Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

UK motor insurer Direct Line to hike premiums after profit hit

Stock Markets Aug 02, 2022 08:50
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: New cars are parked at a dockyard in Grimsby, northern England, January 30, 2009. REUTERS/Nigel Roddis/File Photo 2/2
 
DLGD
+0.54%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Carolyn Cohn

LONDON (Reuters) -British motor insurer Direct Line is raising premiums after higher claims hit its first-half profits, as the company feels the effects of soaring prices for everything from used cars to spare parts.

Chief Executive Penny James said on Tuesday the company saw claims inflation at around 10% for the year, and "our rate increases ... need to reflect that".

Direct Line already lowered its profitability forecast last month, saying the motor insurance market saw "significant" levels of claims inflation in the first half.

James pointed in particular to supply chain problems following the COVID-19 pandemic and the Ukraine conflict, which have made it harder to find parts and added to repair times.

Premium rates rose by 15% in the first half, Direct Line said in a trading statement.

UK car insurance premiums have risen by 6% in the last 12 months, according to a survey from Willis Towers Watson (NASDAQ:WTW) and confused.com.

Direct Line was also hurt by economic uncertainty and by regulatory changes brought in this year that prevent insurers from charging a so-called "loyalty penalty" to longstanding customers, it said.

Pretax profit fell 32% to 178 million pounds ($218 million), though this was above 155 million pounds forecast in a company-supplied poll of analysts.

Adjusted gross written premium rose 2.1% to 1.52 billion pounds.

The insurer said it would pay an interim dividend of 7.6 pence per share, unchanged from a year ago, and James said the insurer was "confident in the sustainability of our regular dividends".

Direct Line's shares slipped 0.2% at 0723 GMT, but outperformed a 0.8% fall in the FTSE mid-cap index.

Smaller motor insurer Sabre has seen its share price nearly halve as profits were also hit by claims inflation.

($1 = 0.8173 pounds)

UK motor insurer Direct Line to hike premiums after profit hit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email