LONDON (Reuters) – British motor and home insurer Direct Line posted a 189.6 million pound ($242.59 million) operating loss for 2023 on Thursday as it grapples high claims inflation, but said it would reinstate its dividend.
The operating loss from ongoing operations compares to a loss of 6.4 million pounds in 2022.
The insurer, which has in recent weeks shot down two takeover offers from Belgian insurer Ageas, scrapped its dividend in early 2023.
New chief executive Adam Winslow, who started earlier this month, said in a statement the insurer was completing a “comprehensive strategic review” during the first half of 2024 and would report back to shareholders in July.
Winslow said that Direct Line “has not always managed volatile market conditions successfully in recent years, particularly in motor”.
However, he paid tribute to outgoing interim CEO Jon Greenwood for taking action to improve the insurer’s performance.
Direct Line said it would pay a dividend of four pence and it set a new target of 13% net insurance margin in 2026, with run-rate annualised cost savings of at least 100 million pounds by the end of 2025.
Direct Line said it intended to cut technology costs and remove complexity across the company.
Direct Line has also been under regulatory pressure, and said it had set aside 150 million pounds for remediation costs related to two internal reviews of past business, one in relation to the Financial Conduct Authority’s pricing practice regulations.
Britain’s markets watchdog says insurers must not charge more to existing customers than to new customers.
($1 = 0.7816 pounds)
(Reporting by Carolyn Cohn, editing by Sinead Cruise)
