UK’s Direct Line to list on price comparison sites as strategy changes

UK’s Direct Line to list on price comparison sites as strategy changes

By Yadarisa Shabong

(Reuters) – Direct Line will make its eponymous motor insurance brand available on price comparison sites for the first time, it said on Wednesday, as the company’s new CEO rolled out a strategy change to win new business.

Adam Winslow, who took over as CEO of the London-listed home and car insurer four months ago, has been trying to strengthen the company as shareholders look to management to unlock value after the company fended off a takeover attempt by Belgian rival Ageas in March and regulators have stepped up scrutiny of the sector.

“One of my general observations is that this is an insurance business that has lost its technical edge,” Winslow said on a call with reporters during the company’s capital markets day.

“It’s important to openly acknowledge the missteps of the past few years,” he said.

The company has long prided itself on not listing on price comparison sites, preferring to communicate directly with customers, but has faced criticism from shoppers looking for the best deal.

“Over the past five years, price comparison sites have continued to increase their share of new business in the market from 80% to 90%… Winning on price comparison sites is critical to growth,” Winslow said.

The company will also exit or cease investing in some businesses, such as pet and travel insurance and motor insurance partnerships with car manufacturers.

Direct Line, which has been struggling with losses and profitability at its motor insurance arm, has reiterated plans to make cost savings of at least £100 million ($128.06 million) by 2025.

Winslow said layoffs could be part of that plan.

The Group plans to pay out approximately 60% of its operating profit as regular dividends, targets a solvency ratio of approximately 180% in the medium term and envisages maintaining a ratio above this level while implementing its restructuring plan.

A solvency ratio above 100% indicates that the insurer has adequate capital. The ratio was 197% in 2023.

“The company’s message that it will aim to achieve a higher Solvency II ratio in the near term… limits the potential for significant share buybacks or special dividends in the near future,” JP Morgan analysts wrote in a note.

The company’s shares were trading down 0.5 percent at 10:01 a.m. GMT after falling as much as 3 percent in early morning trading.

($1 = 0.7809 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman, Mrigank Dhaniwala, Sherry Jacob-Phillips and Barbara Lewis)