Direct Line has seen its shares fall by 1 / 4 after it scrapped its closing dividend, blaming a flood of claims associated to dangerous climate within the UK final month.
The dwelling and motor insurance coverage agency stated extreme climate in December, which included a chilly snap, had pushed it to an underwriting loss for 2022.
The insurer informed traders it now anticipated whole climate claims of round £140m for the yr.
It had beforehand guided on a sum of £73m and, in July, already reduce its profitability outlook and delayed the second leg of a share buyback.
Direct Line has been hit by a surge in claims.
Weather-related ones included for subsidence within the wake of the recent summer season.
While motor insurers carried out strongly in the course of the COVID pandemic as few clients have been driving, inflationary pressures and provide chain points as a result of pandemic and the conflict in Ukraine have pushed up the price of repairs.
Direct Line additionally stated its property funding portfolio had seen a 15% drop in values, equal to £45m.
“Things have gone from bad to worse,” analysts at Jefferies stated in a word, including they anticipated the axed closing dividend to “come as a major shock to the market”.
They reiterated their maintain ranking on the inventory.
Shares fell by greater than 27% in early offers – hitting their lowest degree since October 2013.
“The board recognises the importance of the dividend to our shareholders, and continues to take actions to restore
balance sheet resilience and dividend capacity as a priority, consistent with our track record of delivering returns for
shareholders,” chief government Penny James stated in a press release.
She added: “Despite the impact of these external factors, we continue to make good progress, including enhancing our technological capabilities, introducing new products and improving our efficiency.
“We have taken actions to reply swiftly to additional inflation in motor claims and can proceed to navigate market volatility because it arises.”
Source: information.sky.com”