Direct Line Insurance Group Plc, the UK insurer that rejected a takeover attempt by Belgian rival Ageas SA earlier this year, is set to cut about 550 jobs as part of a turnaround plan aimed at saving £50 million ($64 million) next year.
The reductions would eliminate about 6% of its roughly 9,000 employees, and consultations have already started on the push for “a leaner and more efficient operating model,” the company said in a trading update on Monday.
The Bromley, England-based company reported a 35% slump in gross written premiums and associated fees last quarter. Higher claim costs forced it to increase premiums for car insurance, prompting drivers to switch in search of cheaper offers.
It maintained its guidance of 7% to 10% compound annual growth in gross written premium and associated fees between 2023 and 2026 in non-Motor operations. It also stuck to its goal of a net insurance margin for ongoing operations, normalized for event weather, of 13% in 2026.
Direct Line is pursuing an independent path after rebuffing a proposal from Ageas in March that valued it at around £3.2 billion. Since then, the shares have slumped about 27%, giving it a market value of about £2.2 billion.
Shares in London rose as much as 1.3% in early trading [on Nov. 11], but are still almost 9% down so far this year. The stock traded up 0.1% at 165.4 pence as of 10:44 a.m. London time.
Photograph: The Direct Line DrivePlus app displayed on a mobile phone arranged in London, UK, on Friday, March 1, 2024. Photo credit: Hollie Adams/Bloomberg
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