Di­rect Line raises share­holder pay­out as fall­ing mo­tor claims ease virus strain

The Daily Telegraph - Business - - Business -

◆ 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.

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