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Direct Line Insurance Group PLC on Thursday reported a widened loss in the first half of 2023, as its net insurance margin turned to a loss, while it also announced the disposal of a business line. The Bromley, England-based motor and home insurer said gross written premiums and associated fees grew 9.8% to £1.62 billion in the six months that ended June 30 from £1.47 billion a year before. However, pretax loss widened to £76.3 million from £11.1 million. Direct Line swung to an insurance service loss of £93.4 million from a £166.5 million profit. This was partially offset by net investment income rising to £78.9 million from £53.8 million. Direct Line reported a net insurance margin of negative 6.4% compared to positive 11% a year prior. Direct Line is targeting a net insurance margin of above 10% over time. It proposed no dividend payment, having paid out 7.6 pence a year ago. The company aims to restart dividends once two conditions are met: firstly, when capital coverage improves to the upper end of its agreed range; and secondly, when it returns to organic capital generation in its Motor insurance division. Direct Line announced the sale its brokered commercial insurance business to RSA Insurance, a subsidiary of Intact Financial Corp, for a £520 million initial payment, with a potential further payment of up to £30 million. The company also estimates a capital release of up to £270 million. The sale will allow the firm to ‘focus on retail, personal and direct small business commercial lines, restore the resilience of its capital position and drive the long-term value potential for its customers and shareholders,’ it said. Looking ahead, Direct Line warned of the continuing adverse effects on operating profit from the earn-through of previously written Motor business in 2023, but said improved motor margins should help support operating profit improvement in 2024. Direct Line Insurance shares were up 16% to 174.35 pence each on Thursday morning in London. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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