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Direct Line Group(DLG) Fundamentals


Direct Line Announcement of Offer Price

The offer price has been set at 175 pence per Ordinary Share, implying a total market capitalisation of Direct Line Group £2,625 million.

1st Quarter Results

Financial highlights

· Operating profit from ongoing operations1 of £107.5 million for the first quarter 2013, up 32.9% (first quarter 2012: £80.9 million)

· Gross written premium for ongoing operations 4.5% lower reflecting competitive market conditions in UK personal lines, partially offset by growth in International

· Combined operating ratio2 for ongoing operations of 98.0% for the first quarter 2013, an improvement of 6.5 percentage points against the first quarter 2012 (104.5%) driven by continued prior year reserve releases and lower claims from weather events

· Annualised return on tangible equity3 from ongoing operations of 12.3% for the first quarter 2013 (first quarter 2012: 7.7%; pro forma4 full year 2012: 13.4%)

· Net asset value per share of 195.3 pence and tangible net asset value per share of 166.0 pence (31 December 2012: 189.1 pence and 161.0 pence, respectively). Tangible net asset value per share of 158.0 pence after deducting the 2012 final dividend of 8 pence per share

Strategic and operational highlights

· Continued momentum in pricing and claims initiatives, contributing to improved underwriting result, including significant prior year reserve releases

· Actions relating to the £100 million gross annual cost savings in 2014 on track. Continue to pursue initiatives to improve efficiency further

· New customer propositions and refreshed advertising campaigns for Direct Line, Churchill and Green Flag

· Good growth in the International division, particularly Germany, and Commercial full-cycle eTrading now live

Merrill Lynch Buy 211.80 220.00 235.00 Upgrades

StockMarketWire.com
Direct Line Insurance Group will announce its results for the six months to the end of June will be released on 2 August 2013.

Exane BNP Paribas Neutral 221.10 225.80 - 233.00 Reiterates

Half Yearly report

Sale of Direct Line Life & proposed capital return

Direct Line Insurance Group plc ("Company"), the holding company of the "Direct Line Group" (or the "Group"), announces that it has reached a binding agreement with Chesnara plc ("Chesnara") for the sale of Direct Line Group's UK closed life insurance business, Direct Line Life Insurance Company Limited ("DLL").

Total sale proceeds of £62 million, which include a pre-closing dividend of £23 million, represent 85% of the embedded value of DLL at 30 June 2013. In the financial year ended 31 December 2012, DLL reported a profit after tax of £6.9 million. Direct Line Group is expecting to recognise a gain on disposal of approximately £12 million. The transaction is conditional on the approval of Chesnara shareholders and of relevant regulatory authorities, which is currently expected within 60 business days.

The proceeds of the sale of DLL represent inorganic capital generation and the Company's Board of Directors believes that in this instance it is appropriate to return the sale proceeds to shareholders. Assuming the sale completes as expected, the Board intends to declare a special interim dividend of 4.0 pence per share shortly after completion of the sale. The sale of DLL and the proposed subsequent dividend are not expected to have a material impact on Direct Line Group's capital position.
Separately, the Group is reviewing opportunities to offer its customers access to appropriate life products and is currently testing a distribution only 'white-label' pilot for term assurance.

Direct Line Insurance Group plc

Direct Line Insurance Group plc (Direct Line Group) is headquartered in Bromley, Kent; it has operations in the UK, Germany and Italy.

Through its number of well known brands Direct Line Group offers a wide range of general insurance products to consumers. These brands include; Direct Line, Churchill and Privilege. It also offers insurance services for third party brands through its Partnerships division. In the commercial sector, its NIG and Direct Line for Business operations provide insurance products for businesses via brokers or direct respectively.

In addition to insurance services, Direct Line Group continues to provide support and reassurance to millions of UK motorists through its Green Flag breakdown recovery service and TRACKER stolen vehicle recovery and telematics business.

3rd Quarter Results

Financial highlights

· Operating profit1 of £417.8 million for the first nine months of 2013, up 20.1% (first nine months 2012: £347.9 million)

· Operating profit1 of £131.2 million for the third quarter of 2013, up 6.1% (third quarter 2012: £123.7 million)

· Gross written premium1 4.3% lower for the first nine months of 2013, reflecting competitive market conditions in UK personal lines, partially offset by growth in International and Commercial

· Combined operating ratio1,2 of 95.4% for the first nine months of 2013, an improvement of 4.3 percentage points against the same period last year (99.7%) arising from improved underwriting, including lower costs, as well as fewer claims from major weather events

· Annualised return on tangible equity3 from ongoing operations of 16.8% for the first nine months of 2013 (first nine months 2012: 10.6% and pro forma4 13.5%). Annualised RoTE normalised for claims from major weather events of approximately 15%5

· Net asset value per share of 187.9 pence and tangible net asset value per share of 155.8 pence

Strategic and operational highlights

· Good progress across each of the Group's strategic priorities and towards its target of a 15% return on tangible equity and its full year 2013 target of a 98% combined operating ratio

· Improved customer propositions, including the roll-out of telematics products with one in five new Direct Line motor policies with drivers aged under 25 now including telematics

· Cost saving programmes progressing well and on track to meet target to reduce the cost base6 to approximately £1,000 million in 2014

· First stage of IT migration from RBS Group delivered with new data centres established which offer more flexibility to progress digital plans

· Announcement on 8 October for the sale of the UK closed life insurance business and intention to pay a special interim dividend of 4.0 pence per share following completion

Credit Suisse Outperform 228.90 - - Reiterates

Numis Buy 228.90 265.00 265.00 Retains

Direct Line Insurance Group has completed the sale of Direct Line Life Insurance Co to Chesnara. Direct Line Insurance says proceeds of the sale will be returned to shareholders via a special interim dividend of 4.0p per share.

Lovely sustained breakout.

Technically excelent, just look at the
lower indicators, couldnt ask for more
than that.

Gone long.......large position.

Further confirmation of breakout today....

Long may it continue!

hope the weather doesn't spoil the fun.

Preliminary Results

Financial highlights

· Operating profit from ongoing operations1 of £526.5 million for 2013, up 14.2% (2012: £461.2 million); and total Group profit before tax of £423.9 million (2012: £249.1 million)

· Combined operating ratio2 for ongoing operations1 of 96.1% for 2013, an improvement of 3.1 percentage points against 2012 (99.2%), and ahead of the target 98% for 2013

· Combined operating ratio2 for ongoing operations1 in 2013 included higher than expected contribution from prior-year reserve releases of 12.4 percentage points (£435.1 million) compared to 8.7 percentage points in 2012 (£322.0 million)

· Return on tangible equity3 from ongoing operations1 of 16.0% for 2013 (2012: reported 11.5%; pro forma4 2012: 13.4%)

· 5.0% increase in final dividend per share to 8.4 pence per share and second special interim dividend of 4.0 pence per share taking total dividends for 2013 to 20.6 pence per share

· Strong capital position maintained with risk-based capital coverage5 of 148.7% post final and second special interim dividends, towards the upper end of the target range of 125% to 150%


Strategic and operational highlights

· Investment in improved customer focused capabilities and propositions, launch of two telematics products and start of roll-out of smartphone and tablet optimised websites

· Extended efficiency programme particularly in head office functions and announced additional cost savings, targeting a reduced total cost base6 of approximately £1,000 million in 2014

· Completed claims transformation for Motor and Home, extended ClaimCenter to Commercial Motor and Italy, and laid the foundations for DLG Legal Services Limited

· Continued to develop Commercial and International, in particular full roll-out of eTrading and strong
growth in Germany

2014 First Quarter Interim Management Statement

Highlights

· Continued progress on delivery of the Group's strategic development, including completing the roll-out of smartphone and tablet optimised websites for Motor, full launch of self-install telematics offering and launch of DLG Legal Services

· Gross written premium (at constant currency) for ongoing operations1 5.1% lower for the first quarter of 2014 compared with the first quarter of 2013, reflecting competitive market conditions in UK personal lines, partially offset by growth in Commercial and in Germany

· Motor gross written premium 10.2% lower compared to the first quarter of 2013. Motor prices reduced by 4% year-on-year, supported by positive claims trends and technical pricing initiatives

· Home major weather event claims of approximately £60 million in the first quarter of 2014, lower than the previously announced estimate of £70 to £90 million; Commercial major weather event claims of approximately £20 million, as previously indicated

· Investment income yield of 2.2% for the first quarter of 2014 (first quarter 2013: 2.0%), reflecting the positive effect of portfolio actions

· Reiterate 2014 aim to achieve a combined operating ratio in the range of 95% to 97% for ongoing operations, assuming a normal level of weather claims

Citigroup has upped its rating for Direct Line from 'neutral' to 'buy', saying it sees "significant upside" from further cost reductions at the insurance group. The bank has hiked its target price for the stock from 244p to 306p.

"We think Direct Line can increasingly use its market-leading position as a competitive advantage in terms of pricing, claims and cost efficiency," Citi said.

Half Yearly Report

Financial highlights

· Gross written premium for ongoing operations1 decreased by 5.1% in the first half of 2014 reflecting disciplined underwriting in competitive markets. Motor prices reduced on average by 2% during the second quarter compared with the same period in 2013

· Operating profit from ongoing operations1 of £249.1 million for the first half of 2014, down 13.1% (first half 2013: £286.6 million) reflecting higher weather claims and lower prior-year reserve releases of £218.0 million (first half 2013: £239.2 million); total Group profit before tax of £225.1 million up 7.8% (first half 2013: £208.8 million)

· Combined operating ratio2 for ongoing operations1 of 96.6% for the first half of 2014, an increase of 2.0 percentage points (first half 2013: 94.6%) reflecting higher weather claims. Current-year attritional loss ratio of 71.8% (first half 2013: 73.8%)

· Return on tangible equity3 from ongoing operations1 of 15.8% for the first half of 2014 (first half 2013: 17.3%)

· Interim dividend per share of 4.4 pence representing growth of 4.8% over 2013 interim dividend, and a special interim dividend per share of 10.0 pence taking total interim dividends to 14.4 pence per share

Strategic and operational highlights

· Improvement in personal lines trading capability through new smartphone and tablet optimised websites for Motor, delivery of a number of pricing projects and implementation of further claims initiatives

· Development of telematics with launch of self-install proposition in Motor and extension to Commercial

· On track to achieve total cost base4 target of approximately £1,000 million in 2014 with 5.4% reduction in the first half of 2014 to £496.0 million (first half 2013: £524.1 million). Restructuring and other one-off costs reduced by approximately 60% compared with the first half in 2013

· Strategic review of International, with potential disposal being explored

· Reiterate 2014 aim to achieve a combined operating ratio in the range of 95% to 97% for ongoing operations, assuming a normal level of weather claims

Ex-divi wed 13th Aug (14.4p)

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Third Quarter Interim Management Statement

Highlights

· Gross written premium for ongoing operations1 5.0% lower for the first nine months of 2014 compared with the same period of 2013, reflecting lower gross written premium in Motor and Home, partially offset by growth in Commercial

· Motor in-force policies 0.7% lower than the previous quarter with prices stable in the third quarter of 2014

· Improvement in personal lines capability through new websites, delivery of a number of pricing projects and a new advertising campaign and propositions for the Direct Line brand. Launched self-install telematics proposition in Motor

· Total cost base2 for the nine months ended 30 September 2014 6.0% lower than for the first nine months of 2013. On track to achieve targeted total cost base2 of approximately £1,000 million in 2014. Investment income yield increased by 20 basis points on the first nine months of 2013 to 2.3%, reflecting actions to diversify the portfolio

· Announced a binding agreement with Mapfre, S.A. for the sale of the Group's International division for cash sale proceeds of €550.0 million (£430.1 million3). It is expected that substantially all of the net proceeds will be returned to shareholders

· Group expects the combined operating ratio for ongoing operations1 to be within the range of 95% to 97% including the benefit of significant reserve releases. Motor current-year loss ratio in the second half of the year is expected to be similar to the first half of 2014