There was mixed news for UK insurance giant Direct Line today as it announced its half year report for the six months ending on June 30.
The company suffered a 5.2% fall in pre-tax profits as the introduction of Flood Re impacted the business. Overall, profits for the insurer dropped to £298.5 million, down from £315 million during the same period one year earlier. The company also endured a slip in its operating profits, down to £323.6 million.
Despite this, however, the firm did enjoy a rise in gross written premiums – climbing by 3.9% to £1.6 billion.
At the heart of the profit fall were two main factors. First, investment returns have not delivered to the usual standard with a drop to £91 million, a slip of 17.1% compared to the prior year’s £109.8 million.
In addition, the insurer faced the additional expense of a £24 million levy to cover Flood Re. Weather-related events also impacted the insurer, with claims at £13 million.
Despite the falls, however, Peter Geddes, chief executive of Direct Line Group, was pleased with the overall performance.
“I am pleased with our results over the first half of 2016, as we delivered an excellent performance against a very strong comparator from the previous year,” he said. “We have generated operating profits of over £320 million in spite of weaker investment markets and the addition of the new Flood Re levy.
“Our customers continued to respond well to the refreshed propositions of our brands, which is reflected in another increase in the number of our own brands policies. Together, this demonstrates the benefits of the improvements we have made to strengthen our business.”
In reaction to the results, Shore Capital Group noted that they were “better than expected”.
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