REG - Direct Line Ins Grp - Solvency Capital Ratio Update

Direct Line InsuranceAnnouncement

23/08/2024 07:00

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RNS Number : 5062B  Direct Line Insurance Group PLC  23 August 2024

This announcement contains inside information.

 

DIRECT LINE INSURANCE GROUP PLC

SOLVENCY CAPITAL RATIO UPDATE

23 August 2024

 

Direct Line Insurance Group plc ("the Group" or "the Company") provides the
following update in advance of its half year results.

 

During the Group's half year results preparation, a miscalculation has been
identified within the Group's audited Solvency II own funds for the year ended
2023. This miscalculation arose in the Solvency II treatment of the whole
account quota share reinsurance arrangement (incepted 1 January 2023), and in
particular the translation of the reinsurance debtors between IFRS and
Solvency II own funds. This miscalculation has no impact on the IFRS figures.

 

Correcting for the miscalculation, the solvency capital ratio (post-dividend)
at year end 2023 was 188%, which was above the Group's risk appetite range of
140% to 180% (the previously reported solvency capital ratio was 197%). In
the normal course of preparing for our half year results, the Group estimates
its solvency capital ratio at 30 June 2024 to be around 200%(1). This follows
good capital generation in the first half from a combination of operating
earnings, one-off benefits from partnerships, and market movements.

 

The Group has taken action to strengthen the control environment in relation
to the specific area where the miscalculation occurred.

 

The Group will report its half year results in full at 7.00 am (BST) on 4
September 2024.

 

This announcement contains inside information. The person responsible for
arranging the release of this announcement on behalf of the Company is Neil
Manser, Chief Financial Officer.

 

For further information, please contact:

 Paul Smith
 Director of Business Performance and Investor Relations
 Tel: +44 (0)7795 811 263

 Roger Lowry
 Director of Corporate Affairs

 Tel: +44 (0)7881 553 155

 

 

 

Note:

1.    Estimate based on the Group's Solvency II partial internal model.

 

 

Forward-looking statements disclaimer

 

Certain information contained in this document, including any information as
to the Group's strategy, plans or future financial or operating performance,
constitutes "forward-looking statements". These forward-looking statements may
be identified by the use of forward-looking terminology, including the terms
"aims", "ambition", "anticipates", "aspire", "believes", "continue", "could",
"ensures", "estimates", "expects", "guidance", "intends", "may", "mission",
"outlook", "over the medium term", "plans", "predicts", "projects",
"propositions", "seeks", "should", "strategy", "targets", "vision", "will" or
"would" or, in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements include all matters
that are not historical facts. They may appear in several places throughout
this document and include statements regarding intentions, beliefs or current
expectations, including of the Directors, concerning, among other things: the
Group's results of operations, statement of financial position, financial
condition, prospects, growth, net insurance margin, insurance service result,
strategies, the industry in which the Group operates and the Group's approach
to climate-related matters. Examples of forward-looking statements include
financial targets which are contained in this document with respect to return
on tangible equity, solvency capital ratio, net insurance margin, combined
operating ratio, percentage targets for current-year contribution to operating
profit, prior-year reserve releases, cost reductions, reduction in net expense
ratio, investment income yield, net realised and unrealised gains, capital
expenditure and risk appetite range; and targets, goals and plans relating to
climate and the Group's approach and strategy in connection with
climate-related risks and opportunities. By their nature, all forward-looking
statements involve risk and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future and/or are
beyond the Group's control and/or they rely on assumptions that may or may not
transpire to be correct. Forward-looking statements are not guaranteeing
future performance.

 

The Group's actual results of operations, financial condition and the
development of the business sector in which the Group operates may differ
materially from those suggested by the forward-looking statements contained in
this document, for example directly or indirectly as a result of, but not
limited to:

 

-          changes to law, regulation or regulatory approach following
any change in government

-          United Kingdom ("UK") domestic and global economic business
conditions, and changes of a geo-political and/or macro-economic nature;

-          the Trade and Cooperation Agreement between the UK and the
European Union ("EU") regarding the terms of the trading relationships between
the UK and the EU and its implementation, and any subsequent trading and other
relationship arrangements between the UK and the EU and their implementation;

-          the terms of trading and other relationships between the UK
and other countries following Brexit;

-          the impact of the FCA's GIPP regulations and Consumer Duty
regulations and of responses by insurers, customers and other third parties
and of interpretations of such rules by any relevant regulatory authority;

-          market-related risks such as fluctuations in interest rates,
exchange rates and credit spreads, including those created or exacerbated by
the war in Ukraine following the Russian invasion and/or the conflict in the
Middle East involving Israel and Gaza;

-          the policies and actions and/or new principles, rules and/or
regulations, of regulatory authorities and bodies, and of changes to, or
changes to interpretations of, principles, rules and/or regulations (including
changes made directly or indirectly as a result of Brexit or related to
capital and solvency requirements or related to the Ogden discount rates) and
of changes to law and/or understandings of law and/or legal interpretation
following the decisions and judgements of courts;

-          the impact of competition, currency changes, inflation and
deflation;

-          the timing, impact and other uncertainties of future
acquisitions, disposals, partnership arrangements, joint ventures or
combinations within relevant industries; and

-          the impact of tax and other legislation and other regulation
and of regulator expectations, requirements, interventions, enforcements,
fines and requirements and of court, arbitration, regulatory or ombudsman
decisions, judgements and awards in the jurisdictions in which the Group and
its affiliates operate.

 

In addition, even if the Group's actual results of operations, financial
condition and the development of the business sector in which the Group
operates are consistent with the forward-looking statements contained in this
document, those results or developments may not be indicative of results or
developments in subsequent periods.

 

The forward-looking statements contained in this document reflect knowledge
and information available as of the date of preparation of this document. The
Group and the Directors expressly disclaim any obligation or undertaking to
update or revise publicly any forward-looking statements, whether because of
new information, future events or otherwise, unless required to do so by
applicable law or regulation. Nothing in this document constitutes or should
be construed as a profit forecast.

 

Neither the content of Direct Line Group's website nor the content of any
other website accessible from hyperlinks on the Group's website is
incorporated into, or forms part of, this document.

 

 

LEI: 213800FF2R23ALJQOP04

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