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Direct Line GWP Drops 4.5% Amid ‘Competitive Market Conditions’ – UK’s Largest Personal Lines Insurer Increases Operating Profits 32.9% In First Quarter

Direct Line’s gross written premium (GWP) for on-going operations fell 4.5% amid “competitive market conditions” in the UK personal lines space.

Chief executive Paul Geddes said the firm had “made some deliberate choices in the first quarter” to reduce premium.

The group’s operating profit shot up 32% to £107.5m in the first quarter (2012: £80.9m).

Combined operating ratio for on-going operations improved to 98% (104.5%) driven by lower weather-related claims and continued reserve releases.

However, the book was boosted by 13.9% of reserve releases. It meant that on an underlying basis, excluding weather losses and reserve releases, the combined ratio stood at 111.9%.

The group enjoyed good growth in its international division, particularly Germany. It has also now completed full-cycle e-trading for NIG.

Chief executive Paul Geddes said: “We continue to make progress towards achieving our financial targets with an increase in our on-going operating profit of 33% to £107.5 million compared to the first quarter of 2012.

“The UK market remains competitive, particularly in motor. We made some deliberate choices in the quarter that had the effect of reducing our motor premiums.

“We believe these choices achieved an appropriate balance between managing risk and protecting value.

“Momentum across our five strategic pillars was sustained, and independent control of our cost base continues to present us with opportunities to improve efficiency.

“We continue to monitor and support the implementation of motor legal reforms, the impact of which we expect to be at least net neutral in the medium term.

“Reduced claims arising from these reforms should, over time, contribute to lower premiums for motorists, especially young drivers.”

Return on equity from on-going operations was 12.3% (pro-forma 13.4%)

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