Direct Line Group at a glance About Direct Line Group Key Facts Operating and Direct Line Group is the largest retail general insurer in the UK, Direct Line Group is the UK’s leading Financial Performance the number one direct motor insurer in Italy and the number three personal lines insurer. Data is for ongoing operations and excludes direct motor insurer in Germany. We operate a multi-brand, Brands run-off businesses and restructuring costs. multi-product and multi-channel business that covers the majority Direct Line (internet and phone); Churchill (internet, of customer segments in the UK for personal lines general phone and price comparison websites); Privilege Direct Line Group 2012 2011 insurance and small and medium-sized enterprise commercial (internet, phone and price comparison websites); GWP £3,991m £4,125m insurance. Our brands offer the following products: motor, home, Green Flag (internet, phone, price comparison Operating Profit £461m £422m rescue, pet, travel and commercial. websites and partnerships); NIG (brokers); and IFPs 19.6m 19.4m DL4B (internet and phone). ROTE 11.5% 10.0% Business Model Key Distribution Partners COR 99.2% 101.8% Uses a multi-brand, multi-product and multi-distribution channel Nationwide Building Society, NatWest, Prudential, Loss Ratio 67.1% 70.2% business model, positioning each brand to offer different RBS and Sainsbury’s Bank, underwritten by Commission Ratio 9.1% 10.1% subsidiary U K Insurance Limited (“UKI”). propositions to distinct customer segments. Combined effectively Expense Ratio 23.0% 21.5% with its significant scale, high performance is achieved in Products IGD Coverage Ratio 279% 319% distribution, pricing, claims and cost, which in turn delivers value Motor, home, van, travel, pet, breakdown and to customers and sustainable returns to shareholders. rescue, SME/commercial insurance and direct Motor 2012 2011 small business insurance. GWP £1,624m £1,735m Distribution Key Brand Facts Operating Profit £262m £255m The Group sells direct to private customers online IFPs 4.1m 4.1m and via telephone, price comparison websites and partners; and to businesses online by telephone COR 101.6% 105.6% and via brokers. Loss Ratio 74.6% 81.7% Underwriting Commission Ratio 2.0% 1.5% Four legal underwriting entities rationalised to one, Expense Ratio 25.0% 22.4% U K Insurance Limited, in December 2011. Market Share 16% 19% Debt Securities In April 2012 the Group issued £500 million of Home 2012 2011 Fixed/Floating Rate Guaranteed Subordinated GWP £989m £1,031m Direct Line launched in 1985 – it was the first UK insurance Notes Due 2042 (Ticker: XS0773947618). Operating Profit £93m £112m company to use the telephone as the main channel of customer Listed Securities IFPs 4.2m 4.3m communication. On 16 October 2012, Direct Line Group was COR 96.6% 95.1% Churchill launched motor insurance in 1989 and was acquired admitted to the Official List of the UK Listing Authority Loss Ratio 58.4% 57.4% in 2003. and to trading on the London Stock Exchange’s Commission Ratio 16.2% 17.5% main market for listed securities (Ticker: DLG). Privilege Insurance was launched in 1994 and acquired Expense Ratio 22.0% 20.2% in 1999. Credit Ratings Market Share 18% 18% U K Insurance Limited is rated ‘A’ with a stable Green Flag launched in 1971, initially named as the National outlook by S&P, and it is rated ‘A2’ with a stable Rescue, Pet & Travel 2012 2011 Breakdown Recovery Club. It was renamed Green Flag in 1994 outlook by Moody’s. and acquired in 1998. GWP £390m £350m Underwriting Mix Operating Profit £84m £63m The National Insurance and Guarantee Corporation UK Personal Lines represents 75% of GWP; Motor IFPs 9.4m 9.2m (“NIG”) was founded in 1894. represents 41% of GWP; Home represents 25% COR 82.7% 86.3% Brand Partners is the business to business arm of Direct Line of GWP; UK Commercial represent 11% of GWP; Loss Ratio 50.9% 44.4% Group and specialises in providing personal lines insurance and and International represents 14% of GWP, with motor breakdown solutions to a range of partners. leading positions in the direct insurance markets Commission Ratio 12.1% 22.5% for Motor insurance in the UK, Italy and Germany. Expense Ratio 25.8% 19.4% All of the insurance brands operated under RBS Insurance until it Board of Directors was renamed Direct Line Group in February 2012. Executive Directors: Paul Geddes (CEO); John Commercial 2012 2011 Reizenstein (CFO). GWP £436m £439m Strategy Non-Executive Directors: Mike Biggs (Chairman), Operating Profit £2m (£12m) Direct Line Group aims to build on its transformation plan and Glyn Jones (Senior Independent Director), Andrew IFPs 0.5m 0.4m unlock value from being the UK’s leading retail general insurer. Palmer, Jane Hanson, Clare Thompson, Priscilla COR 108.2% 112.3% Vacassin, Bruce Van Saun and Mark Catton. Targets include 15% return on tangible equity, a 98% combined Loss Ratio 63.1% 65.4% operating ratio for the 2013 financial year, and £100m of gross UK In-Force Policies (IFPs) Commission Ratio 21.6% 21.0% annual cost savings in 2014. Approx. 20 million. Expense Ratio 23.5% 25.9% International In-Force Policies (IFPs) Distribution: Enhance effectiveness to improve customer Approx. 1.5 million. lifetime value. International 2012 2011 Number of Employees GWP £553m £570m Pricing: Build superior pricing capabilities to utilise scale Approx. 15,000. advantage in data. Operating Profit £20m £4m Number of Sites IFPs 1.5m 1.4m Claims: Attain market leading position in claims management. 16 operating sites. COR 103.3% 107.6% Costs: Enhance cost efficiency. Countries of Operation Loss Ratio 78.1% 81.4% UK, Italy, Germany. Commercial and International: Leverage core skills to Commission Ratio 12.1% 7.9% improve performance. Head Office Expense Ratio 13.1% 18.3% Churchill Court, Westmoreland Road, Bromley, BR1 1DP. Further information Direct Line Group Media Relations T: 0208 313 5850 E: [email protected] W: www.directlinegroup.com 28 February 2013.