Reuters logo
UPDATE 1-Insurer Direct Line profit up on higher prices
February 28, 2013 / 7:51 AM / 5 years ago

UPDATE 1-Insurer Direct Line profit up on higher prices

* FY operating profit 461.2 mln stg vs 454 mln consensus

* Return to underwriting profit from year-earlier loss

* Final dividend 8 pence per share

LONDON, Feb 28 (Reuters) - Britain’s Direct Line Group , the motor insurer spun out of Royal Bank of Scotland , said it made a better-than-expected profit last year as it raised prices and withdrew cover from riskier drivers.

Britain’s biggest car insurer reported a 2012 operating profit of 461.2 million pounds ($698 million), up 9.3 percent on the year and ahead of the 454 million expected by analysts in a company poll.

In its first set of results since its stock market debut last October, Direct Line said the improvement reflected a turnaround in its core insurance business, which swung to a profit of 28.2 million pounds from a 72.3-million-pound loss in 2011.

The company has since 2010 been cutting costs, shunning high-risk drivers and pushing up prices to boost profits in preparation for life as a listed company.

Chief Executive Paul Geddes warned that stiff competition and regulatory changes would pose a challenge in 2013.

“There is no room for complacency as we face a competitive market, particularly in UK motor, where there are also expected to be significant legal reforms,” he said on Thursday.

Britain’s regulators are investigating the motor insurance market after a probe by consumer watchdogs concluded that ineffective competition was inflating drivers’ insurance costs.

RBS, ordered by European regulators to dispose of Direct Line as condition of its 2008 taxpayer bailout, sold about a third of the company to stock market investors in October.

Shares in the insurer have risen 20 percent since then.

Direct Line is paying a final dividend of 8 pence per share, ahead of the 7.8 pence pencilled in by analysts.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below