Insurance group hit by £75m in severe weather claims
PUBLISHED: 12:41 01 August 2018 | UPDATED: 12:41 01 August 2018
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Direct Line boss Paul Geddes is to leave the insurance giant next summer after 10 years at the helm.
Mr Geddes said he had been “privileged” to lead the firm, with a tenure that saw him oversee Direct Line’s split from Royal Bank of Scotland and its stock market flotation.
The announcement came as Churchill owner Direct Line reported a 13.9% fall in pre-tax profits to £293.8 million for the first six months of 2018 after taking a £75 million weather hit after the Beast from the East freeze sent claims soaring.
Chairman Mike Biggs said the group had a “well-developed” succession plan in place and aimed to have a new chief executive in position by the time Mr Geddes leaves next summer.
Mr Geddes said: “As I approach my 10th anniversary, it is right to put a successor in place to lead the company in the years ahead.
“In the meantime, we have a very busy and exciting agenda, which I look forward to delivering.”
Mr Biggs paid tribute to the “huge contribution” made by Mr Geddes.
He added: “The company is deeply indebted to him for his strong leadership.
“During his tenure, Paul has been leading the management team which very successfully separated the business from the Royal Bank of Scotland Group, floated it on the London Stock Exchange and turned it into a successful FTSE 100 company.”
But shares in Direct Line fell 3% after news of his departure and its half-year results.
Direct Line is a big employer in Suffolk, with more than 400 employed in Ipswich.
Insurance analyst Paul De’Ath said: “Mr Geddes has driven the business for nearly 10 years and has done an exceptional job for shareholders over that time so news of his departure is likely to be another negative for the shares.”
Interim results showed the impact of freezing temperatures in March and April, with the £75 million in large weather claims far higher than the £9 million bill seen a year earlier.
Operating profits dropped 15.7% to £303.1 million, while gross written premiums fell 5% to £1.6 billion over the half-year, dragged lowed by a plunge in its home insurance partnerships sales after ending tie-ups with Nationwide and Sainsbury’s.
Stripping this out, its own-brand written premiums rose 3.3% to £1.1 billion.
Its motor insurance division saw premiums rise 1.9% to £839.8 million despite a market-wide easing off of premium rates.