In 2019, the last “normal” year before the pandemic, Motor generated 52% of group GWP and 55% of group Operating Profit. It generates roughly 70% of its Gross Written Premiums (“GWP”) from its own brands, the rest from partnerships.ĭirect Line operates four segments, with Motor contributing the bulk of its profits. Motor insurance (after Admiral), and a top-3 player in Home and Rescue it also has a growing Commercial business as well as Other Personal Lines such as Travel and Pet. It is the second largest provider in U.K. In 2022, the group had £2.97bn of total GWP, and 9.69m in-force-policies at year-end. Property & Casualty insurer with a current market capitalization of £2.03bn ($2.5bn). Overall, we believe Direct Line is in the “too difficult” category for the moment and assign it a Hold rating. Relative to pre-COVID 2019 financials, Direct Line shares have a P/E of 5.3x and a Dividend Yield of 13.8%, but EPS has now declined every year since 2018 and several of its businesses are now smaller. The dividend has been suspended and will not be reinstated until half-year results at the earliest. Headwinds from 2022 will likely impact at least H1 2023. We only have limited visibility over future profitability, as Direct Line is making significant changes to improve its Solvency Ratio and profit margins. An acting CEO was put in place in January and he has lowered medium-term profitability targets. While this was partly due to factors, management made key mistakes in Motor pricing.

We have historically avoided Direct Line, seeing it as a weaker business and a long-term market share donor to sector leader Admiral Group plc ( OTCPK:AMIGY), which has been Buy-rated in our coverage since October 2020.ĭirect Line made a loss in 2022 and its Solvency Ratio fell below target. Direct Line’s share price fell 6.6% in London in the three days after results, taking its total decline in the last 5 years to 60%:

FatCamera/E+ via Getty Images Introductionĭirect Line Insurance Group plc ( OTCPK:DIISY) released full-year 2022 results on Monday (March 13), having already disclosed some headline figures in a profit warning in January.

Outlook 2019 buy