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Direct Line posts above-forecast rise in nine-month premium.#increasedprofits Why are #premiums going up?

By 11th August 2016No Comments
​British insurer Direct Line (DLGD.L) posted a 4.2 percent rise in gross written premiums in the first nine months of 2016, mainly due to a strong performance in its motor brands, it said on Tuesday.

Gross written premiums totalled 2.5 billion pounds, slightly above expectations of 2.48 billion pounds, according to a company-supplied consensus forecast.

Direct Line, whose brands include Churchill, Green Flag and Privilege, said it expected its combined operating ratio, a measure of underwriting profitability for general insurers, to be towards the lower end of its 93-95 percent target range.

A ratio below 100 percent indicates an underwriting profit.

Strong competition in British motor insurance has put pressure on prices in the past few years, partly because of the growth of price-comparison websites. But in the past few quarters prices have been increasing, partly as a result of a rise in premium taxes.

A survey by roadside assistance firm AA Plc (AAAA.L) showed a 3.7 percent rise in motor insurance prices in the third quarter from the previous quarter, and a 16.3 percent rise over a year earlier.

“Any uptick in general inflation should be supportive for motor insurance price increases,” said Gordon Aitken at RBC in a client note, adding that if inflation rises, Direct Line was well-positioned. Aitken reiterated his “outperform” rating on the stock.

(Reporting by Carolyn Cohn; Editing by Rachel Armstrong)

Article care of Reuters http://uk.reuters.com/article/uk-direct-line-results-idUKKBN1330R0

Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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