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Preliminary results 2014

Preliminary results for the year ended 31 December 2014

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Highlights
  • Gross written premium from ongoing operations1 3.8% lower for 2014 compared with 2013, reflecting disciplined approach to underwriting in Motor and Home. Gross written premium trends improved during the year with gross written premium increasing 0.4% in the fourth quarter compared with 2013
  • Combined operating ratio2 from ongoing operations of 95.0% for 2014, an improvement of 0.2 percentage points on 2013 (95.2%) including stable contribution from prior-year reserve releases of £397.6 million (2013: £395.8 million)
  • Stable operating profit from ongoing operations of £506.0 million for 2014 (2013: £509.9 million); while total Group statutory profit before tax for continuing operations rose 12.2% to £456.8 million (2013: £407.3 million)
  • Return on tangible equity3 of 16.8% for 2014 (2013: 16.0%)
  • 4.8% increase in final4 dividend per share to 8.8 pence per share and second special interim dividend of 4.0 pence per share. Total dividends for 2014 of 27.2 pence per share (2013: 20.6 pence per share)

Notes:

  1. Ongoing operations include Direct Line Group’s ongoing divisions: Motor, Home, Rescue and other personal lines, and Commercial. It excludes the International division which is classified as discontinued operations, the Run-off segment and restructuring and other one-off costs. Continuing operations include all activities other than International.
  2. Combined operating ratio (“COR”) is the sum of the loss, commission and expense ratios. The ratio is a measure of the amount of claims costs, commission and expenses compared to net earned premium generated.
  3. Return on tangible equity (“RoTE”) is adjusted profit after tax from ongoing operations and the International division divided by the Group’s average tangible shareholders’ equity. Profit after tax is adjusted to exclude the Run-off segment and restructuring and other one-off costs, and is stated after charging tax (using the UK standard tax rate of 21.5%; 2013: 23.25%).
  4. The Board has resolved this year to pay an interim dividend in lieu of a final dividend, see page 6, and references in this document to ‘final dividend’ for 2014 are to be construed as references to this interim dividend. In this document the second special dividend is referred to separately from the final dividend. This enables more appropriate comparison to the 2013 final dividend. Both the second special interim dividend and the final dividend will be paid together as one payment.
CEO comment

Paul Geddes, CEO of Direct Line Group, commented

"At the time of our IPO in 2012 we announced four targets for 2014, and I am delighted to report that we have met or exceeded all of them. After paying the regular and special dividends for 2014, we will also have returned a total of £836 million to shareholders since we began life as a public company.

"We also announced a binding agreement for the sale of our International business for total cash sale proceeds of €550 million (£430 million), as we reaffirmed our strategic focus on the UK market. This is a good result for all our stakeholders, including providing excellent value for shareholders.

"Underlying this performance is the successful delivery of many initiatives to improve the competitiveness of our business and to improve the propositions and experience we offer our customers. We will continue to invest in our brands, our technology and our people with the mission to make insurance much easier and better value for our customers."

Upcoming results

First quarter 2015 interim management statement will be published on 6 May 2015

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