|
Direct Line Insurance Group PLC on Wednesday blamed severe cold weather for a significant increase in claims over December, pushing the company to an underwriting loss for the year.
So far, the Bromley, England-based insurance company has helped 3,000 customers deal with burst pipes, water tanks and other related damage due to a prolonged period of sub-zero temperatures across the UK.
Direct Line told investors that it expects related claims of around £90 million across the home and commercial divisions, and would be nixing its final dividend as a result.
Shares plummeted, dropping 28% to 167.91 pence each in London on Wednesday morning. It was the worst FTSE 250 performer.
Together with the freeze event from last January and subsidence -elated claims over the summer, the company now expects total weather claims in the region of £140 million for 2022, well above previous expectations of £73 million.
While Motor unit trading over the fourth quarter improved against a hardening market backdrop, inflationary pressures have pushed up the cost of repairs.
Inflation in relation to own managed damage claims remained broadly in line with expectations, said Direct Line, but there was a further increase in third party claims inflation during the period.
The fourth quarter also saw more claims, in part relating to the adverse weather conditions. Direct Line now expects its motor loss ratio for the year to increase by around 6%.
Further, the property investment portfolio experienced a 15% reduction in values, equivalent to £45 million and greater than initially expected.
‘We have seen a volatile and challenging operating environment in the fourth quarter. We have seen a significant increase in claims as a result of the prolonged period of severe cold weather in December, and I am proud of the way that we have supported our customers during this period. These claims, combined with further increases in motor inflation, have had a significant impact on our underwriting result for 2022,’ said Chief Executive Officer Penny James.
‘Despite the impact of these external factors, we continue to make good progress, including enhancing our technological capabilities, introducing new products and improving our efficiency. We have taken actions to respond swiftly to further inflation in motor claims and will continue to navigate market volatility as it arises.’
By Holly Beveridge; Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
|
