Direct Line says will be more profitable after spin-off
LONDON (Reuters) - Direct Line Insurance Group, stepping up a charm offensive with investors ahead of a planned stock market listing next month, said it expected to be more profitable after the flotation.
Britain's largest motor insurer, an autonomous unit of Royal Bank of Scotland (RBS.L) whose brands include Churchill and Green Flag as well as Direct Line, said it was setting a 15 percent target for return on tangible equity.
That is up from 10.2 percent annualised ROTE reported for the first half of this year, although the insurer said its underlying ROTE would have been 12.1 percent after its raised 500 million pounds in a debt issuance.
It also said it was aiming to deliver 100 million pounds in cost savings by the end of 2014.
Direct Line paid a 200 million pound ($318 million) dividend to RBS on Monday, having paid 800 million earlier this year.
"Other than some transitional services provided by RBS Group, we have essentially achieved the goal of operating as a standalone insurance company," chief executive Paul Geddes said.
Direct Line is on track to be listed in October, RBS said last month.
Analysts say it could be worth about 3 billion pounds, making it one of London's biggest listing for years.
RBS, 82 percent state-owned, has been ordered by European regulators to sell Direct Line as a condition of taking a government rescue.
Direct Line also on Monday added to its board, naming Clare Thompson as a non-executive director.
Thompson is a non-executive at Miller Insurance Services, a specialist insurance and reinsurance broker that operates at the Lloyd's market, and was previously a partner at PricewaterhouseCoopers, active in the insurance sector.
She is the seventh board member, including Chairman Mike Biggs, Geddes and RBS Finance Director Bruce van Saun.
Direct Line's headline results for the six months to June had already been reported by RBS.
Separate statutory results released on Monday showed an operating profit from ongoing operations of 224 million pounds, up 7 percent, with pretax profit down 43 percent to 106.5 million because of restructuring and other one-off costs relating to its separation from RBS.
The sale of a minority stake in Direct Line is being run by Goldman Sachs (GS.N), Morgan Stanley (MS.N) and UBS (UBSN.VX), who are acting as joint bookrunners, sources have said.
($1 = 0.6296 British pounds)
(Reporting by Steve Slater; Editing by Erica Billingham and David Cowell)
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