Share price in Direct Line powers ahead as insurance company reveals boost to profits for its year ended December 2015, despite costs of over £100m from winter storms

 
Hayley Kirton
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Storm Frank Causes More Flooding In The North of England And Scotland
Floods are just hand-in-hand with the business of insurance, said Direct Line's chief executive (Source: Getty)

Share price in Direct Line rose today as the insurance company revealed a boost to profits before tax in its preliminary results despite costs of over £100m from winter flooding.

The insurer, which owns the Churchill and Green Flag brands, reported profits before tax of £507.5m for its year ended December 2015, up 11.1 per cent from £456.8m the year before, while gross written premiums rose to £3.2bn, up 1.7 per cent on £3.1bn in 2014.

Shares in the company, which floated on the London Stock Exchange in October 2012, were trading up 5.4 per cent at 409.7p just before 3pm London time.

The flooding over the winter cost the insurer £130m, but, thanks to initiatives throughout the year to reduce costs by 4.6 per cent, the company cushioned some of the impact on its bottom line.

Speaking to City A.M., Direct Line's chief executive Paul Geddes remarked: "It's kind of what we're in business for. I don't think anyone in the business of insurance should moan about floods."

Read more: Flood-o-nomics: Why flooding will remain a problem

In January, the insurer revealed estimates that the winter floods would cost it between £110m and £140m.

Direct Line also increased its final dividend to 9.2 pence per share and awarded a special dividend of 8.8p, bringing the total dividends for 2015 to 50.1p, almost double the 27.2p awarded in 2014.

Looking forward to 2016, Geddes remarked that the company was seeing the effects of higher rates of insurance premium tax, which was increased by 3.5 per cent last November.

"That's caused more people to shop around," Geddes said. "So, we're very busy because people are shopping more and we do well when that happens because we're a good brand with good propositions but it's keeping us pretty busy."

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