Totally agree. Just received £3500 into my ISA.
Bought these just over 3 years ago and already received 30% of investment in dividends and although capital growth has not been great I am sitting on £2k unrecognised gain. Predicting 6% future yield.
I agree about Aviva. I was with them and paying under £250 a year for fully comp on my 200bhp sports car and year on year the increase was never more than inflation. In fact, last year my premium went down. Last month I bought a replacement that was a 6 year newer version of the same car but more powerful and the new premium, with the same terms, is still under £300.
Try Aviva - they saved me a huge amount on my insurance (nearly 30%) compared to Privilege who like most ramp the premium 10% or more for customers stupid enough not to shop around. Remains to be seen what renewal quote I get next year, but again I will shop around as needed.
Lovely big dividend paid today 13.60p final and 15.00p special. That is 7.6% of yesterday's closing SP! Just worked out since I did a bed and ISA on DLG in April 2017 total return 17.8%. Worth holding for those returns IMO.
I insure my car through Churchill which is owned by Direct Line Insurance Group. Thinking I too should change. One thing about Churchill is they are quicker than most to pay up on claims and do not put up premium after a modest claim even if your fault. Some insurance companies put up basic premium a huge amount even if accident was not your fault and all costs paid by another insurance company or due to theft.
having banked a 28.6p dividend in April, I am not at all negative on DLG. Quite the contrary.
Sadly all the insurance companies seem to rely on the "customer laziness" excuse to hike premiums every year. I am sure LVE will do the same if you don't switch again. Its really annoying, but I guess they have to use that technique to fund the discounted offers. I get quite sick of the number of policies , utilities that have to be switched to avoid paying over the odds. The AA is the worst for that, £10 to add a family member to the policy and then literally a doubling of the premium the following year... no trust /no honourable practice these days I am afraid
Seem to show reasonable growth. I cannot see where CSS got 51.4% rise in full-year operating profit.
Direct Line declared a special dividend for 2017 after strong performance in its motor brands, rising premiums and favourable claims helped it post a 51.4% rise in full-year operating profit. The company, whose brands include Churchill, Green Flag and Privilege, said operating profit from continuing operations was £610.9m ($853.49m) for the year ended Dec. 31, compared with £403.5m a year earlier.
DLG is on my watch list for possible purchase. I generally buy shares in companies I use and/or like. My house/contents renewal price was quoted with a colossal rise even though I have never claimed in 30 years. I did a price comparison Meerkat stuff, and found LVE offered identical cover at more than 50% lower than DL so I moved (And got a stuff toy!)
Then they offered me a fully comp car renewal also markedly up, (My NCB = 9years+)
Went to LVE via Meerkat got a lower quote from LVE and current customer discount and another stuffed toy!
No wonder DLG doesn't appear on comparison sites! If my experience is anything to go by, they will be losing customers, and no able to regain via comparison sites, so I am holding off, but watching.
"LSE:DLG:Direct Line has built on the strong momentum announced at the full-year figures in February during its first quarter, despite having taken a hit from the recent cold snap.Indeed, the annual weather budget has effectively now been used, ..."
Despite the excellent results and a total of 28.6p of final and special dividend in 3 trading days time, the SP is well below the 388p on days of results announcement. I had expected a good run-up to XD on 5th April and maybe there is time for that to happen, but not a lot!
Given dividend tax treatment, the last day of the tax year may not be the best for a huge dividend payout!
They regularly pay special dividends. But this cumulative dividend this year are yielding over 9% even at 383 which is towards the year's high for the SP.
With an ongoing eps of 33p and what appears to be a sustainable dividend at this level I would expect a re-rating and for DLG to settle in a higher trading range over the coming 6 months. However don't be surprised when the sp plunges on ex dividend day (5/4), and takes a while to claw back up!! that's the problem with such a large divi- the ex divi date can spook people.
As I posted some while ago, I see DLG as a relatively safe place for a solid double digit return pa of blended income and (relatively modest) capital gain . And so far it's delivering that and with re investing dividends I believe it will deliver a surprisingly good result for such a boring stock .
Excellent update. Interesting that because it exceeded expectations they chose to announce the results headlines, a positive and transparent move.
This is one of my biggest holdings, so nice to see some positives after a year of Ogden and other worries. The yield was variously forecast at between 7 and 8% which now looks secure, the surplus over solvency requirements opens the possibility of special div, but I guess they may go with buybacks, (I think most PIs prefer to see the divi payment hit the account).
The prospective rise in interest rates (stoked by Carney yesterday) seem likely to be a double edged sword, but presumably will increase DLGs investment returns to offset some of the negatives.
Good question. I haven't seen seen analysis of the effects of autonomous cars on DLG and other motor insurers.
The expectation is clearly fewer accidents and claims once a significant proportion of vehicles are AV. Until then I would think the unpredictable human driver will find plenty of opportunities for crashing into things including AVs. That would seem unlikely to be the case for at least 10 years as the existing manual drive fleet is gradually replaced, starting when, 2-5 years out? On that timescale I can't see AVs are significantly affecting valuations yet.
When they do what happens? Maybe the catastrophe insurers like LRE give some idea. They had several years of no major storms or claims, so premiums fell and LRE wrote less business. That freed up a lot of capital previously required to cover potential claims and they paid a series of generous special dividends. There was also considerable consolidation in the industry, with several nice premium bids on offer. Maybe motors could see something similar as AVs took over.
The dividend policy was update at H1 2017 as below, indicating regular dividend one third interim, two thirds final. 6.8p paid in August so expect 13.4p final total 20.4p. Key points are:-
In the normal course of events the Board will consider whether or not it is appropriate to distribute any surplus capital to shareholders once a year, alongside the full year results.
"Group expects to operate around the middle of its solvency II capital coverage ratio risk appetite range of 140% to 180% of the Groups solvency capital requirement, and it will take this into account when considering the potential for any special dividends."
After paying Interim dividend the SCR was 173%, so depending on H2 performance, special dividend could be considered.
Forecast dividends from 4-Traders and Digital Look are 27.4p and 28.51p, which would imply 7-8p special along with final, but nothing guaranteed.
7.7-8% is well up there and reflects some risks, but I recall a provision being taken when Ogden was changed, so the softening of that policy may cause some write-back and create more room for a special.
The Group aims to manage its capital efficiently and generate long-term sustainable value for shareholders, while balancing operational, regulatory, rating agency and policyholder requirements.
The Group aims to grow its regular dividend in line with business growth.
Where the Board believes that the Group has capital which is expected to be surplus to the Group's requirements for a prolonged period, it would intend to return any surplus to shareholders. In normal circumstances, the Board expects that a capital coverage ratio around the middle of its risk appetite range of 140% to 180% of the Group's solvency capital requirement ("SCR") would be appropriate and it will therefore take this into account when considering the potential for special distributions.
In the normal course of events the Board will consider whether or not it is appropriate to distribute any surplus capital to shareholders once a year, alongside the full year results.
The Group expects that one-third of the annual dividend will generally be paid in the third quarter as an interim dividend, and two-thirds will be paid as a final dividend in the second quarter of the following year. The Board may revise the dividend policy from time to time. The Company may consider a special dividend and/or a repurchase of its own shares to distribute surplus capital to shareholders.
"These all suggest to me that SP will rise. Attractive as an income investment with a good chance of capital gain IMO."
I agree and have a decent chunk of these for that reason. The issues which have affected the profitability and valuation included increased claims in homes business (implied false or inflated claims) which they claim to have addressed through revised claims procedures.
The Ogden formula impact (discount rates on awards for long term care required due to accidents). Discount rate was revised up from -0.75% to 0-1% is September, I'm not sure if that has come into effect but will reduce claims exposure. I was expecting a recovery on that basis but it fizzled out.
The yield is excellent, cover not great, forecast at 1.2 in 2017. The 2016 adjusted EPS was 21.2p, with forecast 32.51p in 2017 and 31.27p in 2018 so cover is an ongoing concern.
DLG have a strong competitive position and brand covering a range of insurance business areas, road recovery etc. Their volume and own brands should protect against tough times.
I have enough of these at ~4.5% so will not be adding unless price gets much lower but plan to hold.
The fall of 13% in SP since August looks overdone given forecast PE of 10.9%. A forecast yield of 7.9% covered x1.2 and forecast growth of 54% in pre-tax profit. These all suggest to me that SP will rise. Attractive as an income investment with a good chance of capital gain IMO. Broker consensus is buy.
In-force policies across all segments increased slightly to 15.8m at the end of the third quarter, of which 6.8m were Direct Line own brands, 5.1% higher than this time last year. The group expects its full year combined operating ratio to be in the middle of its 93-95% target range.
The shares fell 1% following the announcement.
Highly competitive with broadly generic products; few companies can maintain any semblance of pricing power in personal insurance.
That tends to drive combined operating ratios (the percentage of premiums that are paid out as claims or expenses) closer to 100% as companies are forced to attract customers through cutting their prices. Price comparison websites haven't helped.
Fortunately for Direct Line (DLG), the strength of its brands mean it's able to bypass price comparison sites altogether, while also supporting high levels of customer retention. That has helped keep pricing and margins strong. As the market leader, DLG enjoys access to more information on claims and customer behaviour than competitors, helping it to price more accurately, while scale provides opportunities for cost cutting.
The decision to upwardly rebase the dividend at the half year was welcome, not only for the immediate cash infusion but because of the confidence it implies in the long term future of the business. Recent results have benefited from bumper reserve releases, but those are unlikely to continue forever. Improving operating expenses and higher in-force policies are more important to the group's long term future.
Looking ahead to the full year, investors will be eyeing Direct Line's improved Solvency II ratio with interest.
Even after dividend payments, it sat at 173% at the half year. Management say they are looking to operate in the middle of the 140% to 180% range in the normal course of business, so there's scope for a healthy special dividend. Analysts are forecasting a prospective yield of 7.6% for 2018 - although as ever there are no guarantees where dividends are concerned.
Direct Line is delivering a respectable underwriting performance in a sector which is currently enjoying a bit of a let up in pricing pressure. If it can maintain its brand position, and resulting price advantage, then the group should continue to generate strong returns.
Third Quarter Results
Total gross written premiums at the end of the third quarter stood at £907m, up 2.8%. That reflects particular strength in the group's own brands, which saw gross premiums rise 8.3% to £607m.
Motor was by far the strongest segment, with gross written premiums rising 7.1% to £462m. That reflects an increase in own brand policies as well as premium growth. Commercial and Rescue & Other Personal Lines also delivered positive performances. However, Home continues to struggle, with gross written premiums falling 3.9% to £217m.
The group investment portfolio has generated a return of 2.8% so far this year, up 0.1 percentage point on last year.
Direct Line continues to expect a combined operating ratio of between 93-95% in the medium term, and is targeting a Return on Tangible Equity of at least 15%.
Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss. http://www.hl.co.uk/shares/share-research/201711/direct-line-on-track-for-the-full-year?utm_source=Silverpop&utm_medium=email&utm_campaign=E00RN&utm_content=Share%20research&theSource=E00RN&Override=1&cid=halDM10145&bid=44727950&e_cti=1096016&e_ct=T&utm_source=AdobeCampaign&utm_medium=email&utm_campaign=E00RN_Share%20research%20update_07.11&theSource=E00RN&Override=1
Motor insurance pricing is set to hold steady as companies benefit from another shift in the sector's dynamics, Deutsche Bank said as it recommendation on Admiral and kept Direct Line and Esure at 'buy'.
Direct Line is the preferred stock in the UK motor space for its attractive yield and long-term growth prospects of 2-3% leading to a 10%-plus total shareholder return. "We also like its relative defensive position against the UK motor pricing cycle due to its control over distribution and relative diversification of its business."
A partial reversal in a change affecting personal injury payouts has been proposed - marking a victory for insurers but potentially reducing compensation for accident victims.
In March, the government introduced a new formula for calculating compensation payments for those who suffer long-term injuries.
The Ministry of Justice decided to reduce the discount rate from 2.5% to minus 0.75% - a move which it said was determined by existing law....
Now the government is planning to change the rules. The Ministry of Justice said that, if the rate were set today under the new approach, it might end up within the range of 0% to 1%.
"SharePad gives a forecast yield of 5.5% and forecast PE of 13.8. Digital figures you quote seem a bit over optimistic to me."
Could well be, although I note 4-Traders and DL are forecasting very similar numbers for 2017 consensus
EPS at 32.4p and 32.5p
Divi at 26.9p and 26.8p
These numbers were both updated recently with substantial increases from forecasts early Aug. DL EPS was 29.3p Div 23.1p , I don't use Sharepad so not sure how often they update.
The point of my post however was less the absolute numbers than that the EPS and dividend estimates have been significantly raised. If that is how it plays out, it seems it should be supportive moving forward. That's why I like to keep track of how the forecasts are moving.
Broker estimates tend to be erratic, but consensus numbers close to the end of current year tend not to be too far from the mark so I am inclined to add and watching for a good point to buy.
SharePad gives a forecast yield of 5.5% and forecast PE of 13.8. Digital figures you quote seem a bit over optimistic to me.
I have held DLG since IPO in Oct 2012 and topped up 5 times since then. Now 4.5% by value of my share portfolio. I feel I have a large enough holding now but if that were not true I would be topping up again at current price.
Have held these for 2.5 years now and enjoyed dividends in that time of over 20% in addition to a 7% book profit.
Agree with the first 2 risks and agree that Ogden could be a [Big] upside.
Autonomous vehicles could also be positive news - there are an awful lot of very poor drivers on our roads and I would expect accident rates to fall before premiums
As with any UK centric stock the potential impact of a "hard" Brexit could be painful.
The other upside is that as it changes culture from being part of a bank I would expect it to become more profitable
SP spiked well in August after the good results but have drifted back down from 411 to 380p.
I see that the Digital Look forecast EPS and DPS has been raised since the results 2017 forward PE falling from 12.9 to 11.8 and foreward yield forecast to rise to 7%, detail below.
I have been looking to increase holding in solid yield stocks, I hold just over 3% here, built over the last year, moderately up on capital and divs, and am minded to raise that.
I guess the risks are
-Pension which seems not quite nailed down, but feels manageable
-Investment returns any major slump would hurt, but then it would hit most assets. I don't have a clear picture here but my impression is that they invest more in fixed interest which would seem a reasonable position at present.
-Ogden seems like an upside risk as (if) interest rates are ever restored to normal
-Autonomous vehicles- who knows what impact this would have (I guess the aim is lack of impacts), but can't see this one being material for some time to come.
Anyone see any other big risks or issue here?
Early Aug Latest
29.36p : 32.51
30.38p : 31.27
"There's been plenty to cheer over the past few days. A sweep of positive corporate earnings, the likelihood that UK interest rates will remain glued to record lows deep into next year, and a slightly weaker pound all gave stocks a lift.High ..."
DS - no I certainly would not expect external auditors to pick up any fishy deals between adjusters and repair shops, as you note they seem oblivious to even the most egregious accounting scams in many industries. Sorry I should have clarified I was referring to internal audit processes for checking consistency and appropriate levels of repair costs agreed etc. Not having worked in the industry I idea what arrangements exist for this but would hope there is something fairly rigorous to discourage employees from straying from the straight and narrow.
I doubt the insurers were working as a cartel to increase charges (allowing them to ramp up premiums?). More likely that, yes, each company squeezed their garage suppliers to their favour as much as possible. But if push came to shove they would be able to demonstrate to any regulator that their actions have in fact squeezed suppliers so much, to policyholders' advantage, that if there is a bit of the balloon popping out somewhere else it is inevitable but not evidence that consumers have been ripped off.
I don't see this as motor insurers' version of PPI........!
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.