Shares in insurance firm Direct Line rose after the group hiked half-year dividends by almost 5%, and announced an additional 10p special payout for investors.
Stocks closed the day 5% higher at 299.40p as the company behind the Direct Line, Churchill and Green Flag brands revealed that it was exploring a potential sell-off of its international business.
The Bromley-based company which completed its spin-off from banking group RBS in February, under state aid rules linked to its bailout at the height of the financial crisis said it was “on-track” to cut its cost base to £1 billion this year.
It also hailed the impact of new smartphone and tablet-optimised websites and the roll-out self-install telematics systems: data-recording ‘black box’ systems which can lower premiums for careful drivers an option taken up by one-in-five customers aged under 25.
Gross written premiums declined 5.1% to £1.8bn during the six months to the end of June, but pre-tax profits lifted 7.8% to £175.6 million compared to the same period last year following lower one-off and restructuring charges.
It benefited from more sophisticated pricing techniques which will improve performance through price comparison websites and other sales channels.
New measures are also being adopted to expedite the use of smartphones in home insurance claims.
CEO Paul Geddes said the firm had delivered “good results” despite competitive markets, deflation in the motor sector and major weather events. He hailed a “disciplined underwriting approach” and continued delivery of the group’s strategy objectives despite motor premiums which fell by around 9%.
“This continued performance and our strong capital position have enabled us to declare a special interim dividend of 10p per share as well as increase the regular interim dividend by 5%,” Mr Geddes said.
“Our performance has also allowed us to continue to invest in the future of our business, to enhance our product propositions and improve our customer experience.
“We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we’ve made it easier to buy our motor products on smartphones and tablets.”
The special dividend will see shareholders pocket a total of 14.4p per share.
RBS sold its remaining stake in the firm in February, but Direct Line still faces the challenge of disentangling its IT systems from those of its former parent.
The ongoing process was officially recognised as a risk on the firm’s register yesterday.