in 2016 increased by 3.9% to £3.28bn in comparison to £3.15bn in 2015.
Direct Line has credited the growth to its Motor and Home own-brand in-force policies which in turn had a growth of 4.3% compared to 2015.
Direct Line CEO Paul Geddes said: “2016 was a successful year for Direct Line Group and I’m proud of the strong own brand growth achieved in a switching market, proving our competitiveness in all our key categories and channels.
“This positions us well in a market disrupted by the reduction in the discount rate, and allows us to target a 93-95% combined operating ratio in 2017. We will continue to target improved efficiency and invest in customer and technology trends affecting our markets.”
The company's underwriting profits in 2016 reduced to £70.1m compared to the £175.2m it earned in 2015. The group’s combined operating ratio has been reported to be 97.7% in 2016 in comparison to 94% in 2015.
The insurer's total costs for ongoing operations at £923.7m were largely flat to the £884.7m it reported in 2015. This, it said was after allotting £24.1m for Floor Re levy and also to boost its Motor and Home own brands.
Image: Direct Line Group’s profits for 2016 reduced by 30%. Photo: courtesy of Direct Line Insurance Group plc.