Direct Line Insurance Group’s pre-tax profit slides to £451 million in 2020
- Direct Line Insurance Group’s pre-tax profit slides to £451 million in 2020.
- The insurance firm booked £39 million of restructuring and non-recurring costs.
- Direct Line’s board declared 14.7 pence a share of final dividend on Monday.
Direct Line Insurance Group plc (LON: DLG) said on Monday that its pre-tax profit posted a decline in 2020 amidst the ongoing Coronavirus pandemic. The company still announced a share buyback and a final dividend on Monday.
Direct Line shares tanked roughly 1% in premarket trading on Monday but recovered the loss on market open. Later in the day, however, the stock again slid 4% to trade at £3.2 per share versus £3.25 per share at the start of 2021.
Direct Line booked £39 million of restructuring and non-recurring costs
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Direct Line said that its pre-tax profit printed at £451.4 million in 2020. In the previous year, its profit before tax had come in at a higher £509.7 million. The company attributed the decline to £39.4 million of restructuring and non-recurring expenses related to cost-saving that it said weighed on its operating profit last year.
In its earlier report for the fiscal first half published in August, the London-based company had registered £220.5 million of operating profit. In its statement, Direct Line said on Monday:
“The results have been affected by the usual variability around weather events, but the addition of the factors surrounding COVID-19 make them more difficult to navigate than in previous years.”
The FTSE 100 listed company valued gross written premiums in 2020 at £3.18 billion versus the year-ago figure of £3.20 billion. As per Direct Line, its combined operating ratio stood at 91.0% last year, compared to a higher 92.2% in 2019.
The non-life insurer said its solvency capital ratio came in at 191% in 2020 – an improvement from 165% in the previous year.
Direct Line’s board declared 14.7 pence per share of final dividend
Direct Line’s board announced 14.7 pence per share of final dividend on Monday. The British firm expressed plans of buying back up to £100 million worth of its shares in 2021. It also highlighted that it was aiming for a 93% to 95% of combined operating ratio this year.
Direct Line’s financial update comes a week after its rival, Admiral Group plc, said its profit jumped in 2020 as people drove less due to the ongoing health emergency.
Direct Line remained almost flat on average in the stock market last year with an annual gain of close to 1% only. At the time of writing, the UK-based insurance company has a market cap of £4.24 billion and a price to earnings ratio of 11.16.