UK insurer Direct Line expects motor claims to hit 2023 earnings
(Reuters) - Direct Line Insurance Group Plc said on Tuesday it expected more adverse claims in motor, especially in relation to damage, to pressure its earnings in 2023, sending the British insurer's shares 8% lower in early trade.
The motor and home insurer posted a 9.7% rise in quarterly gross written premiums to 805.7 million pounds ($1.02 billion), helped by price increases to cope with a challenging motor insurance market.
Direct Line has had a tumultuous time as the war in Ukraine and supply chain pressures from the pandemic pushed up the costs of motor repairs, forcing the group to scrap its dividend and post a 95% drop in 2022 profit, while its CEO also stepped down in January.
"2023 earnings outlook continues to be challenging," acting CEO Jon Greenwood said in a statement, adding that the company's focus was to improve its motor insurance claim margins.
Shares in Direct Line fell 8% and fellow motor insurer Admiral dropped nearly 4% by 0714 GMT.
"Whilst the quantum of the impact is unclear (on 2023 earnings), what is clear is that elevated claims severity inflation has not gone away," analyst at Jefferies wrote in a note.
($1 = 0.7923 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich)