Direct Line Insurance Group trading update for the first quarter of 2017

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

Direct Line Group’s Trading Update relates to the first quarter ended 31 March 2017, and contains information to the date of publication.

Highlights

• 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

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.”

For further information, please contact:

Andy Broadfield
Director of Investor Relations
Tel: +44 (0) 1651 831022

Jennifer Thomas
Head of Financial Communications
Tel: +44 (0) 1651 831686

Notes:

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.

Forward-looking statements disclaimer

Certain information contained in this document, including any information as to the Group’s strategy, plans or future financial or operating performance, constitutes “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “aims”, “anticipates”, “aspire”, “believes”, “continue”, “could”, “estimates”, “expects”, “guidance”, “intends”, “may”, “mission”, “outlook”, “plans”, “predicts”, “projects”, “seeks”, “should”, “strategy”, “targets” or “will” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors concerning, among other things: the Group’s results of operations, financial condition, prospects, growth, strategies and the industry in which the Group operates. Examples of forward-looking statements include financial targets, which are contained in this document specifically with respect to return on tangible equity, risk-based capital coverage ratio, the Group’s combined operating ratio, prior-year reserve releases, cost reduction, investment income yield, net realised and unrealised gains, results from the run-off segment, restructuring and other one-off costs, and risk appetite range. By their nature, all forward-looking statements involve risk and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond the Group’s control.

Forward-looking statements are not guarantees of future performance. The Group’s actual results of operations, financial condition and the development of the business sector in which the Group operates may differ materially from those suggested by the forward-looking statements contained in this document, for example directly or indirectly as a result of, but not limited to, UK domestic and global economic business conditions, the result of the referendum and the negotiations relating to the UK’s withdrawal from the European Union, the upcoming UK general election, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements or the Ogden discount rate), the impact of competition, currency changes, inflation and deflation, the timing impact and other uncertainties of future acquisitions, disposals, joint ventures or combinations within relevant industries, as well as the impact of tax and other legislation and other regulation in the jurisdictions in which the Group and its affiliates operate. In addition, even if the Group’s actual results of operations, financial condition and the development of the business sector in which the Group operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.

The forward-looking statements contained in this document reflect knowledge and information available as of the date of preparation of this document. The Group and the Directors expressly disclaim any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation. Nothing in this document should be construed as a profit forecast.

Neither the content of Direct Line Group’s website nor the content of any other website accessible from hyperlinks on the Group’s website is incorporated into, or forms part of, this document.