* Cutbacks to save co 130 mln stg annually by 2014
* Co to record 150 million pounds in restructuring costs in
* Shares rise as much as 6 pct
By Richa Naidu
June 26 Britain's Direct Line Insurance Group
Plc, the motor insurer spun out of Royal Bank of
Scotland, said it plans to axe about 2,000 positions,
joining fellow insurers looking to trim costs and boost profits
in a sluggish and competitive market.
The company said the cutbacks would allow it to save a
further 130 million pounds ($200 million) annually by 2014,
targeting a cost-base of about 1 billion pounds in 2014.
Britain's biggest car insurer, which has about 15,000
employees, has been cutting costs and avoiding high-risk drivers
since 2010 to protect itself from stiff competition, and new
regulation in the British motor insurance market.
"If you go back 20 years, a lot of the paperwork was done by
brokers. As insurers have gone more direct and more automated,
they've needed fewer and fewer people," Barnard said.
Several insurers, including Aviva Plc, AXA
and Standard Life, have cut their workforce in recent
months in an effort to reduce costs and prepare for new
regulations that include higher capital requirements.
Direct Line, whose brands include Churchill, Privilege and
the Green Flag roadside recovery service, said it continued to
expect the migrating of its IT infrastructure to cost about 100
The company said the job cuts announced on Wednesday would
include head office and support positions.
RBS in October floated almost one-third of Direct Line's
shares, fulfilling conditions of a government bailout during the
2008 financial crisis, which left the bank 82 percent
"Direct Line was very unprofitable for many years, part of
the upside of the IPO was that they were going to restructure
the organisation," Berenberg's Sami Taipalus said.
Last year, Direct Line said it would cut nearly 900 jobs as
part of a plan to make it more profitable ahead of its stock
"It wouldn't surprise me if there'd be more (cuts) from
Direct Line, but they'll probably do at most one of these a
year," Oriel Securities analyst Marcus Barnard said.
Direct Line, which also offers home, travel and pet
insurance, said on Wednesday it expected to record 150 million
pounds of its 180 million pound restructuring costs in 2013 or
Since its October 2012 float, Direct Line's shares have
gained 17 percent, giving it a market value of about 3.29
billion pounds. Direct Line's shares were up 5 percent at 230
pence at 0915 GMT on the London Stock Exchange.