Direct Line (LON:DLG) has updated investors on its half-year performance this morning.
Highlights from the company statement:
Gross written premium for ongoing operations1 3.9% higher, with strong growth in Motor in-force policies (up 2.5%) and premium rates (up 9.5%)
Combined operating ratio1 from ongoing operations continued to be strong at 89.6%, 0.2pts higher, including Flood Re levy impact of 1.6pts. Motor current-year attritional loss ratio1 improved by 1.0pt
Operating profit from ongoing operations decreased £12.2m to £323.6m, after £18.5m lower investment gains
Return on tangible equity1,2 of 23.1% (1H 2015: 21.2%). Profit before tax decreased £16.5m to £298.5m (1H 2015: £315.0m)
Interim dividend per share of 4.9 pence (1H 2015: 4.6 pence) and special interim dividend of 10.0 pence per share
Post dividends, the Group's estimated Solvency II capital3 coverage ratio was 184% (pre-dividends: 199%)
Paul Geddes, CEO of Direct Line Group, commented
"I am pleased with our results over the first half of 2016, as we delivered an excellent performance against a very strong comparator from the previous year. We have generated operating profits of over £320m in spite of weaker investment markets and the addition of the new Flood Re levy. Our customers continued to respond well to the refreshed propositions of our brands, which is reflected in another increase in the number of our own brands policies. Together, this demonstrates the benefits of the improvements we have made to strengthen our business.
"Although there remains a range of uncertainties in the macro-economic environment, we gain confidence from the strength of this performance, the transformation of the business and the approval of our partial internal model. These factors enabled us to increase the interim dividend to 4.9p and to declare an additional special interim dividend of 10.0p, representing a total payout to shareholders of £204.9m."
The Group maintains its combined operating ratio expectation for 2016 in the range of 93% to 95% for ongoing operations, assuming a normal annual level of weather claims. If current trends continue throughout the second half, the Group expects the ratio for the full year to be towards the lower end of this range, reflecting improved trading and higher than expected prior-year reserve releases in the first half of the year.