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- Direct Line plans to pay 60% of its operating earnings as a regular dividend
Direct Line Group is planning to pay out roughly 60 per cent of its operating profits as regular dividends, as its new boss works to revive the insurer’s fortunes.
Revealing a ‘refreshed strategy’ ahead of its annual general meeting on Wednesday , Direct Line told investors it will soon launch its motor insurance brand on price comparison websites.
Direct Line also plans to exit or stop investing in original equipment manufacturer affinity motor partnerships and other personal lines businesses, and instead focus on home, commercial direct and rescue, outside of motor insurance.
Refreshed strategy: The boss of Direct Line, Adam Winslow
Adam Winslow, who took over as the chief executive of Direct Line earlier this year, is tasked with reviving the struggling insurer’s fortunes at a time when regulators are tightening scrutiny of the sector.
Winslow said in a statement: ‘Putting our strongest brand, Direct Line, on price comparison websites, where 90 per cent of consumers shop, means we will be shaking up the motor insurance market once again.’
Direct Line has committed to paying out around 60 per cent of post-tax operating profit for the regular dividend, ‘with any additional capital returns to be reviewed annually alongside our full-year results’.
The home and motor insurer was a potential takeover target earlier this year. However, Belgian rival Ageas walked away from a potential deal in March after Direct Line rejected two of its proposals.
The group on Wednesday reiterated its target of ‘at least £100million of gross run-rate cost savings by exit 2025’.
On motor instance, it said: ‘We aim to deliver sustained, profitable growth in Motor by focusing on all elements of the insurance value chain; pricing and underwriting, customer experience, claims and distribution.’
Winslow added: ‘Since joining DLG just over four months ago I have rigorously reviewed our business, and listened carefully to investors, customers, and employees. This work has deepened my belief in our strong foundations and excellent potential.
‘Our refreshed strategy will be delivered by our new executive team, who have significant expertise in our core markets.
‘The strategy and targets set out today signal our ambition and intention to grow our business and deliver strong returns for our shareholders.’
Direct Line shares rose 0.28 per cent or 0.54p to 193.44p on Wednesday, having risen over 41 per cent in the last year.
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