Direct Line Insurance Group PLC trading update for Q3 2024

Early operational progress towards our targets

Adam Winslow, CEO of Direct Line Group, commented:

"We delivered double-digit premium growth year on year in Motor, Home and Commercial Direct. However, we are in the early stages of a significant turnaround and our Q3 trading is not yet fully reflective of the actions we have taken. In Motor, trading conditions have been challenging although we continued to grow policy count on price comparison websites ("PCW") and have worked at pace on the launch of the Direct Line brand in this channel.

"We are making good progress against our gross cost savings target, with around £50 million expected to be delivered in 2025 from improvements in procurement, technology rationalisation and simplifying our operating model.

"I'm pleased with the strategic and operational progress we are making across the business. I'm delighted that Jane Poole recently joined as CFO and is already focused on reviewing our financial strategies, policies and controls. In total we have hired eight² new Executive leadership team members, six of whom have already started. This reinforced and refreshed team will help us unlock the potential of DLG and deliver the strategy we set out at the Capital Markets Day in July.

"We believe the steps we are taking will position the company for enhanced profitability and growth as we build on our strong foundations to become the customers’ insurer of choice."

Operational and strategic update: Early progress towards our targets

• Motor: Product build for launch of Direct Line on PCW is well developed and a PCW launch partner has been selected.
• Home: Further progress made with re-platforming which brings new capability and supports simplification. Privilege is live on four leading PCWs and Churchill is live on the largest.
• Rescue: Green Flag recently signed two new contracts, including a collaboration with Apple, becoming the only UK breakdown brand to offer rescue services as part of Apple's roadside assistance via satellite.
• Cost saving programme: A series of initiatives aimed at simplifying the organisation is projected to deliver £50 million gross costs savings in 2025, showing material progress towards our target of at least £100 million gross cost savings by the end of 2025, on a run rate annualised basis. Our drive to create a leaner and more efficient operating model is advancing, with consultations currently taking place as part of a proposed reduction of around 550 roles.

Trading update

• Gross written premium and associated fees from ongoing operations grew 11.8% year on year supported by growth of 11.4% in Motor and 12.9% in Non-Motor. As a reminder, 2024 reflects six months of Motability³ premiums compared with seven months in 2023.
• Motor own brands delivered premium growth of 2.9% year on year due to higher average premiums. In-force policies declined across Q3, however we experienced a reduction in the rate of decline and delivered 3% growth in the PCW channel.
• In Motor, trading conditions were competitive in Q3 and we remained disciplined in both pricing and risk selection. We experienced a higher level of large bodily injury claims in Q3, with experience in H1 and Q4 to date in line with expectations.
• Non-Motor premium growth was strong at 12.9%. Home own brands delivered 21.6% growth in gross written premium year on year and a fourth consecutive quarter of policy count growth. Commercial Direct and Rescue premiums were 11.8% and 0.7% higher year on year respectively.

Outlook

We continue to target 7% to 10% compound annual growth ("CAGR") in gross written premium and associated fees between 2023 and 2026 in Non-Motor, and we reiterate our net insurance margin target for ongoing operations, normalised for event weather, of 13% in 2026.

Trading summary

	9 months	9 months	Change
	2024	2023
	£m	£m
Gross written premium and associated fees
Own brands4,5	1,213.7	1,179.3	2.9%
Partnerships3,5	551.9	406.2	35.9%
Motor	1,765.6	1,585.5	11.4%
Own brands4	353.4	290.7	21.6%
Partnerships	110.5	106.4	3.9%
Home	463.9	397.1	16.8%
Rescue: Green Flag	70.7	68.6	3.1%
Rescue: Linked	25.8	28.0	(7.9%)
Rescue: Partners and other	13.9	13.0	6.9%
Rescue	110.4	109.6	0.7%
Commercial Direct4	203.7	182.2	11.8%
Non-Motor	778.0	688.9	12.9%
Ongoing operations6	2,543.6	2,274.4	11.8%
Non-core and Run-off6	149.8	204.4	(26.7%)
Brokered commercial insurance6	438.4	491.0	(10.7%)
Total Group	3,131.8	2,969.8	5.5%
	30 Sep 2024	31 Dec 2023	Change to 31 Dec 2023
In-force policies - ongoing operations6,7(thousands	8,975	9,339	(3.9%)

For further information, please contact:

DHRUV GAHLAUT

CHIEF STRATEGY AND INVESTOR RELATIONS OFFICER

Email: dhruv.gahlaut@directlinegroup.co.uk

Mobile: +44 (0)7385 481177

ROGER LOWRY

DIRECTOR OF CORPORATE AFFAIRS

Email: roger.lowry@directlinegroup.co.uk

Mobile: +44 (0)7881 553155

Download the full anouncement

Notes:

1. The Trading Update relates to the three months and nine months ended 30 September 2024 and contains unaudited information to the date of publication.
2. In addition to the seven new members referred to in the Capital Market Day update in July, a new Chief People Officer is now scheduled to join in early 2025.
3. Motor partnerships includes the Motability partnership, which started on 1 September 2023, and resulted in significant growth in the third quarter of 2023. From 2024, the majority of Motability gross written premium is recognised twice a year on 1 April and 1 October. As the Motability contract is a fleet contract, customer numbers are used to allow a more representative presentation of the Group's in-force policies.
4. Own brands include in-force policies for Motor under the Direct Line, Churchill, Darwin, Privilege and By Miles brands, Home under the Direct Line, Churchill and Privilege brands and Commercial Direct policies under the Direct Line and Churchill brands.
5. Gross written premiums for the By Miles brand which were previously reported within Motor partnerships have been reallocated to own brands. There is no impact on in-force policies.
6. Ongoing operations – the Group's ongoing operations result excludes the results of the Brokered commercial business, that it sold to RSA Insurance Limited in 2023, and its Non-core businesses, announced at the Group's 2024 Capital Markets Day, and three Run-off partnerships that the Group completed its exit from in H1 2024. Relevant prior-year data has been restated accordingly.
7. Total in-force policies have been adjusted as follows: policies associated with bordereaux business on Commercial Direct have been added across all periods, and 1,771,000 policies in Non-core and Run-off as of 31 March 2024, previously included in the Q1 Trading Update, have been removed.
8. A reclassification between Rescue Partners and other and Rescue Linked has been made to reflect how these businesses are managed.
9. Excluding the By Miles brand.