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Motor and home insurer Direct Line Insurance Group PLC earnings fell last year, the company revealed on Tuesday, though it said 2021 brought ‘significant strategic progress’.
Pretax profit fell 1.2% to £446.0 million in 2021 from £451.4 million in 2020.
Gross written premiums declined by 0.3% to £3.17 billion from £3.18 billion.
The company's combined ratio improved, indicating it has seen a chunkier profit from underwriting operations.
Direct Line's combined ratio was reduced to 90.1% in 2021 from 91.0% in 2020. Any ratio below 100% indicates profit from underwriting operations, so the lower the better.
Adjusted for weather, its combined ratio was 91.1%, beating its medium-term target of 93% to 95% and in line with its 90% to 92% target range for the year.
Direct Line lifted its final dividend by 2.7% to 15.1 pence per share from 14.7p. Its total ordinary payout also was up 2.7% to 22.7p from 22.1p.
However, the company did not declare a special dividend for 2021. It had declared a 14.4p special payout for 2020.
Direct Line did unveil a £100 million share buyback for 2022, the same as done in 2021. Half will be conducted in the first half of the year and half in the second.
Looking ahead, the company said: ‘These are early days but we have seen positive new business premium inflation across the Home and Motor markets in January and February 2022, with search volumes higher but with switching reduced when compared to the same period in 2021. Our retention levels in Motor and Home have remained strong. These movements are within the range of outcomes we had projected and prepared for.
‘There are a range of inflationary pressures currently being seen within our market. Our claims expertise, including our repair cost advantage in Motor, puts us in a good position to manage these. Elsewhere, we have delivered absolute reductions in our overall cost base and we plan to reduce costs further during 2022.’
It affirmed its medium-term, weather-adjusted combined ratio target.
Shares in the company were 2.8% lower at 253.35 pence each in London on Tuesday morning.
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