Direct Line Group has beaten its 2013 combined operating ratio (COR) target of 98%, reporting a 96.1% COR for the year.<\/p>\n
This was a 3.1 percentage point improvement over 2012\u2019s COR of 99.2%.<\/p>\n
The COR improvement was driven by \u201chigher than expected\u201d reserve releases of \u00a3435.1m (2012: \u00a3322m), which shaved 12.4 percentage points from the COR (2012: 8.7 points).<\/p>\n
The improvement came despite continued competition in motor, where Direct Line Group cut rates by 3%, and \u00a389m of weather claims – \u00a369m in home insurance and up to \u00a313m in commercial.<\/p>\n
The group also boosted profit after tax from continuing operations by 15% to \u00a3375.2m (2012: \u00a3326.5m).<\/p>\n
However, gross written premium was down 4.1% to \u00a33.8bn (2012: \u00a34bn) as the company continued to underwrite selectively.<\/p>\n
\u2018Good progress\u2019<\/p>\n
Direct Line Group chief executive Paul Geddes said: \u201cWe have continued to make good progress on our strategic priorities, helping us to achieve our 2013 financial targets in highly competitive markets.<\/p>\n
\u201cIn UK motor, our improved pricing capability and claims management, as well as benefits arising from recent legal reforms, enabled us to reduce average prices for customers by 3% during 2013.<\/p>\n
\u201cIn home, recent UK weather events have emphasised the importance of insurance. I am proud of our people who have been working tirelessly around the clock to assist customers affected by the floods and storms, both on the phones and on the ground.\u201d<\/p>\n
He added: \u201cLooking forward to 2014, we will continue to pursue our strategic priorities and self-help agenda to enable us to deliver benefits for our customers and shareholders.\u201d<\/p>\n
More weather claims to come<\/p>\n
Direct Line Group incurred \u00a369m of weather claims in its home insurance business in 2013 and betwen \u00a312m and \u00a313m in its commercial division.<\/p>\n
Most of the claims came from the flooding in the fourth quarter.<\/p>\n
The company also estimates that the continued bad weather in 2014 will cost it between \u00a370 and \u00a390m in the home business alone, with a further \u00a320m coming from comercial.<\/p>\n
However, the company warned that the estimates were early. It said: \u201cMore certainty around the actual claims costs will be possible only once flood waters have receded.\u201d<\/p>\n
Commercial boost<\/p>\n
Despite incurring \u00a320m of weather related claims in the year, Direct Line Group\u2019s commercial division quadrupled its operating profit to \u00a39.5m (2012: \u00a32.2m).<\/p>\n
The division is still making an underwriting loss: Its 2013 COR was 106.8%. However this is 1.4 points better than 2012\u2019s 108.2%.<\/p>\n
The company said its commercial COR would have been 104% excluding the weather claims, and added that the unit continues to enjoy \u201csignificant reserve releases\u201d.<\/p>\n
Direct Line Group is targeting a commercial COR below 100% for 2014.<\/p>\n","protected":false},"excerpt":{"rendered":"
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