Employees in sales, operating and commercial roles hit hardest by the redundancies
Direct Line Group (DLG) is making sweeping job cuts, including a small number of roles at NIG, as part of its plan to save £100m by 2014.
The group said 891 roles had been targeted for redundancy across three areas of business.
Sales service and partnership will see up to 500 jobs cut through the closure of the company’s Teesside operational centre, while the chief operating office and commercial side of the business will bear the brunt of the remaining 400 redundancies.
There will be between 50 and 60 redundancies across the group’s commercial lines businesses, which include NIG, Direct Line for Business and Business Insurance Services (BIS) in head office and support function roles.
The cuts are aimed at reducing administrative costs in central business and improving market efficiency, the company said.
We have not made these proposals lightly”
Paul Geddes, Direct Line Group
DLG’s first-half results this year showed its commercial business was the company’s least profitable area, with a combined operating ratio of 112.7%.
Since effectively splitting from RBS earlier this year, DLG has gained full ownership of its expense base, thereby creating an opportunity for a reassessment of the main components of the business.
DLG chief executive Paul Geddes said: “We have not made these proposals lightly and fully understand the impact this will have on our people. As we have done in the past, we will be open and honest, dealing fairly and carefully with those affected.”
DLG’s profits dropped almost £60m during the first half of 2012.
The insurer plans to launch its initial public offering (IPO) before the end of this year.
Pass notes: Direct Line IPO
What could affect its flotation plans?
Direct Line Group’s market value could be adversely affected by the company’s first-half COR of 101%, which is far from the strongest in the field. The Office of Fair Trading motor probe could also adversely affect the company’s ancillary income.
Is private equity interest dead?
Not yet. Duke Street Capital founder Edmund Truell has registered an interest in buying the company should the £2bn-£3bn flotation fail. Truell has created a firm called Tungsten Corporation specifically to make bids for insurers, especially those dealing in motor insurance.