Direct Line Insurance Group PLC (LSE:DLG) reported a fall in group premiums in the third quarter, hit by falling sales in its Home and Motor divisions, but said its medium-term targets and dividend outlook remain unchanged.
In a trading statement, the insurer said group premiums fell 5.8% to £807.2mln with double-digit falls in its Motor and Home insurance units offsetting rises in the Rescue and Commercial arms of the business.
Motor and Home premiums were down 13% and 10.3% to £383.8mln and £139mln, respectively. In the Commercial segment, however, premiums were up 13.7% to £174.4mln.
The group said new business market conditions in its Home division “remain very challenging”.
Penny James, chief executive officer said: "Trading across the group was broadly in line with our expectations given the challenging market backdrops in Motor and Home, whilst we continued to deliver strong growth in Commercial.”
“The pricing actions we have taken to restore margins in Motor led to a reduction in new business sales; however, we were encouraged to see this improve steadily across the quarter as the market hardened.”
The group said the economic volatility makes an assessment of inflation more uncertain than usual but the current-year underwriting performance remains in line with expectations.
Motor inflation is tracking closely to expectations of around 10% for 2022, Direct Line said, adding there remains pressure in the supply chain elongating repair times, especially for third-party repairs, whereas used car prices have come off their peak.
The group also reported claims are taking longer to settle, for example due to court backlogs, and this is slowing down the recognition of prior-year reserve releases, particularly from Motor large bodily injury claims.
James concluded: "In these challenging economic conditions, the business is strong and actions we have taken continue to underpin the group's future earnings power."