Building society is one of insurer’s largest partners
Direct Line Group is at risk of losing roughly £206m of annual home gross written premium (GWP) as building society Nationwide reviews its home deal with the insurer.
Direct Line said in its half year results that Nationwide is currently reviewing its contract, under which Direct Line Group provides home insurance to nationwide customers, as it comes up for renewal.
The insurer said the deal accounted for 22.9% of its gross written premium in the first half of 2015. Assuming the deal made up the same proportion of Direct Line Group’s 2014 home GWP of £898.6m, the deal brings in annual GWP of £205.8m.
Direct Line said that while the deal accounted for 22.9% of home GWP in the first half of 2015, it contributed “a significantly lower proportion of home profit”.
In its 2014 results, Direct Line Group described Nationwide as “one of the group’s largest partners”.
Shore Capital analyst Eamonn Flanagan said the loss of the deal, which he estimates is worth around £207m of annual GWP, would be “a real blow for the group”.
A Direct Line Group spokeswoman said that the insurer had mentioned the deal’s review in the first quarter, and as the tender process is still underway no further update could be provided.