Churchill owner Direct Line Group today said its refusal to get sucked into a price war in the fiercely competitive motor insurance market hurt first-quarter premiums.
Churchill owner Direct Line Group said its refusal to get sucked into a price war in the fiercely competitive motor insurance market hurt first-quarter premiums.
The UK's biggest motor insurer blamed its decision to hold prices and cut the number of new young drivers it takes on - deemed a bigger risk - for gross premiums falling 4.5% during the first three months of the year to about £1 billion.
But pre-tax profits surged 47% to £94.3 million from a year earlier after unusually low weather-related claims, despite freezing conditions. It usually gets about £25 million of weather-related claims in its first quarter.
It is also slashing costs, including axing about 1,200 jobs, which helped boost profits.
Rivals including RSA Insurance and Admiral have already warned over aggressive competition in the car insurance market in recent weeks, which has driven prices lower.
Direct Line's gross written motor insurance premiums were down 16% to £364.1 million during the quarter. Its live motor insurance policies fell almost 7% to about 3.8 million.
The group, which also owns brands including Green Flag and Privilege, said young drivers as a share of its new business fell to 8.3% from 11.7% a year earlier.
The fall in motor premiums was partly offset by growth in its international business, where it is adding customers in Italy and Germany.
Chief executive Paul Geddes said Direct Line made "deliberate choices" which led to the fall in gross premiums, and expects the market to remain tough through 2013.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article