Proactive Investors - Direct Line Insurance Group PLC (LON:DLGD) on Tuesday will provide its third update of 2023, with the previous two having seen its shares tumble 40% by the end of March.
Last year saw a 95% collapse in profits after what it called “a tough year”, hit by elevated motor claims inflation, higher-than-expected weather event claims, new regulatory changes and challenging investment markets, all combining to push the operating ratio over 100%, essentially signalling loss-making territory for an insurer, with its Solvency II ratio dropping to 147% from 176%.
On the back of the initial shock profit warning in January, the company parted ways with boss Penny James and a permanent replacement has yet to be found.
But some investors have lately been taking a punt that things are on the mend, or at least not getting worse. Having dropped from over 235p in early January to below 135p, the shares have climbed to around 165-170p over the past month.
Analysts at Jefferies last month upgraded to a 'buy', forecasting Direct Line’s Solvency II ratio can "comfortably" be restored to 161% by the end of the first half and 165% by the end of the year without having to raise equity.
If market conditions "sufficiently harden", the analysts expect it to outperform listed rival Admiral.