Direct Line to report interim results in indication of turnaround plan

Direct Line shareholders will get an early sign of whether the insurer’s turnaround plan is beginning to bear fruit as it posts its interim results on Wednesday.

Shares in the insurer, which owns Churchill, Privilege and the breakdown recovery provider Green Flag, are down 12 per cent since May and its long-term record makes for similarly difficult reading, down nearly 40 per cent since the start of 2022.

Many firms in personal line insurance were left floundering after the inflationary pressures to labour and parts brought on by Russia’s invasion of Ukraine. In 2023, providers providers paid out £1.14 in claims and operating costs for every £1 they earned in premiums.

But Direct Line was an especially high profile casualty of the period. It issued a profit warning and axed its dividend in a set of results in January 2023, prompting the sudden exit of then chief executive Penny James. It also had to rebuff a megabid from Belgian rival Ageas.

James was replaced by Adam Winslow, who instantly declared a restructuring. He has also put the firm’s flagship brand Direct Line on price comparison websites for the first time.

Analysts are divided on Direct Line’s future prospects. Citi upgraded the firm to a ‘buy’ recommendation last week, citing improving conditions in the motor insurance and better performance from its non-motor lines.

But analysts at Peel Hunt downgraded the FTSE 250 constituent to an ‘add’, saying it expects earnings to recover more slowly than they had previously expected.