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Q1 Trading Update

Direct Line Insurance Group Trading Update for the first quarter of 2017

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  • Gross written premium for Ongoing operations1 4.2% higher than the first quarter of 2016, with Motor own brands increasing 11.2%
  • Continued success in the Direct Line brand in a market that continues to experience high levels of shopping around. Growth in Motor and Home own brand in-force policies for a fourth successive quarter. Continued growth in Green Flag direct and Direct Line for Business
  • Investment income in line with expectations at £42.0 million and remains on course to achieve a 2.4% yield
  • The Group is on course to achieve its aim of reducing its commission and expense ratios during 2017
  • The Group continues to target a 2017 combined operating ratio2 in the range of 93% to 95% for Ongoing operations, assuming a normal annual level of claims from major weather events and no further change to the Ogden discount rate


  1. Ongoing operations include Direct Line Group’s Ongoing divisions: Motor, Home, Rescue and other personal lines and Commercial. It excludes the Run-off segment and restructuring and other one-off costs.
  2. Combined operating ratio (“COR”) is the sum of the loss, commission and expense ratios. The ratio measures the amount of claims costs, commission and expenses compared to net earned premium generated.
Business update

During the first quarter of 2017, Direct Line Group (the “Group”) maintained its trading momentum from 2016, delivering further policy growth in its Motor and Home own brands and making good progress in delivering its strategy. The Group continued investing in brand differentiation, particularly in its Direct Line brand. Direct Line Motor recently launched a new proposition to provide customers onward travel by taxi if their car is not driveable, and Direct Line for Business launched rent guarantee cover.

The Group’s multi-brand and multi-channel approach helped successfully grow its Motor own brands in-force policies by 5.9% compared to Q1 2016, whilst Home own brands in-force policies grew by 2.0% compared to Q1 2016. The Group’s Direct Line brand, in particular, delivered continued momentum in the first quarter. Direct Line for Business also grew in-force policies by 5.3% compared to Q1 2016, as it continued to leverage the brand.

In Motor, the Group traded well in the quarter both before and after the Lord Chancellor’s decision to reduce the Ogden discount rate. While the Ogden decision had little impact on the first quarter trading result, the Group has increased prices in response to the lower discount rate and the anticipated impact on claims inflation and continued to grow in-force policies at, or slightly better than, its target loss ratio. Overall for the quarter, average written premiums were up 6.6%, and risk-adjusted prices increased significantly more than that, comfortably ahead of the Group’s current view of claims inflation.

The strong performance in Motor was partially offset by the challenging home market, where the Group slowed its growth. Home claims inflation started to increase in 2016 and continued to rise above the Group’s long-term expectations in Q1 2017. In response, the Group has been increasing prices through recent quarters, resulting in lower new business volumes in Q1 2017 compared to Q1 2016, albeit retention remained strong. The Group remains focused on margins and protecting the long-term value of the Home portfolio and is prepared to sacrifice some volume in support of this objective.

The Commercial business had a good quarter, with in-force policies up 5.1% compared to Q1 2016 and pricing movements overall keeping pace with underlying claims inflation. Strong growth in Direct Line for Business and portfolio mix changes in NIG and other resulted in overall growth of 0.9% in gross written premium.

Rescue premiums grew 3.3% driven by Green Flag premiums which were up 11.5% and more than offset a continued reduction in packaged bank account volumes. Green Flag grew in-force policies 6.8% as web sales continued to perform well.


For 2017, the Group reiterates its target of achieving a combined operating ratio in the range of 93% to 95% for Ongoing operations assuming a normal annual level of claims from major weather events and no further change to the Ogden discount rate, and is on course to achieve its aim of reducing its commission and expense ratios during 2017.

CEO comment

Paul Geddes, CEO of Direct Line Group, commented:

“Overall, I am pleased with the positive start we have made to the year, continuing the momentum we built in 2016 and supported by continued strong growth in the Direct Line brand. We have delivered particularly strong results in Motor and this performance has more than offset the challenging home market. Direct Line for Business and Green Flag have also performed well. We reiterate our target of a COR2 in the range of 93%-95% for 2017.”

Results downloads

Upcoming results

Direct Line Insurance Group plc ("Direct Line Group") will publish its 2017 half year report on 1 August at 7am (BST). Management will host a conference call for investors and analysts at 9.30am (BST), dial in details are available on the results and presentations page.

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