Direct Line has said it plans to cut costs by more than £100 million a year as it shifts to automation and strengthens its digital channels, after rejecting a takeover approach from a rival insurer.
The car insurance giant said the savings will come from technology and digitisation initiatives and from simplifying the group’s structure.
It already has an online claims hub for motor customers and a car management app launched last year.
The company also said it plans on “simplifying operational complexity” and “right-sizing support functions”.
We have today announced our 2023 preliminary results. You can read our full announcement and view our analyst presentation at https://t.co/jblpC8sjJ4 pic.twitter.com/5QlMP97YzA
— Direct Line Group (@DLGroupMedia) March 21, 2024
It has not given any details about whether this could lead to job cuts but boss Adam Winslow said the firm will talk to staff first.
It is aiming to make the yearly savings by the end of 2025.
Direct Line revealed in its results that it returned to a pre-tax profit last year after a more turbulent period for the group, as it was hit by higher motor cover claims amid colder weather and rising costs.
It reported a pre-tax profit of £277 million for 2023, up from a loss of £302 million the previous year, driven by the sale of its brokered commercial business.
But its operating loss widened to £190 million from a loss of £6 million in 2022.
Gross written premiums, meaning the total amount paid by customers who have an insurance policy, surged by more than a quarter year on year to £3.1 billion, helped by higher prices.
The new boss of the car insurance giant said it had “not always managed volatile market conditions successfully in recent years”.
Mr Winslow, who took over as chief executive earlier this month, said: “While the picture has improved, we need to do more to drive performance and we have identified immediate actions we can take in 2024 to create value”, which he said include reducing its cost base.
Direct Line rejected two takeover approaches from Belgium-based rival Ageas earlier this month.
The higher potential offer valued the business at around £3.1 billion, but Direct Line said it thought the bid was “uncertain, unattractive, and that it significantly undervalues” the firm.
It said it is “confident” in its “standalone prospects”.