Direct Line Group PLC trading update for Q3 2023

Q3 REFLECTS CONTINUED IMPACT OF MANAGEMENT ACTIONS TO RESTORE CAPITAL RESILIENCE AND IMPROVE PERFORMANCE IN MOTOR

Trading summary

​	Q3 2023	Change to Q3 2022	9 months	Change to 9  months 2022
			2023
	£m		£m
Gross written premium and associated fees2
Motor direct own brands3	425.8	13.2%	1,161.5	9.1%
Motor partnerships4	401.0	N/A5	424.0	N/A5
Motor	826.8	115.4%	1,585.5	45.4%
Home direct own brands3	107.2	2.7%	290.7	1.5%
Home partnerships	37.2	7.5%	106.4	3.4%
Home	144.4	3.9%	397.1	2.0%
Green Flag Rescue	27.7	(3.5%)	68.6	(0.9%)
Other Rescue and other personal lines	48.5	(3.2%)	138.3	(4.8%)
Rescue and other personal lines	76.2	(3.3%)	206.9	(3.5%)
Commercial direct own brands3	63.0	8.2%	182.2	10.8%
Ongoing operations6	1,110.4	68.3%	2,371.7	27.6%
Brokered Commercial insurance	137.5	18.3%	491.0	26.6%
Run-off partnerships6	34.5	10.6%	106.8	27.6%
Total Group	1,282.4	58.9%	2,969.5	27.4%
	30 Sep 2023	Change to 30 Jun 2023		Change to 31 Dec 2022
In-force policies - ongoing operations6,7 (thousands)	9,518	4.9%		1.3%

Trading update

• Total in force policies for ongoing operations up 4.9% in the third quarter, including around 725,000 Motability customers.
• Growth of 27.6% year to date in gross written premium and associated fees for ongoing operations, driven by premium rate increases in Motor and commencement of the Motability partnership⁴. Motor direct own brands⁸ average premium in Q3 up 37% compared with Q3 2022.
• Other business lines traded in line with previous trends, with premium growth in Home and Commercial Direct.
• Assumption for 2023 claims inflation⁹ for Motor and Home unchanged at high single digits.
• Claims from weather events to date, including recent storms, are currently estimated to be within the Group's annual assumption.
• Shareholder approval obtained for sale of the Group's brokered commercial business to RSA Insurance Limited, with initial consideration of £520 million received on 26 October 2023.

Jon Greenwood, Acting CEO of Direct Line Group, commented

“Throughout Q3 we have continued to address our three key priorities: to restore our capital resilience, improve our performance in Motor and maintain our performance in our other businesses.

"The sale of our brokered commercial business to RSA Insurance Limited strengthens our business strategically and financially.

"In Motor, we can see the pricing actions we have taken come through in strong premium growth during the quarter and we believe we are writing profitably, consistent with a 10% net insurance margin. At the same time, we have continued to progress our strategic agenda, launching Direct Line Essentials in Motor, which improves our competitiveness in the direct market, and we have welcomed around 725,000 Motability customers.

"We are confident that the decisive actions we are taking sets the Group up for improved performance going forward."

For further information, please contact
PAUL SMITH DIRECTOR OF BUSINESS PERFORMANCE AND INVESTOR RELATIONS		ALAN OLIVER GROUP COMMUNICATIONS
Email: paul.r.smith@directlinegroup.co.uk		Email: alan.oliver@directlinegroup.co.uk
Mobile: +44 (0)7795 811263		Mobile: +44 (0)7385 481295

APPENDIX 1: Gross written premium and associated fees²

​	Q3 2023	Q2 2023	Q1 2023	Q4 2022	Q3 2022
	£m	£m	£m	£m	£m
Gross written premium and associated fees2
Motor direct own brands3	425.8	391.3	352.9	333.6	376.1
Motor partnerships4	401.0	8.7	5.8	8.5	7.7
Motor	826.8	400.0	358.7	342.1	383.8
Home direct own brands3	107.2	89.1	94.4	95.0	104.4
Home partnerships	37.2	34.6	34.6	33.7	34.6
Home	144.4	123.7	129.0	128.7	139.0
Green Flag Rescue	27.7	21.5	19.4	19.0	28.7
Other Rescue and other personal lines	48.5	44.9	45.3	40.4	50.1
Rescue and other personal lines	76.2	66.4	64.7	59.4	78.8
Commercial direct own brands3	63.0	56.8	62.4	54.5	58.2
Ongoing operations6	1,110.4	646.9	614.8	584.7	659.8
Brokered Commercial insurance	137.5	196.7	156.9	142.6	116.2
Run-off partnerships6	34.5	38.3	34.0	40.7	31.2
Total Group	1,282.4	881.9	805.7	768.0	807.2

APPENDIX 2: In-force policies by segment⁴ (thousands)

​	30 Sep 2023	30 Jun 2023	31 Mar 2023	31 Dec 2022	30 Sep 2022
Motor direct own brands3	3,441	3,607	3,669	3,756	3,766
Motor partnerships4	795	66	72	80	88
Motor	4,236	3,673	3,741	3,836	3,854
Home direct own brands3	1,686	1,705	1,731	1,732	1,758
Home partnerships	748	759	765	769	775
Home	2,434	2,464	2,496	2,501	2,533
Green Flag Rescue	1,062	1,093	1,073	1,106	1,136
Other Rescue and other personal lines	1,134	1,196	1,275	1,318	1,336
Rescue and other personal lines	2,196	2,289	2,348	2,424	2,472
Commercial direct own brands3,7	652	645	643	636	644
Ongoing operations6,7	9,518	9,071	9,228	9,397	9,503
Brokered Commercial insurance	291	293	287	277	268
Run-off partnerships6	2,221	2,199	2,187	2,188	3,315
Total Group	12,030	11,563	11,702	11,862	13,086

APPENDIX 3: Motor and Home average premium (£)

​£	Q3 2023	Q2 2023	Q1 2023	Q4 2022	Q3 2022
New business	588	532	478	474	472
Renewal	480	412	373	362	343
Motor direct own brands8	507	445	401	392	372
New business	214	204	188	201	214
Renewal	257	249	230	226	215
Home direct own brands	250	243	224	223	215

Notes:

1.     Direct Line Group’s Trading Update relates to the three months and nine months ended 30 September 2023 and contains information to the date of publication.

2.    The total premiums from insurance contracts that were incepted during the period, including the impact of a contractual change to Green Flag premium such that a portion of income that was previously included in gross written premium is now included in service fee income.

3.    Direct own brands include in-force policies for Home and Motor under the Direct Line, Churchill, Darwin, Privilege and By Miles brands and Commercial policies under the Direct Line for Business and Churchill brands.

4.   Motor partnerships includes the Motability partnership, which has an initial term of 7 months from 1 September 2023. Subsequently, Motability premiums are repriced twice a year on 1 April and 1 October with gross written premium recognised twice a year on the same dates. As the Motability contract is a fleet contract, Motability customer numbers are used to allow a more representative presentation of the Group's in-force policies.

5.    As stated in footnote 4, above, the Motability partnership started on 1 September 2023, with no comparatives available resulting in significant distortion in comparatives for Motor partnerships as a whole.

6.    Ongoing operations – the Group has excluded a number of Rescue and other personal lines partnerships from its ongoing operations results. The run-off partnerships relate to a Rescue partnership with NatWest Group that expired in December 2022 and Travel partnerships with NatWest Group and Nationwide Building Society which expire in 2024, and which the Group has already indicated that it will not be seeking to renew. Relevant prior-year data has been restated accordingly.

7.    In-force policies as at 31 December 2022 and 31 March 2023 have been restated to remove 14,500 and 19,700 direct own brand policies respectively that were previously included in the reported amounts in error.

8.   Excluding the ByMiles brand.

9.    Based on attritional claims.