Moody’s views Direct Line negatively

Moody’s Investors Service said it revised its outlook for Direct Line Insurance Group to negative from stable

“The change in outlook to negative reflects the deterioration in DLG's profitability during YE2022 combined with Moody's expectation of further earnings headwinds, which could arise from high claims inflation and difficult pricing conditions in the U.K. retail property and casualty (P&C) market. The negative outlook also reflects the risks that it could take the group longer than anticipated to rebuild its capital resilience, with the YE2022 Solvency II ratio now towards the bottom end of DLG's target range of 140% to 180%,” the agency said in a press release.

However, the agency noted DLG has worked to fix its balance sheet, but suspending the end-of-year dividend, a challenging earnings outlook could hurt the group’s access to external market funding.

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