Direct Line premiums drop 5% in Q1, big freeze to use up year's weather budget

Insurer Direct Line reported a 5% drop in gross written premiums for the first quarter on Wednesday and warned that claims associated with the cold weather at the beginning of the year would eat up its full annual weather budget.

Total gross written premiums in the period fell to £769.9m from £810.3m in the first quarter of last year and the company said claims associated with the big freeze would be around £50m.

Motor premiums were up 2.9% in the quarter to £404m, while home own brands nudged up 0.4% £96m. However, home partnerships premiums slumped 52.3% to £47.3m and rescue and other personal lines premiums were down 0.6% to £103.6m.

Total in-force policies declined 2.2% to 15,469, but direct own brand policies were 5% higher at 6,966.

Chief executive officer Paul Geddes said: "The freezing weather earlier this year hit many drivers, households and businesses hard, and I am proud of the way our people helped our customers during this difficult period, demonstrating the value of our insurance cover and service. We estimate the claims associated with the major freeze event will utilise the group's full annual weather budget.

"In Motor, the premium rises in the first half of 2017 have now largely reversed as customers benefitted from last year's favourable claims environment. On partnerships, Royal Bank of Scotland Home returned to policy growth for the first time since 2012, benefitting from our investment in digital capabilities, and Volkswagen joined our portfolio of Motor partnerships.

"We are pleased we were able to grow while maintaining our discipline on loss ratios and we reiterate our full year targets."