Direct Line reveals claims bill of up to £40m from February storms

Insurer Direct Line has revealed a claims bill of up to £40 million from the storms last month that battered the UK.

It said it had helped more than 10,000 customers with claims after storms Dudley, Eunice and Franklin wrought havoc last month.

Direct Line said its early estimate sees claims reaching between £30 million and £40 million for storm damage.

Over a million homes were left without power in the immediate aftermath, while the storms also caused widespread damage and travel chaos on roads and railways as trees were brought down.

The details of the storm impact came as Direct Line reported a 1.2% drop in pre-tax profits to £446 million for 2021 as it said it faced a “challenging market, impacted by the pandemic”.

Direct Line said operating profits lifted 11.4% to £581.8 million last year.

It added it was “deeply saddened and shocked by the conflict in Ukraine”, but confirmed it has no direct investment exposure to Russia or Ukraine across its fund portfolios.

Penny James, chief executive of Direct Line, said: “I am delighted by the group’s strong performance and proud of the way we have navigated the complexities of a challenging market.

“Operating profit has increased to £582 million, own brands policies grew as our home, commercial and rescue businesses performed strongly, whilst in motor we steered a smart path through another uncertain period as the market sought to predict the impact of Covid-19.”

Direct Line saw pre-tax profits fall due to restructuring and one-off costs, though it also revealed a 0.3% fall in policies to 14.6 million while gross written premiums dropped 0.3% to £3.2 million.

It said within its own-brand business, policies rose 1%, with gross written premiums down 0.8% but 0.7% higher in the final six months.

Direct Line unveiled a 15.1p a share final dividend and a £100 million share buy-back programme.

The group said its combined operating ratio – a measure of underwriting profitability – improved to 90.1% in 2021 and confirmed its target for 93% to 95% in 2022 and going forward.

A ratio below 100% indicates profitable underwriting.

Insurance analysts at Jefferies said the “new £100 million buyback programme and confirmation of targets sends out a confident message”.