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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.

Barclays Capital today reaffirms its equal weight investment rating on Direct Line Insurance Group PLC (LON:DLG) and cut its price target to 360p (from 364p).

Half Year Report 2016

2 August 2016

Direct Line Group's Half Year Report relates to the six months ended 30 June 2016 and contains information to the date of publication. Income statement comparisons are to 1H 2015, in-force policy numbers are to 30 June 2015 and balance sheet comparisons are to 31 December 2015, unless otherwise stated.

Financial highlights

· Gross written premium for ongoing operations1 3.9% higher, with strong growth in Motor in-force policies (up 2.5%) and premium rates (up 9.5%)
· Combined operating ratio1 from ongoing operations continued to be strong at 89.6%, 0.2pts higher, including Flood Re levy impact of 1.6pts. Motor current-year attritional loss ratio1 improved by 1.0pt
· Operating profit from ongoing operations decreased £12.2m to £323.6m, after £18.5m lower investment gains
· Return on tangible equity1,2 of 23.1% (1H 2015: 21.2%). Profit before tax decreased £16.5m to £298.5m (1H 2015: £315.0m)
· Interim dividend per share of 4.9 pence (1H 2015: 4.6 pence) and special interim dividend of 10.0 pence per share
· Post dividends, the Group's estimated Solvency II capital3 coverage ratio was 184% (pre-dividends: 199%)

Strategic and operational highlights
· Continued investment in brand differentiation through enhancements and initiatives to Direct Line and Churchill propositions. In-force policies for Motor and Home own brands up 3.0%, with strong customer retention. Growth in Green Flag direct and Commercial direct
· Extension agreed with RBS of the Home and Private Insurance partnership for a further three years. This encapsulates an innovative proposition in the market to support the RBS customer-led strategy
· Well prepared for UK's referendum on EU membership, immediate investment volatility actively managed and no operational impact
· Maintains combined operating ratio expectation for 2016 in the range of 93% to 95% for ongoing operations, assuming normal annual weather. If current trends continue, the ratio is expected to be towards the lower end of this range, reflecting improved trading and higher than expected prior-year reserve releases

Paul Geddes, CEO of Direct Line Group, commented
"I am pleased with our results over the first half of 2016, as we delivered an excellent performance against a very strong comparator from the previous year. We have generated operating profits of over £320m in spite of weaker investment markets and the addition of the new Flood Re levy. Our customers continued to respond well to the refreshed propositions of our brands, which is reflected in another increase in the number of our own brands policies. Together, this demonstrates the benefits of the improvements we have made to strengthen our business.

"Although there remains a range of uncertainties in the macro-economic environment, we gain confidence from the strength of this performance, the transformation of the business and the approval of our partial internal model. These factors enabled us to increase the interim dividend to 4.9p and to declare an additional special interim dividend of 10.0p, representing a total payout to shareholders of £204.9m."

Nice div. Aug 4 ex div.

StockMarketWire.com
Direct Line Group says it has traded in the first nine months of the year while making progress on delivering its strategy.

Highlights:
- Motor and Home own brands in-force policies up 4.3%, with strong customer retention. Continued growth in Green Flag direct and Direct Line for Business

- Gross written premium for ongoing operations 4.2% higher, with continued growth in Motor own brands, up 9.7%

_ Investment income yield of 2.5% in line with full year guidance and no material gains or losses in the quarter

- Total costs of £669.5m up £16.1m from the first nine months of 2015, after absorbing £24m of Flood Re costs in Q2 2016. Q3 total costs 3.3% lower than Q3 2015. In line with previous guidance, full year business as usual costs expected to be no higher than in 2015. However, reported costs may be somewhat higher than in 2015, due to higher non-cash intangible asset impairments than in recent years

- Combined operating ratio for ongoing operations still expected to be towards the lower end of the 93%-95% target range, assuming normal weather

Chief executive Paul Geddes said: "I'm pleased that we have traded well this quarter with good policy and premium growth, particularly for Direct Line, showing that customers like the value, service and brand propositions we offer them. We have achieved this while maintaining our underwriting discipline and reiterate that we expect to be towards the lower end of our 93%-95% combined operating ratio target range."

Credit Suisse today initiates coverage of Direct Line Insurance Group PLC (LON:DLG) with a neutral investment rating and price target of 370p.

Peel Hunt today reaffirms its hold investment rating on Direct Line Insurance Group PLC (LON:DLG) and cut its price target to 365p (from 370p).

Noting the Lord Chancellor's announcement

Direct Line Insurance Group plc (the "Group") notes the announcement today by the Lord Chancellor regarding a change to the discount rate for calculating personal injury damages awards.

The Group will update the market later today regarding implications of this change.

Impact of the Lord Chancellor's announcement

27 February 2017

Direct Line Insurance Group plc (the "Group") is updating the market following today's announcement by the Lord Chancellor regarding the discount rate for calculating personal injury damages awards. The new discount rate to be used is -0.75% ("New Discount Rate"). The Group notes that the Government has said it will review the framework under which the rate has been set today by the Lord Chancellor.

The Group expects to recognise the New Discount Rate in its financial statements and also within its Solvency 2 ratio calculation for the year ended 31 December 2016. The Group has previously disclosed in its 2015 Annual Report that its claims liabilities, at that time, were calculated using a discount rate of 1.5%.

The Group currently estimates that the impact of moving to the New Discount Rate of
-0.75% on the 2016 reported financials would be to:

· reduce profit before tax by between £215 million and £230 million after reinsurance recoveries (including the impact on both ongoing and run-off business);
· increase the Combined Operating Ratio ("COR") for ongoing business by approximately 6ppts; and
· reduce the Group's year end Solvency II capital coverage ratio before dividends, to towards the higher end of the Group's target range of 140-180%. As at 30 June 2016, the Group's Solvency II coverage ratio was 184% after interim dividends.

The Lord Chancellor's recent announcement has left open the possibility of further changes to the process by which the rate is set, and therefore the rate itself. The implications of this uncertainty have not, at this stage, been included within the Group's solvency calculation.

Before adjusting for the New Discount Rate, the Group confirms it expects to achieve its guidance of a combined operating ratio of towards the lower end of the 93%-95% range adjusted for normal weather for the year ended 31 December 2016.

The Group is committed to ensuring claimants receive appropriate compensation. The Group is disappointed at the Lord Chancellor's decision, but will take the time to review the full statement of reasons given. The Group welcomes the consultation to consider options for reform to achieve a better and fairer framework for claimants and defendants.

The Group's capital and reserve strength, coupled with its leading brands, differentiated propositions and excellent service mean it is well positioned despite higher claims costs arising from the New Discount Rate.

The Group will provide further details in its preliminary full year results announcement scheduled for 7 March 2017, including its estimated Solvency II position as at 31 December 2016.

This document contains inside information for the purposes of Article 7 of European Union Regulation 596/2014.

-ENDS-

Peel Hunt Hold 336.90 365.00 365.00 Reiterates

Shore Capital Sell 336.90 - - Reiterates

The consensus of opinion seems to be that all of the insurers will pass this extra cost onto the customer, so short term pain for them and increased premiums for us.

Dead right Harry.

Preliminary results for the year ended 31 December 2016


7 March 2017

Financial highlights

· Gross written premium for Ongoing operations1,2 up 3.9% to £3,274.1m (2015: £3,152.4m), driven by growth in Motor and Home own-brand in-force policies (up 4.3%)

· 2016 results reflect the one-off impact of using the new Ogden discount rate of minus 0.75%. Operating profit from Ongoing operations of £403.5m (pre-Ogden discount rate reduction3: £578.6m; 2015: £520.7m) and profit before tax of £353.0m (pre-Ogden3: £570.3m; 2015: £507.5m). Return on tangible equity1, 2 of 14.2%, (pre-Ogden3: 20.2%; 2015: 18.5%)

· Combined operating ratio1 from Ongoing operations of 97.7% (pre-Ogden3: 91.8%; 2015: 94.0%) increased as a result of the reduction in the Ogden discount rate, partially offset by improved current-year underwriting performance and favourable weather claims. Adjusted for normal weather and before the Ogden discount rate change, the combined operating ratio was 93.5%, towards the lower end of the target range of 93% to 95%

· 5.4% increase in final dividend per share to 9.7 pence per share, (2015: 9.2 pence). Total dividends per share for 2016, including special interim dividend of 10.0 pence per share paid in September 2016 following the approval of the Group's partial internal model, of 24.6 pence per share (2015: 50.1 pence)

· The Group's estimated Solvency II capital coverage ratio4 post dividend is 165%, above the middle of the Group's risk appetite range of 140% - 180% (pre-dividend: 174%)

Strategic and operational highlights

· Direct Line Motor and Home new business growth at the highest annual level since IPO, demonstrating the success of the investment in brand, proposition and customer service

· Total costs for Ongoing operations of £923.7m broadly flat year on year before non-cash impairment charge of £39.3m, after absorbing £24.1m Flood Re levy and supporting growth in Motor and Home own brands

· Extended Home and Private Insurance partnership with RBS for a further three years, and implemented faster and easier sales journeys using cloud-based technology making connectivity and future change easier

· Invested in innovation, including partnership with PSA Peugeot Citroën for telematics extended for 4 more years, introducer role developed with Tesla, and MOVE_UK project brought into data collection stage

· Received approval from the Prudential Regulation Authority to use the Group's Solvency II partial internal model

Paul Geddes, CEO of Direct Line Group, commented
"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."

Peel Hunt Hold 339.90 360.00 360.00 Reiterates

Shore Capital Sell 339.90 - - Reiterates

Half year report http://www.moneyam.com/action/news/showArticle?id=5608796

Highlights and outlook

· Motor continued to grow gross written premiums, up 10% with Direct Line driving the growth
· Commercial launched the first of its flexible and bespoke business insurance policies, a part of our digital transformation, leveraging our strong Direct Line brand and our goal of making insurance much easier and better value for our customers
· The Board is rebasing the regular dividend up 38.8%, increasing the interim dividend to 6.8p3. In addition, the Group expects to operate around the middle of its Solvency II capital coverage ratio range of 140% to180%, in the normal course of business
· Reiterate the current financial targets for 2017: combined operating ratio in the range of 93% to 95% and investment income yield at 2.4%
· In addition, management targets maintaining a 93% to 95% combined operating ratio over the medium term, reflecting its ambition to maintain strong annual financial performance

Peel Hunt Hold 399.65 360.00 360.00 Reiterates

Shore Capital Sell 399.65 - - Retains

Breakout, but will it hold?
LATEST BROKER VIEWS
Date Broker New target Recomm.
13 Feb Deutsche Bank N/A Buy
12 Feb Deutsche Bank N/A Buy
12 Feb Citigroup 400.00 Neutral
9 Feb Peel Hunt 415.00 Add
7 Feb Peel Hunt 415.00 Add
6 Feb Barclays... 413.00 Overweight
1 Feb Numis 455.00 Add
1 Feb Barclays... 384.00 Equal weight
29 Jan Morgan Stanley 449.00 Overweight
22 Jan Peel Hunt 360.00 Hold

NO! :0)

Financial highlights

·    

Strong growth in direct own brands1 premiums and in-force policies up 9.3% and 5.3% respectively, driven again by continued Direct Line momentum in Motor.

 

·    

Operating profit from Ongoing operations of £610.9 million (2016: £403.5 million), primarily due to the non-repeat of the Ogden discount rate change which was reflected in 2016's results. Profit before tax of £539.0 million (2016: £353.0 million).

 

·    

Reported expense ratio in line with 2016. Excluding non-cash intangible assets impairments of £56.9 million (2016: £39.3 million), underlying expense ratio improved 0.5 percentage points to 23.5%.

 

·    

Combined operating ratio from Ongoing operations of 91.8% (2016: 97.7%) reflecting strong Motor and Commercial performance, including from prior-year reserve releases. Adjusted for normal weather, combined operating ratio towards the lower end of the target range of 93% to 95%.

 

·    

Final dividend up by 40.2% to 13.6 pence bringing the total ordinary dividends to 20.4 pence (2016: 14.6 pence) and a special dividend of 15.0 pence (2016: 10.0 pence). Total dividends for 2017 of 35.4 pence per share (2016: 24.6 pence).

 

 

Header links updated.

Credit Suisse Outperform 384.40 445.00 450.00 Reiterates

JP Morgan Cazenove Overweight 384.40 450.00 450.00 Reiterates