The new chief executive of Direct Line says he will cut the company's cost base by £100 million by the end of next year as the insurance group battles claims inflation and takeover approaches from a Belgian rival.

The announcement by Adam Winslow came this morning as Direct Line posted an operating loss of £189.5m for the year to the end of December, up from £6.4m previously. A pre-tax profit of £277.4m was achieved on gains from the sale of the group's brokered commercial business.

The insurer - whose brands also include Churchill, Darwin, Privilege and Green Flag - has rejected takeover offers from Belgium's Ageas in February and March, calling them “uncertain, unattractive” and “highly opportunistic”. Under UK takeover rules, Ageas has until March 27 to announce a firm intention on whether to make another offer. 

READ MORE: Talk of cost cuts makes uncomfortable reading for Direct Line staff in Scotland

Mr Winslow said Direct Line has identified "significant opportunities" to cut around £100m by the end of 2025 by reducing operational complexity and technology costs. Marketing spend will also be further reduced as the company builds out customer self-service options such as its digital motor claims hub and the Caha! app launched in 2023.

Direct Line did not quantify whether this will lead to immediate job cuts or a reduction in headcount over time. When asked earlier this morning, Mr Winslow - who is completing a "comprehensive strategic review" and will report back again in July - said staff would be the first to be informed in the event of cuts.

Direct Line is the UK's second-largest motor insurance group and a major employer in Scotland with approximately 1,000 staff based mainly out of Direct Line House in Glasgow's Cadogan Street.

Shares in Direct Line were trading marginally higher this morning at around 212p, compared with Ageas' most recent cash and shares offer of 237p which values the UK group at approximately £3.07 billion.