The FTSE 100-listed firm said operating profit from ongoing operations rose by 9.5% to £354.2mln for the six months to June 30, up from £323.6mln a year earlier.
The group - Britain's largest motor insurer, whose brands include Churchill, Green Flag and Privilege – said its gross written premiums increased by 5% to £1.69bn, with a 10% rise in gross written motor premiums.
The company raised its interim dividend 38.8% to 6.8p per share, up from 4.9p last year.
Paul Geddes, Direct Line’s CEO said the group is rebasing the regular dividend upwards “to reflect its confidence in the Group's earnings and the progress the business has made since the IPO nearly 5 years ago when the Group's dividend policy was previously set.”
Aim to grow regular dividend in line with business
He said: “We aim to grow the regular dividend in line with business growth, which we expect to be in the region of 2% to 3% per annum over the medium term.”
Geddes added: “The investments we have made and continue to make in our business have delivered value for our customers and shareholders.
“As a result, we reiterate our 93% to 95% combined operating ratio target for 2017 and also extend this ambition over the medium term."
Back in March, Direct Line has reported a drop in 2016 profits, dented by a shock decision last month by the Lord Chancellor to dramatically change the way in which personal injury claims are assessed.
The firm posted pre-tax profits of £353.0mln for the 12 months to December 31, down from £507.5mln a year earlier, reflecting the one-off impact of using the new Ogden discount rate of minus 0.75%.
The group’s combined operating ratio from ongoing operations increased to 97.7% as a result of the reduction in the Ogden rate, partially offset by improved current-year underwriting performance and favourable weather claims.
Before the Ogden rate adjustments, Direct Line said that figure had fallen to 91.8%, down from 94.0% in 2015.