11th February 2018

Direct Line trading statement positive for 2017

Direct Line Insurance Group has issued a trading statement (unaudited) in respect of the year ended 31st December 2017 ahead of the preliminary results announcement on 27th February.
The Board anticipates that the Group will report:
-Operating profit from Ongoing operations of circa £610m and profit before tax of circa £540m(2016: £403.5m and £353.0m)
Operating profit from Ongoing operations reflecting good results in Motor and Commercial, including from prior year reserve releases, lower than expected weather claims and a £57m impairment to IT intangible assets; Profit before tax also reflects a strong run-off result and a one-off charge related to the refinancing of debt in November 2017
-An estimated Group solvency capital ratio of between circa 185% and circa 190% of Solvency Capital Requirements(SCR), before final dividend, reflecting lower capital requirements and better than expected profits. As at 31st December 2017 surplus above SCR is estimated to be circa £1.2bn
-Gross written premium of circa £3.40bn(£3.27bn) and approximately 350,000 more direct own brand in-force policies at 31st December 2017
-A combined operating ratio for Ongoing operations of circa 92%(97.7%)
-An underlying expense ratio and commission ratio lower than prior year
-The Group expects to operate around the middle of its Solvency II capital ratio risk appetite range of 140% to 180% of the Group's SCR. The Board will consider any return of capital and will announce this with the Group's preliminary results on 27th February.
Paul Geddes, ceo of Direct Line Group, comments “I’m proud of the Group’s performance in 2017, as our customers continued to respond positively to the multiple initiatives we have made to improve the business, helping to grow our direct own brand premiums and in-force policies. The combination of our operating performance and favourable claims result has delivered financial results ahead of market expectations. Therefore we are publishing our headline results early and look forward to giving more details on the progress of the business in our preliminary results on 27th February 2018.”

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