The Direct Line 2018 results are a mixed affair with both gross written premiums (GWP) and operating profits falling.

GWP dropped 5.3% from 2017 to 2018, slumping from £3,392.1m ($4,453m) to £3211.9m. This was directly attributed to the exit from Nationwide and Sainsbury’s Home partnerships. In fact, Direct Line’s own brands actually saw a rise of 1.7% over the year.

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Operating profit dropped from £642.8m in 2017 to £601.7m in 2018. Primarily, this was due to prior year reserve releases.

Paul Geddes, chief executive of Direct Line Group, said: “We enter a pivotal year of operational delivery in 2019. This includes starting the roll-out of the latest generation IT systems for personal lines, following the successful launch of our new systems for small businesses in 2018, which we believe will deliver benefits for customers, colleagues and shareholders over the coming years. This aims to provide the springboard from which to deliver a step change in both capability and efficiency to help to grow the contribution from current-year profitability.

“This gives us the confidence to continue to target a combined operating ratio of 93% to 95% in 2019 and over the medium term.”

Direct Line in 2019

The targeted improvement in profitability is supposed to be supported by the  investment the group is making in building future capability.

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This wants to improve the current-year loss ratio by delivering additional pricing sophistication and supporting multiple initiatives to combat fraud.

Furthermore, efficiency through self-service and digitalisation are key areas of focus over the coming months. These improvements are only expected to be noticeable over a number of years.

Geddes added: “In 2019, the group expects to make further progress in reducing operating costs and is targeting operating expenses below £700m. We reiterate our ongoing target of achieving at least a 15% return on tangible equity.”

Penny James, as announced at Direct Line’s AGM, will become the firm’s next CEO in May. She was previously chief financial officer at the company.