Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Direct Line Insurance Group Announces Maiden 8 Pence Per Share Dividend

LONDON -- The shares of Direct Line Insurance  (LSE: DLG  )  climbed 1 pence to 212 pence during early London trade this morning after the company declared its first dividend following its separation from Royal Bank of Scotland last year.

The insurer will pay an 8 pence per share final dividend to shareholders in June, and the shares will go ex-dividend next week.

Direct Line said the dividend implied a pro forma annual payout equivalent to 55% of underlying post-tax profits. Therefore, with reported earnings coming in at 21.8 pence per share, the full-year dividend would have been 12 pence per share had the company operated separately from RBS throughout all of 2012.

Direct Line's dividend news accompanied full-year results that showed underlying net earned premiums falling 5% to 3.7 billion pounds and underlying operating profits advancing 9% to 461 million pounds.

The profit improvement was due to a 72 million-pound underwriting loss transforming into a £28m underwriting profit. The company cited "pricing actions" and "improvements to risk mix" for the turnaround.

Today's figures also showed the number of in-force policies gaining 1% to 19.6 million and net tangible assets falling from 217 pence to 161 pence per share.

Paul Geddes, Direct Line's chief executive, said:

We have made good progress since the beginning of our transformation plan... However, there is no room for complacency as we face a competitive market, particularly in UK motor, where there is also expected to be significant legal reforms.

Our transformation plans target further benefits and we have made substantial progress on our target to achieve £100 million of gross annual cost savings in 2014. We will maintain our firm focus on value and underwriting discipline, consistent with achieving our 98% combined operating ratio target for 2013.

Geddes also said he aimed to raise Direct Line's dividend annually in real terms from 2013.

Based on today's results, Direct Line is valued at 10 times profits and offers a possible 5.7% dividend income.

Of course, whether the current rating, today's maiden dividend and the general outlook for the insurance industry all combine to make Direct Line a buy remains your decision.

However, if you already own Direct Line shares and are looking for another dividend opportunity, this exclusive in-depth report reviews a solid income possibility within the FTSE 100.

Indeed, the blue chip in question offers a 5.7% income, might be worth 850 pence versus around 700 pence now -- and has just been declared the "Motley Fool's Top Income Stock For 2013"!

Just click here to download the report -- it's free.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2285708, ~/Articles/ArticleHandler.aspx, 9/24/2016 8:39:51 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 23 hours ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 12:08 PM
DLG $378.75 Down -3.75 -0.98%
Direct Line Insura… CAPS Rating: No stars