Direct Line raises shareholder payout as falling motor claims ease virus strain
◆ Insurer Direct Line surprised the City by increasing its interim dividend and pledging to pay shareholders its cancelled full-year dividend for 2019 after emerging relatively unscathed from the coronavirus economic shutdown, writes Michael O’Dwyer.
A fall in motor insurance claims helped to offset weaker returns on the firm’s investments.
The restoration of the dividend is a boost to income investors who have suffered a £16.1bn divi bonfire as companies dash to conserve cash.
Penny James, chief executive of the insurer, which also owns Churchill and Green Flag, said the swift return to paying a dividend was “a reflection of our financial resilience”.
The decision to restart payments to shareholders was agreed with the regulator and the capital ratio – a measure of the capital held to ensure it can pay out on claims – will stand at a strong 192pc after the money is paid, Direct Line said. Pre-tax profits for the first six months of 2020 fell to £236m, down 9.5pc from a year earlier.