(Reuters) - British motor and home insurer Direct Line Insurance Group (DLGD.L) reported a 5 percent fall in quarterly gross written premiums and said claims linked to Britain’s recent cold weather snap would utilise almost all the company’s annual weather budget.
Direct Line, whose brands include Churchill, Green Flag and Privilege, said claims associated with widespread snow and icy weather conditions in the first quarter were expected to be about 50 million pounds post tax, against a budget of 55 million pounds.
The weather system dubbed “the Beast from the East” brought rare snow and sub-zero temperatures to much of Britain in late February and early March.
Shares were trading 3.9 percent down at 361.7 pence at 0714 GMT.
Smaller rival Hastings (HSTG.L) also reported higher claims costs due to the inclement weather and a slowdown in gross written premium growth in the first quarter.
Direct Line’s gross written premiums fell to 769.9 million pounds in the first quarter from 810.3 million pounds a year earlier, as its exit from the Nationwide and Sainsbury’s partnerships reduced premiums by 48.8 million pounds.
Meanwhile, motor gross written premiums rose 2.9 percent in the quarter, but the premium rises seen in the first half of 2017 had now largely tailed off as customers benefited from last year’s favourable claims environment, the company said.
Motor gross written premiums rose 9.9 percent in the first half of 2017 but only by 8.5 percent over the full year.
The cost of a comprehensive motor insurance policy fell 7 percent in Britain in the first quarter, the largest quarterly reduction in premiums seen in four years, according to a survey compiled by insurance advisory company Willis Towers Watson.
The FTSE 100 company maintained its full year target.
Reporting by Radhika Rukmangadhan in Bengaluru, editing by Sinead Cruise