Direct Line Insurance Group (DLG) H1 2024 earnings summary

Executive summary

• Returned to profitability in H1 2024, driven by strong premium growth and improved margins in Motor and Non-Motor segments, supported by Motability partnership and pricing actions.

• Turnaround strategy underway with new leadership, technical excellence, cost control, and focus on published targets.

• Disciplined trading in challenging market conditions, with repricing of Motor now complete and PCW book returning to growth.

• Strong capital generation and solvency capital ratio at 198% post-dividend, enabling a 2.0p per share dividend.

• Ongoing operating profit reached £64m, a £157m improvement from H1 2023, with profit before tax at £62m.

Financial highlights

• Gross written premium and associated fees rose 53.5% year-over-year to £1,839m, with Motor up 76.5% and Non-Motor up 13.7%; excluding Motability, growth was 11.4%.

• Net insurance margin improved to 1.8% (H1 2023: -8.8%), with Non-Motor at 11.6% and Motor at -3.0%.

• Ongoing operating profit: £64m (H1 2023: £94m loss); profit before tax: £62m (H1 2023: £76m loss).

• Operating earnings per share 2.7p (vs. -6.3p), basic EPS 2.8p (H1 2023: -4.6p), and operating return on tangible equity 5.8%.

• Investment income: £90m, up 44.8% year-over-year, with a 4.1% yield.

Outlook and guidance

• Further improvement in Motor margin expected in H2 2024 as higher written margins earn through; transitional year for Motor earnings.

• Non-Motor targeted for 7–10% compound annual growth in gross written premium and associated fees through 2026.

• Group targets a 13% net insurance margin (normalised for event weather) in 2026 and at least £100m gross cost savings by end of 2025.

• Operating expense ratio expected to remain broadly flat year-on-year in 2024.

• Claims inflation expected to remain at high single digits; focus on margin over growth.