Direct Line premiums drop amid challenging home, motor markets

Direct Line reported a decline in gross written premiums on Tuesday as it pointed to a challenging market backdrop for the motor and home segments.

In the nine months to 30 September, total gross written premiums fell 3.5% to £2.3bn. Within that, motor premiums declined 8.9% to £1.1bn, while the home segment saw a 10.1% drop to £389.4m.

In rescue and other personal lines, gross written premiums rose 1.3% to £298.1m, while the commercial business saw a 12.8% increase to £552.2m.

In the third quarter, total gross written premiums fell 5.8% to £807.2m, coming in below consensus expectations of £861.4m. Motor and home premiums were down 13% and 10.3% to £383.8 and £139m, respectively. In the commercial segment, however, premiums were up 13.7% to £174.4m.

Chief executive officer Penny James said: "Trading across the group was broadly in line with our expectations given the challenging market backdrops in motor and home, whilst we continued to deliver strong growth in commercial.

"The pricing actions we have taken to restore margins in motor led to a reduction in new business sales; however, we were encouraged to see this improve steadily across the quarter as the market hardened. Having restored our motor targeted written loss ratios, based on our claims assumptions, we maintained these throughout Q3, with inflation developing in line with our expectations."

Direct Line said that based on current economic conditions and actions it has already taken, its 2023 and medium-term targets and the outlook for dividend capacity remain unchanged.