Direct Line Insurance Group PLC (LON:DLG) saw its shares decline on Wednesday as the motor and home insurer reported a fall in quarterly gross written premiums and said claims linked to the recent cold weather will utilise its full annual weather budget.
In a first-quarter trading update, the FTSE 100-listed firm - whose brands include Churchill and Green Flag - said claims associated with the snow and icy weather conditions in February and March were expected to be about £50mln after tax.
READ: Churchill owner Direct Line sees full-year profit jump, big dividend hike
The group said its gross written premiums in the quarter fell to £769.9mln, down from £810.3mln a year earlier, impacted by the company's exit from partnerships with building society Nationwide and supermarkets giant J Sainsbury plc (LON:SBRY).
Direct Line said its Home insurance own brands premiums grew by 0.4% and in-force policies grew by 1.8% compared to the prior year as the price comparison website channel saw strong growth.
Meanwhile, it added the partnership with Royal Bank of Scotland Group PLC (LON:RBS) achieved its first quarter on quarter policy growth since 2012.
The firm said the exit from the Nationwide and Sainsbury's partnerships reduced premiums by £48.8mln compared to the first-quarter of 2017.
Direct Line added that its Motor insurance own brands premiums grew by 5.3% and in-force policies grew by 5.0% compared to the prior year, with Direct Line particularly strong. The group added that average premiums were higher than a year earlier, albeit with the year-on-year increase reduced.
Paul Geddes, Direct Line Group’s CEO, commented: "The freezing weather earlier this year hit many drivers, households and businesses hard”.
He added: “We estimate the claims associated with the major freeze event will utilise the Group's full annual weather budget.”
in early morning trading, Direct Line shares were down nearly 4% at 361.6p.