Direct Line Group has revealed plans to axe around 550 roles as it looks to cut costs amid a turnaround at the insurer.
The insurance giant has been struggling to reinvigorate its business under a turnaround strategy launched by chief executive Adam Winslow after it fended off a £3.17billion takeover attempt by Belgian rival Ageas in March.
‘We are in the early stages of a significant turnaround and our Q3 trading is not yet fully reflective of the actions we have taken,’ Mr Winslow said in a statement.
Direct Line had 10,131 employees globally, as of last December, according to its annual report.
Direct Line Group has revealed plans to axe around 550 roles as it looks to cut costs amid a turnaround at the insurer
Aggressive price hikes have helped Direct Line mitigate the effect of rising cost of claims, but have also turned its customers away to cheaper rivals.
The company said its total gross written premium and associated fees reached almost £836million in the three months up to the end of September compared with £1.28billion a year earlier.
News of the insurance giant’s job cuts come after Direct Line missed expectations for its first half operating profit amid higher claims costs, particularly across its motor insurance arm.
The firm’s operating profit from ongoing operations reached £63.7million by the end of the period, against forecasts of around £85million.
The FTSE 250 firm saw in-force policies fall 3.1 per cent in the period, to 8.95million from 9.24million, with the biggest reduction in its motor arm, at 4.8 per cent.
Direct Line’s own-brand motor policies fell to 3.12million from 3.37million over the half-year, with 254,000 exiting.
Like many insurers, the group has increased its prices in recent years to tackle high claims inflation.
Its net insurance margin was 1.8 per cent, against forecasts of three per cent.
Adam Winslow is the chief executive of Direct Line said the firm was in the early stages of ‘significant turnaround’
The firm took in premiums and associated fees totalling more than£1.8million during the period, beating analyst forecasts. This upturn, the group said, was ‘largely as a result of the Motability partnership, which began in September 2023.’
Direct Line boss Mr Winslow previously said: ‘In the first half of the year we delivered strong premium growth and returned to profitability.
‘The actions we have taken are beginning to make a difference but there is more to do.
‘We will continue to drive business transformation during the second half of 2024 and into 2025, as our new high calibre management team continues to arrive.’
The group said it planned to make £100million worth of cost savings by the end of next year.
Looking ahead, the company said: ‘We expect motor’s net insurance margin to improve during the second half of 2024 as written margins of above 10 per cent continue to earn through.
‘In non-motor we expect continued growth, in line with our target of 7 per cent to 10 per cent compound annual growth in gross written premium and associated fees between 2023 and 2026.’
After posting two profit warnings in two years, new chief executive Winslow is trying to strengthen the firm’s bottom line.
In August, the group lowered a key gauge of its financial strength, citing a previous miscalculation.
Direct Line shares fell 1.04 per cent or 2.00p to 191.10p at the start of September, having risen over 25 per cent in the last year.