The Direct Line Insurance Group PLC (LON: DLG) share price surged 18% after announcing that it signed an agreement to sell its brokered commercial insurance business lines to RSA Insurance Limited, a wholly-owned subsidiary of Intact Financial Corporation, for an initial consideration of £520 million.
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The company also released its financial results for the half year ended 30 June 2023. The company’s gross written premium and associated fees from ongoing operations increased 9.8% to £1,615 million from £1,470.5 million in H1 2022.
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Direct Line attributed its higher gross written premiums to growth in Commercial and rate increases executed to improve the Motor written margins, which more than offset a 3.2% decline in in-force policies across H1.
The Group’s net insurance margin for H1 2023 was -6.4% and was negatively affected by the earn-through of Motor policies written in 2022. The continued high claims inflation also affected the company’s margins.
However, the net insurance margin excluding Motor was 12.2%, driven by the resilient underlying results across Commercial, Home and Rescue. The Group’s operating loss for ongoing operations in H1 2023 was £78 million, a reduction of £275 million from the H1 2022 profit due to lower earnings in Motor.
Direct Line also recently announced the appointment of Adam Winslow as Group CEO, subject to regulatory approval. Adam has extensive experience in the UK general insurance market and significant international work experience spanning two decades.
Jon Greenwood, Acting CEO of Direct Line Group, Commented: “Over the last six months, we have taken decisive action to put the Group back on a more stable footing. In March, we set out that our key priorities were to restore capital resilience, improve Motor performance and maintain the performance of our non-motor businesses. The proposed sale of the brokered commercial insurance business that we announced yesterday addresses the first, at the same time as focusing our strategy on retail personal lines and small business commercial customers. Its impact is estimated to increase the Group's solvency ratio on a pro forma basis by approximately 45 percentage points.”
Direct Line (DLG) share price.
The Direct Line (DLG) share price surged 18.27% to trade at 178.05p, from Wednesday’s closing price of 150.55p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.