Direct Line first-half profit rises amid fewer claims

4th Aug 2015 08:37

(ShareCast News) - Direct Line Insurance Group reported a rise in pre-tax profit for the first half and a largely unchanged gross written premium, as it said underlying trends remain broadly in line with prior expectations.Pre-tax profit for the six months ended 30 June came in at £427.8m, up from £175.6m in the first half of 2014 amid fewer claims, while the gross written premium from ongoing operations - used by insurance companies instead of revenue - was up 0.4% to £1.55bn.The insurer raised its interim dividend to 4.6p per share, up from 4.4p in the same period last year.Chief executive officer Paul Geddes said: "Our first half performance shows the benefits of the many improvements that we continue to make to our business. Customers have reacted positively to the refreshed propositions for Direct Line and Churchill, as well as better customer service. This has led to increased retention rates and, in particular for the Direct Line brand, improved Net Promoter Scores. Together, this has helped us to hold our gross written premium flat in competitive markets."With the completion of the International disposal, we are now totally focused on UK general insurance, and our capital and reserves remain strong. We are busy improving our efficiency, propositions and technology to make insurance much easier and better value for our customers."Direct Line also said on Tuesday that it now expects to achieve a combined operating ratio for 2015 of between 92% and 94%, which is an improvement on previous guidance of 94% to 96%. The COR is a key measure of underwriting profitability.Nomura, which rates the stock at 'buy', said the results were "very strong" and noted the improvement in full-year guidance for the combined ratio, saying it bodes well for the special dividend at full year."We believe the group will be able to return specials in the medium term, and the attractive yield (of around 6%) should be supportive of the shares," it said.At 11:03, Direct Line shares were up 1.6% at 372p.