nsurer Direct Line said it slumped to a half-year loss and warned the full-year out-turn will continue to be knocked by higher motor cover claims.
The group swung to an operating loss of £78.3 million for the first six months of 2023 from profits of £197 million a year ago.
Pre-tax losses widened to £76.3 million from £11.1 million a year earlier.
It reiterated that operating profit in 2023 is set to be impacted by the “earn through of previously written motor business”.
But the firm said it is expecting an improvement in operating profit in 2024 because recent moves to hike motor cover prices will start to pay off.
Direct Line’s shares jumped 16% higher in Thursday morning trading on hopes of a turnaround next year, while investors also cheered the firm’s announcement late on Wednesday that it had agreed a deal to sell its brokered commercial lines business.
Canadian property and casualty insurer Intact Financial and its UK and Ireland-focused arm RSA will buy the business for an initial £520 million.
It comes after a the group last week named Aviva’s UK and Ireland general insurance business boss, Adam Winslow, as its incoming chief executive.
We now believe that we are underwriting profitably, consistent with a 10% net insurance margin
The company is currently led by acting chief Jon Greenwood, after previous boss Penny James stepped down in January in the wake of a profit warning and move to scrap its shareholder dividend.
It blamed the impact of freezing weather and the rising cost of motor cover claims.
Direct Line has since admitted it under-priced policies for inflation, while the weather costs left the group unusually exposed compared with its rivals.
The group has been hiking car insurance premium prices to offset the soaring cost of motor repairs, which it said has driven a 25% increase in its average renewal premiums.
Overall, it said half-year gross written motor premiums lifted 7%.
Mr Greenwood said: “Over the last six months we have taken decisive action to put the group back on a more stable footing.
“In March, we set out that our key priorities were to restore capital resilience, to improve motor performance and to maintain the performance of our non-motor businesses.
“The proposed sale of the brokered commercial insurance business that we announced yesterday addresses the first, at the same time as focusing our strategy on retail personal lines and small business commercial customers.”
On boosting motor insurance margins, he added: “We now believe that we are underwriting profitably, consistent with a 10% net insurance margin.
“This has taken longer than expected and will take time to flow through into reported earnings.”