Shares of Direct Line Insurance Group PLC (LON: DLG) are down 9.47% this year amid a drop in total insurance premiums collected in the auto sector. Can the shares reverse course and rally higher.
Today, the insurance company reported that the total premiums paid by customers in Q1 2021 fell 4.7% to £752.3 million on an annualised basis as the motor sector recorded a 10.6% drop in total premiums.
The company attributed the drop in motor premiums to a decline in the number of new cars sold combined with fewer new drivers entering the market.
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Direct Line noted that there were encouraging early signs of a recovery in the auto sector as premiums stabilised in April.
The insurer recorded a massive 16.1% surge in commercial premiums as businesses took more insurance due to the business shocks occasioned by the coronavirus pandemic. The home segment recorded 1.8% growth.
Direct Line shares have fallen since the start of the year, with several rebounds followed by further downtrends indicating that the bears are primarily in control of the price.
However, the trend could be shifting in favour of the bulls given yesterday’s and today’s rally off a support level. However, nothing is guaranteed in the markets, and a 2-day uptrend requires time to form a strong rally.
Aggressive traders and long-term investors may establish new positions at current prices, but with a stop loss, in case the downtrend resumes. Long-term investors may also buy the shares due to their 7% dividend yield.*
*This is not investment advice.
Direct Line share price.
Direct Line Insurance shares are down 9.47% in 2021 as premiums fall in Q1. Can they reverse course and rally?