Direct Line shares up despite fall in profit

Direct Line shares up despite fall in profit

Direct Line profits fell almost 10%

Profits at Direct Line (LON:DLG) fell 9.5% for the first six months of the year down to £236.4m.

Blaming a one-off restructuring cost and bad weather, the insurer said that the affects from Coronavirus were “broadly neutral” and that a fall in travel claims was offset by a rise in Motor and Commercial.

The group is making a series of cost-saving initiatives, totalling £60m over two years. Direct Line has spent £15m on cost-saving initiatives in 2020 so far.

Penny James, the group’s chief executive, said:

“I am very proud of what we have achieved so far this year. We have launched initiatives with an estimated investment of £80m to £90m to support our customers, people and local communities through the uncertainty caused by Covid-19.

“When the Covid-19 pandemic hit, we prioritised phone lines for existing customers, created new online journeys and offered additional value through various initiatives including mileage refunds and payment deferrals. We did not access government support and chose to protect all roles and salaries at the Group through to the autumn and our Community Fund is providing £3.5m to help people in communities across the UK.

“Despite the significant disruption caused by Covid-19 we have continued the trading momentum we saw at the end of 2019, growing direct own brands by two per cent and improving the quality of our earnings with an improved current-year loss ratio. We have also demonstrated financial resilience in the face of Covid-19 disruption, which has enabled us to declare our 2020 interim dividend as well as a catch-up of our cancelled 2019 final dividend.”

Following the results, Direct Line (LON: DLG) shares opened at 327.9. Shares in Direct Line are trading up 6.79% at 328.50 (0848GMT).