Motor and home insurer considers diversification through bank branches

Direct Line is considering diversification of its product range into commercial lines, according to the company's chief executive Annette Court.

Court said: "It's something that we're having a look at through the Royal Bank's NatWest branches. There certainly are opportunities there."

Market analysts said that Direct Line had saturated its core markets of direct motor and direct home and was now looking to extend into other areas.

It was looking to increase its premium income through affinity deals by 50%.

One analyst said: "A move to small commercial through bank branches makes sense when you consider what Halifax is now doing."

Direct Line, announcing its 2002 results, said its combined ratio slipped by 1.4% to 88%, but it increased the amount of money it made for its owner, the Royal Bank of Scotland Group.

The country's sixth largest insurer contributed £355m to group profits in 2002, an increase of £94m or 36% from £261m in 2001.

It also increased its own total income by £596m or 39% to £2.14bn from £1.54bn the year before.

Premium income increased by 38% or £519m to £1.89bn from £1.38bn in 2001.

But the insurer's combined ratio slipped to 89.4% from 88% over the same period.

This reflected an increase in costs such as expenses, which were up by 30% or £100m to £434m from £334m and net claims after reinsurance which increased by 42% or £402m to £1.35bn.

Direct Line's number of UK motor policies increased to 4,668,000 from 4,017,000 the year before.

The number of its international motor policies increased to 1.2 million from 601,000. Its international expansion included the purchase of Royal & SunAlliance's direct motor business in Italy.