SAMI TAIPALUS BERENBERG BANK
The company is likely to find it more difficult to make improvements to underwriting in 2013, as weakening UK motor and home pricing starts to bite. It will benefit from cost reduction measures but we estimate that these will not be sufficient in scale to reach profitability targets.
KEVIN RYAN INVESTEC
While the UK motor market is becoming increasingly competitive in rating terms, Direct Line has a large portfolio of personal insurance products and this offers it flexibility. A further placing of RBS stock will occur this year and we view this as a good opportunity to top up holdings.
EAMONN FLANAGAN SHORE CAPITAL
Our fears over the implications of the on-going Competition Commission investigation into the UK personal motor market and its potential consequences for the industry leave us particularly fearful over the sustainability of ancillary lines. Direct Line is heavily reliant on such income.