CAR INSURANCE giant Direct Line Group yesterday announced plans to cut a further 2,000 staff as part of a push to cut costs in the face of tough competition.
The roles, which are largely in head office and support functions, come on top of 900 job cuts announced ahead of last year’s float.
Shares in the firm, which employs around 15,000 staff, closed up 3.8 per cent at 227.4p as investors welcomed the move.
Shore Capital analyst Eamonn Flanagan said he acknowledged the human cost of the redundancy programme but insisted Direct Line is “taking the correct action” in the face of an ongoing competition commission probe into the industry.
Motor insurers have come under pressure in recent months as competition pushes down premiums and politicians turn their fire on some of the industry’s more profitable activities.
Direct Line says it wants the group cost base to be just £1bn in 2014, down from £1.13bn in 2011. To achieve this it will have to absorb a total of £180m of restructuring costs.
The business was spun out of RBS in a successful float last autumn and now sits just outside the FTSE 100 with a market capitalisation of more than £3.2bn.
“This is another step in the ongoing transformation of Direct Line Group and an important part of our aim to regain competitive edge,” said chief executive Paul Geddes.
“We have not made these proposed changes lightly and understand the impact they will have on our people.”