Direct Line profit falls, chairman to step down

In the year to the end of December 2019, pre-tax profit fell to £509.7m from £580.5m as gross written premiums dipped 0.3% to £3.2bn. Direct Line said underwriting discipline resulted in fewer motor and home policies and lower premiums, largely offset by growth in Green Flag and Commercial direct own brands.

The coronavirus outbreak has the potential to impact the 2020 results of its travel business and so far, the company has incurred claims of around £1m, it said. The group has travel reinsurance protection to mitigate the cost of an event over a 28-day period to £1m up to a limit of £10m.

Chief executive officer Penny James said: "We have delivered a good set of results, and continued to improve the quality, while navigating a difficult motor market and delivering significant change in the business. Our cost reductions and model of disciplined underwriting helped maintain a combined operating ratio of 92.2%, supported by all our product lines.

"This helped deliver 2.9% growth in our final dividend to 14.4 pence and I'm pleased to announce the launch of a share buyback of up to £150 million which we expect to complete by the end of July 2020."

James said the motor insurance market began to show signs of improvement in the second half, helping the company return to growth while its other major markets were competitive, with pricing largely keeping pace with inflationary cost pressures.

Direct Line also said that Mike Biggs, who has been chairman since April 2012, plans to step down from the board in 2020 following the appointment of a successor.