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Direct Line, one of the UK’s largest motor insurers, is to put its signature brand on price comparison websites for the first time, after keeping it off them for decades in a bid to maintain a direct relationship with customers.
Chief executive Adam Winslow in launching his first strategy review on Wednesday, said he had “rigorously reviewed our business, and listened carefully to investors, customers, and employees” on where it should go.
The group said it would focus on its motor, home, commercial insurance lines, and breakdown services, and exit or stop investing in other areas such as pet and travel insurance.
Direct Line is striving to rebuild its valuation after shaking off a takeover attempt by Belgian rival Ageas earlier this year. The group said it planned to resume regular dividends, paying about 60 per cent of post-tax operating earnings, without giving the exact timing.
The insurer already has some brands such as Privilege and Churchill on price comparison websites, but the move to put its main Direct Line brand on these sites — where Winslow said 90 per cent of consumers shop — is a significant shift for the company. Direct Line disrupted the insurance market when it launched in 1985 by cutting out brokers and going direct to customers.
The company said earlier this year that its motor insurance operations had “turned the corner” after a post-pandemic surge in claims costs that had led to a string of profit warnings and the departure of its chief executive.
The group later admitted it had not reacted with sufficient price increases to reflect that inflation, and had been pushing up premiums to repair its underwriting book. But it still posted a £190mn operating loss last year as policies written at lower prices continued to feed through into its earnings.
At its full-year results in March, Winslow set a new £100mn annual cost-savings target from areas such as marketing.
Ageas ultimately decided the same month that it would not push ahead with its takeover attempt, saying it could not justify a significant improvement to its second preliminary cash-and-shares offer.
Analysts at Citi said the “incremental news today is negative”, citing the expected reduction to income from exiting businesses, and other factors.
Jefferies said near-term dividends would be “lower than expected” under the new policy, but the payout should top its estimate by 2026.
Direct Line’s shares were broadly flat at 193p in early trading on Wednesday, and are still some way below Ageas’s 237p a share second offer, which valued the motor insurer at £3.2bn.
