Direct Line's first-quarter premiums rise

In a trading update for the first quarter to the end of March, Direct Line said gross written premiums for ongoing operations rose 4.2% to £777.8m.

Motor gross written premium were up by 10.5% in comparison to the first quarter of 2015 as premium inflation returned to the market, which in part reflects ongoing claims inflation.

Motor and Home own brands in-force policies grew for a second successive quarter, with continued growth in Green Flag direct and Commercial direct.

The company said trading benefited from investment in Direct Line brand differentiation and proposition initiatives, with continued strong customer retention rates in Motor and Home.

Investment income yield was maintained, with a significant improvement in the available-for-sale reserve. Net investment losses of £7.7m mainly reflect decisions to sell certain assets in the high-yield portfolio, Direct Line said.

The insurer said it still expects to achieve a 2016 combined operating ratio – a gauge of underwriting profitability – of 93% to 95% for ongoing operations, assuming a normal annual level of claims from major weather events.

Chief executive officer Paul Geddes said: “This was another quarter of top line growth for Direct Line Group, as customers responded favourably to the many improvements we have made to the business over the last few years.

For the rest of 2016, we will aim to build on these foundations, while keeping a firm control of our costs, and we reiterate our combined operating ratio target.”

At 0814 BST, Direct Line shares were up 0.3% to 369.40p.