Insurer Direct Line said it slumped to a half-year loss and warned the full-year out-turn will continue to be knocked by higher motor cover claims.

The group, which employs 3,000 people in Yorkshire across its Direct Line, Churchill and Green Flag brands, swung to an operating loss of £78.3m for the first six months of 2023 from profits of £197m a year ago.

Pre-tax losses widened to £76.3m from £11.1m a year earlier.

It reiterated that operating profit in 2023 is set to be impacted by the "earn through of previously written motor business".

Insurer Direct Line said it slumped to a half-year loss and warned the full-year out-turn will continue to be knocked by higher motor cover claims. Picture: Direct Line Group/PA Wire

But the firm, which has regional offices in Leeds and Doncaster, said it is expecting an improvement in operating profit in 2024 because recent moves to hike motor cover prices will start to pay off.

Direct Line's shares jumped 16 per cent higher in Thursday morning trading on hopes of a turnaround next year, while investors also cheered the firm's announcement late on Wednesday that it had agreed a deal to sell its brokered commercial lines business.

Canadian property and casualty insurer Intact Financial and its UK and Ireland-focused arm RSA will buy the business for an initial £520m.

A Direct Line spokeswoman told The Yorkshire Post, that about 90 of its Yorkshire employees were affected by the sale. “While it is early days, we are committed to supporting our colleagues through the transition,” she said.

It comes after a the group last week named Aviva's UK and Ireland general insurance business boss, Adam Winslow, as its incoming chief executive.

The company is currently led by acting chief Jon Greenwood, after previous boss Penny James stepped down in January in the wake of a profit warning and move to scrap its shareholder dividend.

It blamed the impact of freezing weather and the rising cost of motor cover claims.

Direct Line has since admitted it under-priced policies for inflation, while the weather costs left the group unusually exposed compared with its rivals.

The group has been hiking car insurance premium prices to offset the soaring cost of motor repairs, which it said has driven a 25 per cent increase in its average renewal premiums.

Overall, it said half-year gross written motor premiums lifted seven per cent.

Mr Greenwood said: "Over the last six months we have taken decisive action to put the group back on a more stable footing. In March, we set out that our key priorities were to restore capital resilience, to improve motor performance and to maintain the performance of our non-motor businesses.”

Direct Line which employs 3,000 people in Yorkshire swings to loss