Investors received a nice surprise from Direct Line (DLG) as it announces it expects to deliver £540m in pre-tax profit in the year to 31 December. This surpassed analysts’ expectations of £508.1m.
Shares in the insurer accelerated 2.1% to 376.3p on the unusually positive announcement. Firms have a tendency to sneak out bad news on Friday afternoons.
Robust trading in the motor and commercial divisions and lower than expected weather claims drove operating profit from ongoing operations from £403.5m to £610m.
The insurer’s combined operating ratio for underwriting operations is also encouraging, falling from 97.7% in 2016 to 92%.
This ratio measures the proportion of claims to premiums. Anything below 100% implies a profit and the lower the number, the higher the profit.
Shareholders could be in for a treat as Direct Line hints it will consider a 'return of capital’, but they will have to wait until 27 February to find out the details.
