Direct Line Insurance Group plc Chief Executive Officer Paul Geddes said the company had started to see prices stabilize in the U.K.’s competitive motor insurance market.
Prices for its auto business were unchanged in the three months to Sept. 30, the Bromley, England-based insurer said in a statement. Gross written premiums still fell 5.4 percent, less than previous quarters, it said.
“We have seen two quarters of price stability,” Geddes said in a telephone interview. “The environment is better than it was, but it’s still competitive.”
Surveys from both Towers Watson & Co. and the Automobile Association showed this month that the declines in prices had come to an end in the third quarter after seeing the first increases since 2011. Premiums remain 14.4 percent lower than the same period last year and at levels similar to 2010 were no longer “economically sustainable,” the AA said.
Geddes said that while auto insurance remained the largest part of the business, the company is looking to expand other lines including its commercial operations. The insurer is now solely focused on the U.K. after last month selling its German and Italian business to Spain’s MAPFRE SA for 550 million euros ($691 million).
“We are very now focused on the U.K., where we see a lot of opportunity in commercial, rescue and telematics,” said Geddes. “We have still got a huge program on motor — the best insurers still have a very good business.”
The company reiterated that its expects its combined operating ratio, or claims and expenses as a percentage of premiums, to be 95 percent to 97 percent, which includes the release of reserves set aside to pay claims in previous years. A number below 100 percent means profitability.
The insurer, which was split off from Royal Bank of Scotland Group Plc in 2012, said it’s also on track to meet its 1 billion-pound cost-saving target by the end of 2014 after reducing total expenses in the nine-month period by 6 percent.
The shares fell 1.6 percent to 277 pence at 11:25 a.m. in London and are up 10.7 percent this year. That compares with a 0.5 percent gain for Admiral Group Plc and a 2.1 percent decline for Esure Group Plc.
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