Direct Line share price dips even as group delivers rise in profits

Blue-chip insurer unveils special payout to shareholders

Direct Line share price dips even as group delivers rise in profits

Shares in Direct Line Group (LON:DLG) have fallen into the red in today’s session, even as the blue-chip insurer posted a rise in profits for the year ended December 31, 2017, and announced a special payout to shareholders. The results come after earlier this month, the blue-chip insurer announced that its full-year profits will come in ahead of market expectations.

As of 10:24 GMT, Direct Line’s share price had lost 0.85 percent to 385.40p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.11 percent higher at 7,297.35 points. The group’s shares have added more than 13 percent to their value over the past year, as compared with a 0.64-percent rise in the Footsie.

Direct Line posts results

Direct Line announced in a statement today that its operating profit from ongoing operations had soared 51.4 percent to £610.9 million last year, while the group’s gross written premium had come in 3.6 percent higher at £3.39 billion. The company proposed an increase in its final dividend by 40.2 percent to 13.6 pence, bringing its total ordinary dividends for the year to 20.4 pence, and declaring a special dividend of 15.0 pence. 

“2017 is the fifth successive year in which we have delivered a strong financial performance,” the blue-chip insurer’s chief executive Paul Geddes commented in the statement, adding that Direct Line had seen ‘significant growth’ in its direct own brand policies.

Analysts on blue-chip group

Despite the upbeat results, Shore Capital reiterated its ‘sell’ rating on Direct Line today, without specifying a valuation on the shares, while Peel Hunt continues to see the company as an ‘add,’ with a price target of 415p. According to MarketBeat, the FTSE 100 group currently has a consensus ‘hold’ rating and an average price target of 414.14p.

As of 10:46 GMT, Tuesday, 27 February, Direct Line Insurance Group PLC share price is 386.60p.

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