OPERATING PROFIT UP AT DIRECT LINE ON LOWER GWP

UK-based insurer Direct Line Group has reported an ongoing operations operating profit of £417.8m ($670.0m) for the first nine months of 2013, up from £347.9m in the same period last year, on gross written premiums (GWP) of £2.954bn, down from £3.085bn. The technical result improved to £122.4m from £8.4m, more than compensating for a decline in the investment return. Direct Line said that the fall in GWP reflected "competitive market conditions in UK personal lines, partially offset by growth in International and Commercial". The combined ratio for the period was 95.4%, from 99.7% in the same period last year. Direct Line Group consists of the several insurance operations – Direct Line itself, Privilege, Churchill, NIG and Green Flag – partially sold off by Royal Bank of Scotland in October last year via an initial public offering. It said this morning that it anticipates a 15% return on tangible equity for 2013, with a combined ratio of 98% or better. The insurer revealed that 20% of drivers under the age of 25 now used a telematics "black box" to measure driving and usage. However, there was no further news on the rumoured sale by Direct Line Group of its telematics operation Tracker, which is loss-making and, with its manufacturing component, does not fit in with the ongoing Direct Line strategy. If Tracker were sold, for an amount reported to be less than £10m, the group would retain other telematics-related businesses. Referring to Direct Line Group's performance, CEO Paul Geddes said that "even after allowing for normal weather losses, our performance proves we are delivering our self-help agenda and making good progress towards our strategic targets".