Direct Line News Update: The Good Summer Saw Profits Rise
Direct Line news update: The good summer saw profits rise as a 96% surge was recorded in the first six months of the year, even against stiff competition.
Direct Line are the biggest motor and home insurer in the UK. They were spun off from the Royal Bank of Scotland last year and were delighted with the dramatic improvement in their profit margin. This was thought likely to have been due to a drop off in claims as a direct link to the better weather that the country enjoyed this summer, coupled with the fact that the company had lowered its exposure to drivers that were more likely to be a risk. The bottom line had also been boosted by a drive for cost cutting that had been carried out company wide.
Part of the cost cutting exercise has seen the axing of more than three thousand jobs across the company. The CEO of the company, Mr Geddes said that he was very pleased with the results even with the good weather conditions that were experienced during the financial period. He also said that the transformation plans for the company would ensure that the home and car insurance side of the business reaped good benefit. He added that operational profit across the International and Commercial side of the business had doubled in the financial period when they were compared to figures from the first half of 2012.
Direct Line News Update
All insurers in the UK face a range of changes in regulation that include the ban on discriminating between female and male drivers and in April the halving of the fixed fees charged by claimant’s legal teams. The impact of this change, Mr Geddes said, was difficult to predict. The brands that are under the umbrella of Direct Line are Green Flag roadside recovery and the insurers Churchill and Privilege. Mr Geddes said that he was confident that targets would be met in the combined operating ratio that is a calculation of the premium proportion that is paid out in claims.
Last year parent company Royal Bank of Scotland floated nearly 33% of Direct Line shares to fulfill the conditions that had been set in relation to a government bail out that took place during the financial crisis of 2008. This move saw the bank reverting to over 80% state ownership status. Since that time the bank has lowered its share in the insurance group to forty eight and a half per cent through the sale of shares.
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