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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Direct Line Insurance Group plc    DLG   GB00BY9D0Y18

DIRECT LINE INSURANCE GROUP PLC

(DLG)
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Direct Line to rein in costs as competition intensifies

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11/21/2019 | 03:21am EDT
FILE PHOTO: A photo illustration shows insurance renewal notices from Direct Line in London

(This Nov. 20 story refiles to remove extraneous words in 11th paragraph)

By Muvija M

(Reuters) - Direct Line Insurance Group Plc on Wednesday laid out a plan to cut expenses and bolster digital presence as Britain's biggest motor insurer looks to thrive in an industry plagued by stagnant prices and stinging competition.

The plans, under Penny James who took on the top job this year, follow a 2.3% fall in number of policies in force to 14,837 for the three months ended Sept. 30.

That underlined the company's struggles to keep up with competitive pricing offered by smaller rivals, although gross written premiums saw a 0.4% rise to 858 million pounds ($1.11 billion).

"We always put our view of claims inflation through our premium numbers. Our prices always go up including what we think claims inflation will be... Earlier in the year we were losing some business because of that and what we found in Q3 is actually that's stabilised," James told Reuters.

"What it tells us... is that the market as a whole is starting to put some price through so prices are starting to go up reflecting claims inflation."

Direct Line has underperformed rivals Admiral Group Plc and Hastings Group Holdings Plc in terms of share performance year to date with a fall of 12%.

(For a graphic on Direct Line click, https://fingfx.thomsonreuters.com/gfx/buzzifr/15/1098/1098/Pasted%20Image.jpg)

While the cost of a motor insurance policy fell in the UK for the last quarter, Britain's plans to change the discount rate used to calculate compensation for personal injuries has also hurt main players in the sector.

Insurers have also had to bear the brunt of higher repair costs for newer cars outfitted with high-tech safety and entertainment gadgets.

Hastings said last month that its annual loss ratio may move above its target range if the cost of claims continue to increase.

Direct Line, the owner of Churchill and Privilege brands, looks to slash its capital spend to less than 100 million pounds from fiscal year ending on Dec. 31, 2021 compared with the 175 million pounds expected for the current year.

The former FTSE 100 constituent also aims to cut its operating expenses before amortisation and depreciation to below 590 million pounds by 2021 from 644 million pounds in the last year.

It said would incur restructuring and other one-off costs of about 60 million pounds in 2019 and 2020 due to the new goals.

(Reporting by Muvija M in Bengaluru; Editing by Rashmi Aich and Lisa Shumaker)


Stocks mentioned in the article
ChangeLast1st jan.
ADMIRAL GROUP PLC -0.98% 2739 Delayed Quote.18.62%
AT HOME GROUP INC. -2.99% 21.12 Delayed Quote.284.00%
CHANGE INC. 2.17% 8940 End-of-day quote.514.86%
DIRECT LINE INSURANCE GROUP PLC -1.28% 277.3 Delayed Quote.-11.26%
HASTINGS GROUP HOLDINGS PLC 0.00% 248.4 Delayed Quote.38.62%
JUST GROUP PLC 1.74% 44.48 Delayed Quote.-43.70%
LETS HOLDINGS GROUP CO., LTD. -0.21% 9.5 End-of-day quote.57.28%
LOOK HOLDINGS INCORPORATED 0.72% 843 End-of-day quote.-32.67%
NEXT PLC 2.22% 6166 Delayed Quote.-12.14%
RISE, INC. 0.00% 27 End-of-day quote.-10.00%
WILL GROUP, INC. 2.10% 877 End-of-day quote.-29.95%
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Financials
Sales 2020 2 993 M 3 875 M 3 875 M
Net income 2020 358 M 464 M 464 M
Net Debt 2020 - - -
P/E ratio 2020 11,3x
Yield 2020 12,6%
Capitalization 3 753 M 4 873 M 4 858 M
Capi. / Sales 2020 1,25x
Capi. / Sales 2021 1,23x
Nbr of Employees 10 762
Free-Float 98,9%
Chart DIRECT LINE INSURANCE GROUP PLC
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Technical analysis trends DIRECT LINE INSURANCE GROUP PLC
Short TermMid-TermLong Term
TrendsBearishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 17
Average target price 351,25 GBX
Last Close Price 277,30 GBX
Spread / Highest target 38,8%
Spread / Average Target 26,7%
Spread / Lowest Target 8,19%
EPS Revisions
Managers
NameTitle
Penelope Jane James Chief Executive Officer & Executive Director
Danuta Gray Chairman
Steven Maddock Chief Operating Officer
Timothy Walter Harris Chief Financial Officer & Executive Director
Jane Carolyn Hanson Independent Non-Executive Director
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