Direct Line’s Penny James steps down as CEO
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Penny James, the chief executive of general insurer Direct Line, has stepped down from her role with immediate effect, two weeks after the company issued a profit warning saying the board no longer expects to declare a final dividend for 2022.
The board is looking for a successor but in the meantime, Jon Greenwood, currently chief commercial officer, is acting CEO, subject to any additional regulatory approvals.
James joined Direct Line in late 2017 as chief financial officer before being appointed CEO in 2019.
According to Danuta Gray, chair of Direct Line Group, during her time as CEO, James has overseen significant strategic progress, transforming the technology and capability across the business, accelerating the digitalisation of customer journeys and helping to set the company up for the future.
Gray added: “She also deserves great credit for the way she led the business through the pandemic, in a very challenging market, ensuring that we continued to serve our customers.”
Gray said Direct Line has new reinsurance arrangements, which are expected to increase the group’s year-end 2022 solvency capital ratio by around 6 percentage points, “and we will continue to focus on rebuilding our capital position”.
Earlier this month, Direct Line issued a profit warning with “a significant increase in claims” as a result of the prolonged period of severe cold weather in December.
The company expected total weather claims to be in the region of £140m for 2022, well ahead of the £73m previously estimated.
Motor trading improved in the fourth quarter compared to the third, with own brand policies broadly flat and gross written premiums down 2%. Claims inflation remains a challenge, and along with an increase in claims frequency over Q4, the motor loss ratio for 2022 is expected to rise by around 6 percentage points.
Direct Line’s investment property portfolio saw a drop in valuation of around 15%, or £45m. Occupancy levels remain at around 95%.
Matt Britzman, equity analyst at Hargreaves Lansdown, said after the insurer’s trading update: “It’s not too surprising to see the dividend come under pressure. The forward yield’s been trending above 10% for most of the second half of 2022 and looked likely to be revised lower at some point.”
Moody’s analyst Helena Kingsley-Tomkins, also commenting on the insurer’s profit warning earlier this month, said the rating agency views the group’s decision to suspend its final dividend positively.
She added: “Direct Line Insurance Group’s announcement that it expects to make an overall underwriting loss in 2022 reflects the continuing adverse impact on UK P&C retail insurers from high claims inflation, challenging pricing conditions and higher than expected weather related claims.”
Can a company CEO be blamed for inflation, weather impacts and other market-related events?
