Insurance group Direct Line, spun off by Royal Bank of Scotland last year, has overcome “highly competitive” market conditions to deliver a 20 per cent jump in profits for the first nine months of the year.
The firm, still 28.5 per cent owned by RBS, also said that costs associated with its restructuring plans will be lower than previously thought.
In June, the insurer said it would axe about 2,000 jobs, on top of more than 1,200 announced last year, as it seeks to trim £130m from costs. Today, it predicted its restructuring bill would be about £220m – £30m less than estimates – as operating profits for the nine months to September hit £417.8m, from £347.9m a year earlier.
Lower costs and a sharp drop in weather-related claims helped its combined operating ratio (COR) – a key measure of profitability for the insurance sector – improve to 95.4 per cent, compared with 99.7 per cent for the same period last year. A figure below 100 per cent shows more is being received in premiums than paid out in claims.
Chief executive Paul Geddes said the group – which owns Churchill and Privilege, along with the Green Flag breakdown service – was on track to meet its full-year target of a 98 per cent COR. He added: “ Our performance proves we are making good progress towards our targets.”
Direct Line last month promised a £60m windfall for shareholders after agreeing to sell its closed-book life business to
insurance acquisition vehicle Chesnara for £39.3m in cash.