Motor and home businesses suffered largest hit, while commercial and international books saw an improvement

Direct Line Group (DLG), under pressure from intense pricing competition, allowed its premium income to fall below the billion pound barrier, first quarter results revealed today.

DLG’s gross written premium (GWP) fell to £949.3m compared to £1bn in the first quarter of 2013.

The UK’s largest motor insurer said it had maintained underwriting discipline against a backdrop of competitive pricing in home and motor.

DLG seemingly refused to get dragged into a pricing war with its competitors, allowing motor prices to fall by 4%, compared with a comprehensive premium fall of 16.6% (AA premium index).

This gentle rate drop was a key driver behind the 10.2% reduction in its motor book to £326.9m (£364.1m: Q1 2013).

Meanwhile, the home business fell by 5.6% to £220.5m (2013: Q1 233.5m) and its rescue and other personal lines book declined by 5.6% to £87.9m (£93.1m: Q1 2013).

DLG also has fewer customers. The group’s total in-force policies fell to 18.1m (19.4m: Q4 2013).

Motor policies fell to 3.7m (3.9m: Q1 2013) and home policies declined the most in the group, dropping to 3.7m (4.2m: Q1 2013).

The group said it would continue to prioritise targeting appropriate margins, even if this is at the expense of policy volumes.

The insurer said the falls were partially offset by growth in commercial and in Germany.

Overall the group reduced motor prices on average by 4% during the first quarter of 2014 compared with the first quarter of 2013.

Direct Line Group chief executive Paul Geddes said: “We have improved our digital capability, developed customer propositions and extended our product offering.

“We are also excited by the launch of a new self-install telematics product. It’s a robust, cheaper alternative to ‘black box’ technology and it enables us to offer the benefits of telematics to a wider group of customers.

“We plan to continue investing in initiatives that improve how we interact with customers and boost our competitiveness in what remains a highly competitive market.”

Improvements in commercial and international business

The commercial book grew by 3.9% to £118m in Q1 2014 (£113.6m: 2013), while the number of policies in its commercial book grew to 592m (550m: 2013)

This improvement was owing to Landlord and Tradesman products, partially offset by Van, the new Churchill Van product for small and medium-sized enterprise customers.

The number of policies in the international business also grew from 1.6m to 1.7m.

The international GWP of £196 million was 2.6% lower than the previous period, mainly due to the effect of foreign currency movements, however the GWP for Germany in local currency increased by 9.1%, reflecting the expansion of the group’s share of business renewing on 1 January 2014.


For 2014, Direct Line aims to achieve a combined operating ratio (COR) of between 95% to 97% for ongoing operations and a COR of less than 100% for its commercial division.