Direct Line Share Price Traded Sideways on Mixed FY ’23 Results

The Direct Line Insurance Group PLC (LON: DLG) share price was traded sideways after releasing its preliminary results for the year that ended 31 December 2023. The company's number of policies stayed pretty much the same because it got over 700,000 new customers from Motability. This helped balance out a drop in the number of car insurance and other related policies.

The insurance company earned 27.1% more from premiums and fees in 2023, with a big jump of 46.2% in earnings in the year's second half. The firm’s net insurance margin, which is how much profit it makes from insurance after paying out claims, was -8.3%. This was mainly because car insurance policies from 2022 and early 2023 didn't do as well as expected. 

But if the company eliminates car insurance, it did pretty well, making a 12.2% net insurance margin. Direct Line raised its prices in the car insurance area, which helped improve its claims ratio by 5.8 percentage points in the latter half of 2023. Policies written after August are doing as well as hoped, with a net insurance margin of over 10%.

Direct Line lost £189.5 million 2023 from its day-to-day business, much more than the £6.4 million loss in 2022. This loss was partly balanced out by more income from investments. The sale of its commercial brokerage business helped it report a pre-tax profit of £277.4 million, a big turnaround from a £301.8 million loss in 2022.

The company’s financial health, measured by its solvency capital ratio, improved by the end of 2023, reaching 201%. This improvement came after it sold its commercial brokerage business. The firm is planning to pay a dividend of 4.0 pence per share, and even after that, its solvency capital ratio should be 197%.

The company has been looking for ways to improve in all areas of its business. It has made a lot of progress and sees a chance to cut costs by at least £100 million annually by the end of 2025. It also aims for a net insurance margin of 13% by 2026.

Direct Line started offering a digital way for customers to file car insurance claims, making it faster and giving them more options. But it can save even more money by improving its digital services, spending less on technology, and simplifying its operations. The firm aims to save at least £100 million a year by the end of 2025.

Direct Line share price. 

The Direct Line share price traded sideways, alternating between gains and losses on FY 2023 results.