Direct Line's profit rises on fewer home insurance claims

Wed Feb 26, 2014 2:29am EST

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Feb 26 (Reuters) - Britain's Direct Line Insurance Group reported a rise in full-year profit as it recorded fewer claims in its home insurance unit and tapped into reserve releases to counter a slide in car insurance premiums.

The insurer, spun out of Royal Bank of Scotland in the wake of the financial crisis, said it aimed to achieve a combined operating ratio (COR) of between 95 percent and 97 percent in 2014. A COR below 100 percent means an insurer earns more in premiums than it pays out in claims.

Pretax profit increased about 70 percent to 312.8 million pounds ($521.83 million) in the year ended Dec. 31. Fourth-quarter pretax profit rose 51 percent to 90.9 million pounds, despite an unusually strong spate of storms that inundated chunks of Britain during the period.

Net earned premiums fell 5 percent to 3.52 billion pounds.

Direct Line, whose brands include Churchill, Privilege and the Green Flag roadside recovery service, said it would pay a final dividend of 8.4 pence per share, 5 percent higher than last year.

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