The owner of insurers Churchill and Direct Line said the value of car premiums it sold fell by 9% in the first half of the year as competition in the motor industry remained intense.

Direct Line Insurance said average car insurance prices were 2% lower in the second quarter and 4% lower in the previous period, while in-force car policies fell 1.9% to 3.7 million in the six months to June 30 compared to a year ago.

The firm said that while pressure on prices eased in the second quarter, it was unclear if the market had hit bottom, or whether prices would fall again in the second half of 2014.

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Overall the group, which was spun out of the Royal Bank of Scotland in 2012, posted a pre-tax profit up 7.8% to £225.1 million, beating expectations as lower restructuring costs offset the reduction in motor and household insurance business and an increase in bad weather claims.