DIRECT LINE INSURANCE GROUP PLC PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

4 March 2025

ADAM WINSLOW, CEO OF DIRECT LINE GROUP, COMMENTED:

"Our 2024 financial results demonstrate the significant progress we have made, so far, in transforming the business. The turnround strategy, launched in July, has made a marked difference to the company’s performance, and we have good momentum across all our business lines.

During the year we launched three new Direct Line branded motor insurance products on the largest price comparison website, Green Flag signed two new agreements, our Home business re-platformed, we further improved our pricing and underwriting capabilities, initiated a new operational structure to become a more efficient and effective organisation and overhauled our claims function in service of better customer and indemnity outcomes.

We also delivered a £395 million increase in ongoing operating profit and 12 point improvement in our net insurance margin compared to the prior year. Motor returned to profitability during 2024, and we made material progress on our cost agenda by actioning £50m of run rate cost savings, with the full benefit expected in 2025.

During the year, we improved our reinsurance protection to reduce future earnings volatility and further diversified our asset portfolio whilst ensuring it closely matches liabilities and carried out an independent third-party reserve review. We remain confident in our ability to deliver at least £100 million of gross run-rate savings by the end of 2025 and 13% net insurance margin in 2026.

Our 2024 results and robust balance sheet with a pre-final dividend solvency ratio of 200% has enabled the Board to recommend a final dividend of five pence per share.

For 2025, we remain focused on delivering the turnaround at pace, leveraging our strong market position and operational efficiencies, to become the customers’ insurer of choice.

Our colleagues deserve considerable recognition for showing an unwavering commitment to delivering brilliant customer outcomes everyday particularly during the first year of our turnaround plan.”

Results summary

Financial highlights

• 25% growth in gross written premiums and associated fees. Strong growth of 32% in Motor including Motability and 11% in Non-Motor, above our 7% to 10% compound annual growth rate ("CAGR") target.
• £395 million increase in ongoing operating profit, largely due to the turnaround in Motor profitability, alongside a strong result in Non-Motor.
• Net insurance margin of 3.6% for ongoing operations, a 12.3pt improvement versus prior year, demonstrating disciplined underwriting.
• Investment income was £200 million (2023: £139 million), as we continued to benefit from higher rates with a Group net investment yield of 4.1%.
• Group profit before tax was £218 million, £59 million lower than previous year which included a gain of £444 million from the sale of the Brokered commercial business.
• Tangible net asset value growth of 10% to £1,362 million and net asset value grew by 4% to £2,138 million.
• Strong solvency capital ratio (pre-final dividend) of 200% and the Board has recommended a final dividend of 5.0 pence per share. The Group generated 20pts of capital during the year supporting the strong balance sheet.

Strategic and operational highlights

• Direct Line Motor on Price Comparison Websites ("PCWs"): Successfully delivered on one of our key strategic ambitions with the launch of three new Direct Line branded Motor products on Compare the Market.
• Motor pricing: Next generation pricing models implemented alongside four material new data enrichment sources.
• Home re-platform: All own brands now live on the new technology platform which brings significant new pricing and underwriting capability and supports simplification.
• Rescue: Two new contracts signed, including a collaboration with Apple, becoming the only UK breakdown brand to offer rescue services as part of Apple's roadside assistance via satellite. The own patrol fleet was further expanded to over 60 vehicles across 6 regions (2023: 16 patrols across 2 regions).
• Commercial Direct: New risk models rolled out for Van and improvements made to Landlord online journeys.
• Digital: New apps launched for Direct Line and Churchill Motor, with almost 300,000 downloads to date, enabling customers to make policy changes with ease.
• Cost saving programme: A series of initiatives aimed at simplifying the organisation are projected to deliver £50 million gross cost savings in 2025, as part of our target to achieve run-rate gross savings of more than £100 million by the end of 20255. Our drive to create a leaner and more efficient operating model is well advanced, with consultations now complete as part of a reduction of 550 roles.
• Claims: A range of initiatives launched across Motor and Home, designed to deliver better outcomes for customers at lower cost.
• Travel: We have decided to close our annual multi-trip and single trip travel insurance products to focus on our core markets in Motor, Home, Rescue and Commercial Direct.

Agreement for the acquisition of Direct Line Group by Aviva

• As announced on 23 December 2024, the Boards of Direct Line Insurance Group plc ("Direct Line") and Aviva plc ("Aviva") reached agreement on the terms of a recommended cash and share offer for Direct Line.
• The transaction values each Direct Line share at 275 pence and values the entire diluted share capital of the Group at approximately £3.7 billion⁶.
• The transaction is subject to certain regulatory approvals, including from the Prudential Regulation Authority ("PRA") and the Financial Conduct Authority ("FCA") as well as review by the Competition and Markets Authority ("CMA").
• Direct Line shareholder meetings are scheduled to be held on 10 March and the transaction, subject to regulatory clearances, is expected to become effective mid-2025.
  
  

For further information, please contact

DHRUV GAHLAUT

CHIEF STRATEGY AND INVESTOR RELATIONS 

Mobile: +44 (0)7385 481177

OFFICER ROGER LOWRY

DIRECTOR OF CORPORATE AFFAIRS

 Mobile: +44 (0)7881 553155

Notes:

1.   See glossary for definitions and Appendix A - Alternative Performance Measures for reconciliation of operating return on tangible equity.

2.  Ongoing operations – the Group's ongoing operations result excludes the results of the Brokered commercial business that it sold to RSA Insurance Limited in 2023, and its Non-core businesses, announced at the Group's 2024 Capital Markets Day, and three run-off partnerships that the Group completed its exit from in H1 2024. Relevant prior-year data has been restated accordingly. See glossary for definitions and Appendix B – Management view statements of profit or loss, claims development tables on a discounted basis, expenses, average premiums, gross written premium and associated fees and in-force policies.

3.  Estimates based on the Group’s Solvency II partial internal model.

4.  The full year 2023 solvency capital ratio has been re-presented as explained in the Capital analysis section of this report (previously reported in the Group's full year 2023 preliminary results and Annual Report and Accounts as being 197%).

5.  The Group’s total operating expenses, acquisition expenses and claims handling expenses, adjusted to exclude restructuring and one-off costs, commission expenses and costs associated with the Brokered commercial business, Motability and By Miles.

6.  Based on the closing price of Aviva shares of 489.3 pence on 27 November 2024 (being the last closing share price before the commencement of the Offer Period) and taking into account the final dividend of 5 pence per share announced today.