The insurance group said higher prices helped return its motor division to profitability last year. It reported an underlying operating profit of £205m for 2024, swinging from a loss of £190m the year before
Direct Line is hailing significant progress in its revitalisation strategy, aiming for annual cost savings of £100m as it gears up for acquisition by insurance heavyweight Aviva.
The company revealed that a rise in prices boosted its motor division back into the profitability last year. The insurer announced an underlying operating profit of £205m for 2024, which was a sharp pivot from a loss of £190m the previous year.
The recovery was largely due to the resurgence of its motor business, where Direct Line provides insurance and breakdown cover. Average premiums – the figure customers shell out for their policies – soared after Direct Line increased its prices to stay competitive with other market players.
New motor insurance policies rose on average to £583 from £551 in 2023, while for existing customers the average premium leapt to £508 from £441. Gross written premiums – the collective sum paid by policyholders – experienced a quarter-on-quarter increase to £3.7bn.
Adam Winslow, the chief executive, expressed that inflation has nudged claim costs upwards, notably within home and motor sectors, as expenses for repairs and replacements have climbed over past years. Despite insurers grappling with the challenge of juggling affordable premiums and maintaining profitability, Mr Winslow stood firm, stating that the group’s turnaround efforts have “made a marked difference to the company’s performance” since its kick-off in July.
In an effort to streamline operations, the business has initiated drastic cost-cutting measures, aiming to reduce its annual expenses by up to £100m by the end of 2025. A portion of these savings will come from shedding jobs, with 550 positions set to be cut.
Direct Line is also on the cusp of a major corporate shakeup as it gears up for a takeover by Aviva, following an agreement for a £3.7bn acquisition at the close of last year. This merger is poised to create a powerhouse in the motor insurance industry, commanding over 20% of the total market share.
Mr Winslow remarked on the preparations for the takeover, which is pending approval from shareholders and regulatory bodies. He emphasised the importance of maintaining momentum in organisational transformation, insisting that they will not “take our foot off the accelerator when it comes to business change” during this transitional period.
