The Línea Directa Group has recorded losses of 14.7 million euros between January and September, compared to a profit of 58.3 million euros in the same period of 2022, due to the impact of inflation on the company’s margins. of provision costs, which still remain at “high levels”, as reported this Friday in a statement.
However, in the third quarter it obtained a profit of 0.9 million euros, which has allowed it to reduce the volume of losses it recorded at the end of June of 15.5 million euros.
Línea Directa explains that this improvement is supported by a significant reduction in the cost of claims, especially in the motor sector, by an increase in billing and by the “rigorous measures” of pricing, underwriting and management efficiency.
The total figure for premium income stood at 731.9 million euros as of September 30, 3% more than in the same period of the previous year, driven by the growth in billing in the three business lines (motor , home and health).
This positive evolution of billing occurs despite the 2.4% decrease in the insured portfolio, placing the number of clients at 3.36 million, which would be “in line with the strategy of prioritizing profitability over volumes”.
The insurer explains that it has made an individualized adjustment of rates to risk given the current inflationary situation, as well as a tightening of underwriting. “The effect of both measures is already reflected in the progressive growth of the premiums charged to the current year, which are computed in the income statement throughout the 12 months of the contract. Specifically, these have increased until September 4.3%”, adds the company.
By industry, income from the motor industry has exceeded 595 million euros, 2.7% more, and the customer base stands at 2.51 million policyholders. Premiums charged to the year grew by 3.4%.
For their part, the premiums issued by the home business line, with 734,000 policyholders, increased by 4.4%, to 111.6 million euros, in a context of slowdown in the real estate market as a result of the rise in rates. of official interest. In addition, imputed premiums rose by 9.9%.
The impact of atmospheric and water incidents during the third quarter placed the combined ratio for the nine months as a whole at 97.7%, which implies an increase of 4.3 percentage points.
The group’s operation in the health sector, in which it has started to operate directly under the Línea Directa brand since last September 24, has recorded a growth in policies of 4.1%, to 110,000 insured, and premium billing of 4.4%, up to 24.3 million euros.
On the other hand, the expense ratio closed September at 19.5%, with a reduction of 0.6 percentage points. Gross operating expenses have been reduced by 4.8% at an annual rate, and by 6.8% in the third quarter.
The insurer highlights that the penetration of digital services in the portfolio “continues to reach record levels” and 87.1% of clients already operate through digital channels. With this, the digital interactions of policyholders currently stand at an average of 1.2 million contacts per month through the group’s website and apps, 68% higher than interactions by telephone, which would contribute to improving operational efficiency and productivity in terms of premium volume per employee, which has increased by 6%.
ACCIDENT RATIO
The claims ratio increased by 14.5 percentage points, to 87.3%, while the combined ratio increased by 13.9 percentage points, to 106.8%, due to the persistent pressure of inflation of the service costs in the automobile, mainly, and home lines, and the increase in the injury scale in recent years.
The company, as part of its action plan to offset this inflationary effect on results, claims to be applying measures to make claims management more efficient, the positive effect of which “has already begun to be reflected in the technical margins.”
Thus, the company’s claims ratio has been reduced by a stagnant 7.1 percentage points in the third quarter compared to the previous quarter thanks to a decrease in claim costs of -6.4% in the same period.
This has led to a reduction in the combined ratio in the third quarter of 6.1 percentage points, closing at 103.6%, with a notable evolution in the motor industry, which has experienced a drop of 8.8 percentage points compared to the previous quarter, closing at 102.9%.
The financial result of the entity, for its part, has been 25.1 million euros, which represents a decrease of 3.7% compared to the same period of the previous year, due to the extraordinary capital gains made last year to adapt to the new accounting standards. In recurring terms, excluding capital gains, it increased by 19.1%, driven by higher fixed income reinvestment rates.
However, it records ‘red numbers’ of 47.8 million euros in the technical result, which comes exclusively from the insurance business, compared to the positive result of 47.4 million euros in the same period of the previous year.
All in all, the company’s solvency margin in the nine months of the year is 180%, six percentage points less compared to the first half of the year, which implies an excess of 153.2 million euros over the required capital.
The CEO of Línea Directa, Patricia Ayuela, points out that the results “begin to reflect” the positive effect of the strategy implemented by the company, which has led to a “substantial improvement in margins in the third quarter, especially in the motor line of business.”
“At the same time, we continue to increase our efficiency, grow revenue profitably and maintain a solid and comfortable solvency position,” he concludes.
