Direct Line Publishes 2021 Results

Direct Line has posted its 2021 results and the news is good;

Financial highlights

–     Direct own brands in-force policies grew 1.0% with growth across Commercial direct (7.5%), Green Flag Rescue (5.8%) and Home (2.3%). Motor direct own brands in-force policies were stable in H2 2021 with a reduction of 1.9% over the year. Direct own brands gross written premium was 0.8% lower and grew 0.7% in H2 2021.

–     Operating profit increased to £581.8 million (2020: £522.1 million) driven by an increase in underwriting profit and a strong investment return result. Current-year contribution to operating profit, normalised for weather, was 53% (2020: 65%), in line with the Group’s 2021 target of at least 50%.

–     Combined operating ratio improved to 90.1% (2020: 91.0%). Normalised for weather, the combined operating ratio was 91.1%, ahead of our medium-term target of 93% to 95% and in line with the expectation of between 90% and 92% for 2021 we stated at half year.

–     Profit before tax of £446.0 million was £5.4 million lower than 2020 as the increase in operating profit was offset by a £62.1 million increase in restructuring and one-off costs primarily reflecting restructuring of the property portfolio, including the purchase of the Bromley office in early 2021 as previously announced.

–     Proposed final ordinary dividend of 15.1 pence per share, making a total of 22.7 pence per share, an increase of 2.7% over the 2020 total ordinary dividend, and announcing a £100.0 million share buyback programme. Strong capital position with an adjusted solvency capital ratio of 160%.

Strategic highlights

In 2021, we made great progress on our path to building the insurance company of the future – technology and data-led with a customer obsessive mindset. We completed the main elements of our technology build and continued to make progress across all six of our strategic objectives.

PENNY JAMES, CEO OF DIRECT LINE GROUP, COMMENTED

“I am delighted by the Group’s strong performance and proud of the way we have navigated the complexities of a challenging market. Operating profit has increased to £582 million, own brands policies grew as our Home, Commercial and Rescue businesses performed strongly, whilst in Motor we steered a smart path through another uncertain period as the market sought to predict the impact of Covid-19. We are pleased to declare a final dividend of 15.1 pence per share, up by 2.7% over 2020, and also announce a further share buyback programme.

“2021 has been a year of significant strategic progress – we’ve successfully completed the main elements of our technology build and data capability, both key enablers of future growth. Our new motor platform is improving our competitiveness, we’ve announced a new partnership with Motability Operations that is expected to see over 640,000 customers join us in 2023 and we’ve extended our Home partnership with NatWest Group until 2027.

“I can’t thank my colleagues enough. This year’s success is due to the sheer dedication of our brilliant people who have continued to deliver despite the challenges of a pandemic. This is a fantastic business, with great brands, a customer obsessive mindset and an exceptional claims service where we are harnessing the best of technology to meet customer needs. The capability we have built is already delivering improved competitiveness and we believe there is plenty more to come in 2022.”