UK's Direct Line to list on price comparison websites in strategy shift
Direct Line targets solvency ratio of about 180% in medium term
Plans to pay around 60% of operating earnings as dividend
CEO does not rule out job cuts as part of cost savings plan
Updates throughout with CEO comments from media call
By Yadarisa Shabong
July 10 (Reuters) -Direct Line DLGD.L will launch its eponymous motor insurance brand on price comparison websites for the first time, it said on Wednesday, as the company's new CEO implemented a strategy shift designed to win new business.
Adam Winslow, who took over as CEO of the London-listed home and motor insurer four months ago, is trying to strengthen the company as shareholders turn to management to unlock value after it fended off a takeover attempt by Belgian rival Ageas AGES.BR in March and regulators increase scrutiny of the sector.
"One of my overarching observations is that this is an insurance business that has lost its technical edge," Winslow said in a call with journalists during the company's capital markets day.
"It's important to openly acknowledge missteps over the past few years," he said.
The company long prided itself on not being on price comparison websites and preferring to deal with customers directly, but drew criticism from customers seeking the best deal.
"In the past five years, price comparison websites have continued to increase their share of new business in the market from around 80 to 90% ...To grow, winning on price comparison websites is critical," Winslow said.
The company will also exit or stop investing in some business, including pet and travel and as a motor coverage partnership with automakers.
Direct Line, which has struggled with losses and underwriting profitability at its motor insurance arm, reiterated plans to save at least 100 million pounds ($128.06 million) in costs by 2025.
Winslow did not rule out job cuts as part of that plan.
The group plans to pay around 60% of its operating earnings as regular dividend, targets a solvency ratio of around 180% in the medium term, and expects to maintain a ratio above this level as it executes its turnaround plan.
A solvency ratio above 100% indicates an insurer has sufficient capital. The ratio was 197% in 2023.
"The message from the company that it will seek to have a higher Solvency II ratio in the near term ... likely caps the potential for material share buybacks or special dividends in the near future," JP Morgan analysts wrote in a note.
The company's shares fell by as much as 3% in early trade before recovering to trade 0.5% lower at 1001 GMT.
($1 = 0.7809 pounds)
Reporting by Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman, Mrigank Dhaniwala, Sherry Jacob-Phillips and Barbara Lewis
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