DIISF - Direct Line Insurance Group plc (DIISF) Q4 2023 Earnings Call Transcript
2024-03-21 20:19:05 ET
Direct Line Insurance Group plc (DIISF)
Q4 2023 Results Conference Call
March 21, 2024 7:00 AM ET
Company Participants
Adam Winslow - Chief Executive Officer
Neil Manser - CFO & Director
Paul Smith - Investor Relations Director
Conference Call Participants
James Pearse - Jefferies
Will Hardcastle - UBS
Anthony Yang - Goldman Sachs
Faizan Lakhani - HSBC
Youdish Chicooree - Autonomous Research
Alex Evans - Citi
Thomas Bateman - Berenberg
Ivan Bokhmat - Barclays
Abid Hussain - Panmure Gordon
Andreas van Embden - Peel Hunt
Presentation
Adam Winslow
Great. Good morning, everybody. It's a pleasure to be here today. I wanted to start by taking the opportunity to introduce myself to you all and say that I'm committed to the road ahead and have great belief in DLG's potential. I acknowledge that the past few years have been tough and that we haven't delivered good value for our shareholders. We need to significantly improve our performance. And I believe I'm the right person to lead DLG through this challenge. I know the winning playbook in personal lines, I've run transformations turning around legacy organizations and I've successfully built and led execution-focused teams before.
We'll start with Neil, who'll take you through our full year 2023 results. Then I'll spend some time sharing my initial reflections on the business and my forward-looking plan before taking your questions. Neil, over to you.
Neil Manser
Thanks, Adam, and good morning, everyone. So if I stand back and look at the second half of 2023, I'm confident we've made the right decisions to stabilize the business for the future. Whilst the headline financial result in Motor is disappointing, it's important to say upfront that this is not reflective of the embedded earnings potential of the group. Now we set 3 clear priorities last March, and we've delivered against each of these. We've repriced the Motor book. And the last 6 months, we estimate we are writing business consistent with our net insurance margin ambition of at least 10%. Outside of Motor, we delivered a good result with a net insurance margin of 12%. And with the sale of the commercial broker business, we've refocused the group as a retail, personal and small commercial insurer whilst restoring the capital position. With a strong capital base and good underlying progress, we are proposing a 2023 dividend of 4p per share.
Now let me go into some of the detail. Gross premiums increased by 27%, whilst total policy count remained flat. The operating result was a loss of £190 million, and that was driven by a £320 million loss in Motor, but offset by £130 million profit outside of Motor. And the net insurance margin was minus 8%. Within the result, there is a charge of £104 million relating to the customer remediation for the 2 past business reviews, and we now consider these to be final. Importantly, on a current year basis, the group was profitable in the second half of 2023 as pricing actions started to reduce the Motor claims ratio. Profit before tax was £277 million, benefiting from the gain on the sale of NIG and better investment markets. And these factors drove a significantly improved pre-dividend solvency ratio of 201%, above the top end of our risk appetite range. So standing back, good results in Home, Rescue and Commercial, offset by losses in Motor, but following our actions, we have seen an improved trajectory in the second half....
Direct Line Insurance Group plc (DIISF) Q4 2023 Earnings Call Transcript