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Highlights
- Gross written premiums from ongoing operations grew 11.8% year-over-year, supported by notable gains in Motor (11.4%) and Non-Motor (12.9%) segments.
- Direct Line’s Motor and Home divisions have made significant strides in product launches and platform re-development, positioning the company competitively in price comparison websites (PCWs).
- Direct Line’s cost-saving program aims for £50 million in gross savings in 2025, progressing toward a target of £100 million by year-end 2025.
Direct Line Insurance Group PLC (LSE:DLG) released its Q3 2024 trading and operational update, reporting early progress toward key strategic targets. The company highlighted growth in gross written premiums, advancements in product development, and updates on its ongoing cost-saving program.
Motor Division:
Direct Line’s Motor segment has developed its new product line for Direct Line on price comparison websites (PCWs) and has chosen a launch partner. Motor premiums saw a growth of 11.4% year-over-year, driven by an increase in average premiums despite a slight decline in in-force policies. Notably, PCW channels delivered a 3% rise in motor policies. However, trading conditions remained competitive, and Direct Line saw a higher incidence of large bodily injury claims in Q3, which impacted its overall performance in the segment.
Home Division:
The Home division has made further strides in platform re-development, enhancing its capabilities and supporting process simplification. Key brands, Privilege and Churchill, are now live on multiple leading PCWs, giving Direct Line a strengthened position in the home insurance market. The division delivered a robust 21.6% increase in gross written premiums, marking the fourth consecutive quarter of policy count growth.
Rescue Division:
In the Rescue segment, Direct Line's Green Flag brand achieved a notable milestone by signing two new contracts, including a unique collaboration with Apple. This partnership positions Green Flag as the only UK breakdown service integrated with Apple’s satellite-based roadside assistance service, bolstering its competitive edge in the market.
Cost-Saving Program:
Direct Line continues to make strides in its cost-saving initiatives, targeting £50 million in gross cost savings for 2025, with a larger goal of £100 million by the end of the year. As part of this program, Direct Line is restructuring for efficiency, proposing a reduction of approximately 550 roles. These measures aim to create a more streamlined and cost-effective organization.
Q3 2024 Financial Performance: The trading update reflects strong financial growth. Gross written premium and associated fees from ongoing operations rose by 11.8% year-over-year, supported by Motor and Non-Motor segments' respective growths of 11.4% and 12.9%. Motor own brands delivered a modest premium growth of 2.9%, with an emphasis on disciplined pricing and risk selection. In Non-Motor, the Home division drove much of the growth, with a 21.6% increase in gross written premiums and sustained policy count expansion. Additionally, the Commercial Direct and Rescue divisions reported respective gains of 11.8% and 0.7%.
Outlook: Direct Line remains committed to achieving 7% to 10% compound annual growth (CAGR) in gross written premium and associated fees within its Non-Motor segment from 2023 to 2026. The company also reiterates its target for a 13% net insurance margin on ongoing operations by 2026, adjusted for event-driven weather impacts.
