Direct Line’s results update contained little to suggest trading is going to get easier over the next twelve months, according to UBS.
Takeaways from the numbers were that motor damage claims inflation continues to be a problem, solvency was weaker than UBS forecasts though broadly unchanged from the year-end and motor premiums went up 19% year-on-year.
As such, earnings are set to come under more pressure, said the bank.
While there is no change to estimates, the comment surrounding adverse claims development is likely to put pressure on earnings including from prior-year reserve releases.
UBS remains a buyer even so, with a price target of 193p but rightly predicted the shares would be weak today on the numbers, dropping 6% at 154.4p