Direct Line hikes divi as first-half profit rises

Direct Line posted a 9.5% jump in first-half operating profit on Tuesday as gross written premiums rose 5% and the insurer bumped its dividend up by 39%.

Operating profit came in at £354.2m from £323.6m the year before, with gross written premiums of £1.7bn compared to £1.6bn in the first half of 2016, while the interim dividend was lifted to 6.8p per share from 4.9p.

The company said it continued to benefit from its “strong, competitive” position in the Motor business, growing gross written premium 9.9% and in-force policies 4.9% in the first half, mostly driven by the strength of the Direct Line brand.

Chief executive officer Paul Geddes said: "The group delivered another strong first half performance, as we continued to focus on giving customers what they want. In particular, we are pleased with the continued momentum in our Direct Line brand, which shows that customers value the great service and unique insurance propositions we are offering in both Personal Lines and Commercial Lines.

"Today the board is rebasing the group's regular dividend upwards to reflect its confidence in the group's earnings and the progress the business has made since the IPO nearly 5 years ago when the group's dividend policy was previously set. We aim to grow the regular dividend in line with business growth, which we expect to be in the region of 2% to 3% per annum over the medium term.”

Direct Line reiterated its 93% to 95% combined operating ratio target for 2017 and extended this target over the medium term.