Direct Line Insurance Group PLC (LSE:DLG) reported growth in operating profit for 2021 on the back of higher underwriting earnings and a strong investment return result and also announced that it will return £100mln to shareholders.
The insurance group said in a statement that operating profit increased to £581.8mln in the year to 31 December 2021 from £522.1mln in 2020.
The contribution to operating profit, normalised for weather, was 53%, down from 65% the previous year but in line with the group's 2021 target of at least 50%.
The combined operating ratio, normalised for weather, was 91.1%, slightly down from 91% the year before but ahead of the company’s medium-term target of 93%-95% and in line with expectations of 90%-92% for 2021.
Direct Line reiterated its combined operating ratio target range of 93%-95% for 2022 and the medium term.
Pre-tax profits fell by £5.4mln to £446mln as the increase in operating profit was offset by a £62.1mln rise in restructuring and one-off costs following the restructuring of the company’s property portfolio.
Gross written premiums fell 0.3% to £3.17bn.
Direct Line said it continued to cut costs last year, despite the inflationary backdrop, with operating expenses declining by £18mln to £706mln in 2021. It added that it plans to reduce costs further this year.
The company proposed a final dividend of 15.1 pence per share, making a total of 22.7 pence for the year, an increase of 2.7% on 2020.
It also announced plans to return £100mln to shareholders via a share buyback programme.
Shares rose 1.38% to 264.70p in early trade.