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1. Company Snapshot

1.a. Company Description

Direct Line Insurance Group plc provides general insurance products and services in the United Kingdom.The company operates through Motor, Home, Rescue and Other Personal Lines, and Commercial segments.It offers motor, home, rescue, travel, creditor, and pet insurance products, as well as insurance for mid-to-high-net worth customers; and commercial insurance for small and medium-sized enterprises.


The company also provides management, motor vehicle repair, insurance intermediary, support and operational, legal, and breakdown recovery services.It sells its insurance products directly through price comparison Websites and phone, as well as through partners and brokers under the Direct Line, Churchill, Green Flag, Direct Line for Business, DLG Partnerships, NIG, Privilege, DLG Legal Services, Darwin, and DLG Auto Services brands.The company was formerly known as RBS Insurance Group Limited and changed its name to Direct Line Insurance Group plc in February 2012.


Direct Line Insurance Group plc was founded in 1985 and is based in Bromley, the United Kingdom.

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1.b. Last Insights on DLG

Direct Line Insurance Group's recent performance was driven by a strong financial turnaround, with significant profit increase and premium growth. The company's FY 2024 earnings call highlighted a return to profitability, underpinned by strategic initiatives for future expansion. Additionally, the company's recent Form 8.3 filings indicate ongoing investor interest, with several notable investors increasing their stakes in the company.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Aviva hands out £500 of free shares to staff after Direct Line takeover

Jul -02

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Form 8.3 - Assura plc

Jul -02

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Form 8.3 - Aviva plc

Jul -01

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Form 8.3 - Aviva plc

Jun -30

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Form 8.3 - Assura Plc

Jun -27

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Form 8.3 - Greencore Group PLC

Jun -26

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Form 8.3 - Deliveroo plc

Jun -25

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Form 8.3 - Greencore, PLC

Jun -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.58%)

6. Segments

Motor

Expected Growth: 3.5%

Direct Line Insurance Group plc's Motor segment growth of 3.5% is driven by increasing demand for telematics-based insurance, expansion into new distribution channels, and a focus on customer retention through improved claims processing and competitive pricing. Additionally, the segment benefits from a shift towards online sales, reducing distribution costs and enhancing operational efficiency.

Brokered Commercial Insurance

Expected Growth: 3.8%

The 3.8% growth in Brokered Commercial Insurance from Direct Line Insurance Group plc is driven by increasing demand for risk management solutions among UK businesses, expansion into new markets, and strategic partnerships with brokers. Additionally, investments in digital platforms and data analytics have enhanced customer experience, leading to increased policy sales and retention.

Home

Expected Growth: 3.2%

The 3.2% growth in Home insurance from Direct Line Insurance Group plc is driven by increasing demand for home insurance products, favorable regulatory environment, and strategic partnerships. Additionally, the company's focus on digitalization, improved customer experience, and competitive pricing have contributed to the growth. Furthermore, the rise in UK housing market and increasing awareness of home insurance benefits have also supported the segment's growth.

Rescue and Other Personal Lines

Expected Growth: 3.9%

The 3.9% growth in Rescue and Other Personal Lines from Direct Line Insurance Group plc is driven by increasing demand for motor insurance, expansion into new markets, and strategic partnerships. Additionally, investments in digital platforms and enhanced customer experiences have improved sales and retention rates, contributing to the segment's growth.

Commercial

Expected Growth: 4.1%

Direct Line Insurance Group plc's 4.1% commercial growth is driven by increased adoption of digital channels, expansion into new markets, and a focus on customer retention. Additionally, the company's investments in data analytics and AI have improved underwriting efficiency, enabling more competitive pricing and enhanced customer experience.

Run-off Partnerships

Expected Growth: 3.6%

The 3.6% growth in Run-off Partnerships from Direct Line Insurance Group plc is driven by effective claims management, strategic partnerships, and a disciplined approach to reserve releases. Additionally, a favorable regulatory environment and a strong capital position have enabled the company to optimize its run-off portfolio, resulting in improved profitability and growth.

7. Detailed Products

Car Insurance

Direct Line Insurance Group plc offers comprehensive car insurance policies that provide financial protection against damages, theft, and accidents.

Home Insurance

Direct Line Insurance Group plc provides home insurance policies that cover buildings, contents, and personal possessions against damage, loss, or theft.

Travel Insurance

Direct Line Insurance Group plc offers travel insurance policies that provide medical, trip cancellation, and luggage protection for individuals and families.

Pet Insurance

Direct Line Insurance Group plc provides pet insurance policies that cover veterinary bills and other expenses related to pet care.

Business Insurance

Direct Line Insurance Group plc offers business insurance policies that provide liability, property, and employee protection for small and medium-sized enterprises.

Van Insurance

Direct Line Insurance Group plc provides van insurance policies that cover commercial vehicles against accidents, theft, and damage.

8. Direct Line Insurance Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Direct Line Insurance Group plc operates in a highly competitive market, with many established players offering similar products. However, the company's strong brand recognition and customer loyalty mitigate the threat of substitutes to some extent.

Bargaining Power Of Customers

Direct Line Insurance Group plc's customers have some bargaining power due to the availability of alternative insurance providers. However, the company's strong brand and customer loyalty reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Direct Line Insurance Group plc has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong financial position also gives it negotiating power over its suppliers.

Threat Of New Entrants

The insurance industry has high barriers to entry, including regulatory requirements and the need for significant capital investment. This reduces the threat of new entrants to the market.

Intensity Of Rivalry

The insurance industry is highly competitive, with many established players competing for market share. Direct Line Insurance Group plc faces intense competition from other insurance providers, which can lead to pricing pressure and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 12.09%
Debt Cost 3.98%
Equity Weight 87.91%
Equity Cost 6.17%
WACC 5.90%
Leverage 13.76%

11. Quality Control: Direct Line Insurance Group plc passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Aegon

A-Score: 6.8/10

Value: 9.2

Growth: 2.1

Quality: 7.6

Yield: 7.5

Momentum: 7.0

Volatility: 7.7

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A-Score: 6.8/10

Value: 2.5

Growth: 4.2

Quality: 8.2

Yield: 7.5

Momentum: 9.5

Volatility: 8.7

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Alm. Brand

A-Score: 6.5/10

Value: 4.8

Growth: 1.8

Quality: 7.6

Yield: 8.1

Momentum: 8.0

Volatility: 9.0

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Tryg

A-Score: 6.3/10

Value: 4.1

Growth: 3.1

Quality: 7.9

Yield: 7.5

Momentum: 5.0

Volatility: 10.0

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Baloise Holding

A-Score: 6.1/10

Value: 4.7

Growth: 1.6

Quality: 5.3

Yield: 8.1

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Direct Line Insurance

A-Score: 5.9/10

Value: 6.5

Growth: 2.6

Quality: 6.6

Yield: 5.0

Momentum: 10.0

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.05$

Current Price

3.05$

Potential

-0.00%

Expected Cash-Flows