Benign weather and fewer car accidents helped Direct Line Insurance (LSE:DLG) Group PLC increase profits by over 10% in its latest half-year, though some of these trends have started to reverse, said the FTSE-100 insurer.
Penny James, chief executive, noted that motor claims frequency was below normal levels during the six months to end June 2021, with fewer new car sales and a reduction in new drivers entering the market.
“These factors were strongest in Q1 and have started to reverse in Q2 at the same time as motor market premium stabilised,” she added.
Written premiums dropped 1.5% to £1.56bn as travel insurance also fell away due to the impact of Covid.
An improvement in Direct Line's underwriting offset this and lifted operating profit by 40% to £370mln while pre-tax profits were 10.5% higher at £261mln.
James added: "We maintained underwriting discipline throughout the first half, continuing to price for our view of risk, and this, combined with the benefits of achieving a major technology milestone with our new Motor platform now rolled out across Direct Line, Churchill and Privilege, positions us well as we look ahead.
“This is an exciting and pivotal point for the business, we've completed the majority of our tech transformation, and we're starting to reap the benefits of what the new systems offer us.”
The interim dividend rises by 2.7% to 7.6p.