Direct Line boosts H1 profits and hands out special dividend
British insurer Direct Line reported higher half-year profits despite bad weather and competitive markets and announced a special dividend.
Direct Line, which floated in October 2012 at 175p per share, said group pre-tax profit rose 7.8% to £225.1m in the six months to 30 June despite a 13.1% fall in operating profit on continuing operations to £249.1m.
It said the lower operating profit reflected higher weather claims and lower prior-year reserve releases of £218m.
Gross written premiums for ongoing operations fell 5.1% in the first half, which Direct Line said was due to disciplined underwriting in competitive markets.
Motor prices reduced on average by 2% during the second quarter compared with the same period in 2013.
The group issued an interim dividend per share of 4.4p, up 4.8% against a year ago and a special interim dividend per share of 10p, taking total interim dividends to 14.4p per share.
Direct Line said it was considering the potential sale of its international division.
It also said it was on track to achieve a total cost base target of about £1bn in 2014 with a 5.4% reduction in the first half of 2014 to £496m.
It reduced restructuring and other one-off costs by about 60% compared with the first half of 2013.
Chief executive Paul Geddes said: "We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we've made it easier to buy our motor products on smartphones and tablets."
Shares rose 9.2p or 3.2% to 294.2p at 09:29 in London.
PW