Direct Line to cut jobs following challenging third-quarter trading

Direct Line Insurance Group PLC announced on Monday that it will cut 550 jobs as it reported a decline in third-quarter gross premiums.

Direct Line to cut jobs following challenging third-quarter trading

The London-based car and home insurer revealed a 35% drop in gross written premiums and associated fees, falling to £835.9 million from £1.28 billion the previous year. On a quarterly basis, this figure was down 40% from £1.40 billion. The company's Motor division was one of the weakest performers, with premiums dropping 48% to £426.2 million from £826.8 million last year. Partnerships in this segment also fell sharply, from £391.7 million to £27.1 million over the same period. Direct Line acknowledged that trading in the third quarter had been difficult for the division. In an effort to streamline operations, Direct Line has proposed reducing its workforce by 550 jobs. The company aims to save £50 million in 2025 and target at least £100 million in gross cost savings by the end of that year. The company clarified that it is still in the early stages of a significant restructuring, with third-quarter results not yet reflecting the changes implemented so far. For the first nine months of the year, gross premiums rose by 5.5%, reaching £3.13 billion compared to £2.96 billion the previous year. This growth was supported by an 11.4% increase in Motor premiums to £1.76 billion from £1.59 billion. Non-Motor premiums also showed growth, rising 13% to £778.0 million from £688.9 million.

Estimates confirmed

The company reiterated its goal of achieving 7%-10% compound annual growth in gross written premiums and associated fees in its Non-Motor business between 2023 and 2026. CEO Adam Winslow commented: "We achieved double-digit premium growth year-on-year in Motor, Home, and Commercial Direct. However, we are still in the early stages of a major turnaround, and our third-quarter results do not yet fully reflect the steps we have taken. "In Motor, while trading conditions have been tough, we’ve continued to grow policy counts on price comparison websites and are making good progress with the launch of the Direct Line brand in this channel. "We’re on track with our cost-saving goals, expecting £50 million in savings by 2025 through procurement improvements, technology rationalization, and simplifying our operating model. "I’m pleased with the strategic and operational progress we are making across the business."