Direct Line, the insurance group that was spun off from the Royal Bank of Scotland in October, has reported mixed trading for the nine months to September 30th.

For the nine month period, operating profit from ongoing operations was up 3% at £347.9m compared with the same period in 2011.

The number of policies in force increased to 20.1m, up 4% since the beginning of the year (December 31st 2011: 19.4m) with motor insurance and home insurance broadly stable and growth in 'rescue' or car breakdown insurance and other personal lines.

Its combined operating ratio (the sum of net insurance claims, commission and other operating expenses expressed as a percentage of net earned premium) for ongoing operations was 99.7% for the nine months, an improvement against the nine months to September 30th 2011 (101.9%). This was driven principally by a significant improvement in the loss ratio.

However, operating profit from ongoing operations for the third quarter of 2012 of £123.7m, down 4% compared with third quarter 2011, reflected lower investment returns partially offset by a better underwriting result; the third quarter 2012 combined operating ratio of 96.9% compared with 100.5% for third quarter 2011, driven by improvements in both the loss and expense ratios.

CM

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