Britain’s Direct Line Insurance Group PLC, the motor insurer spun out of Royal Bank of Scotland, said it plans to cut about 2,000 positions as it looks to trim costs and boost profit.
European motor insurers have been faced with sluggish price growth because of intense competition, exacerbated in the past decade by the steady rise of price-comparison Web sites.
“This is another step in the ongoing transformation of Direct Line Group and an important part of our aim to regain competitive edge,” chief executive Paul Geddes said.
Britain’s biggest car insurer, which employs about 15,000 people, has since 2010 been cutting costs and avoiding high-risk drivers to protect itself from stiff competition and new regulation in the British motor insurance market.
Last year, Direct Line said it was seeking to save ￡100 million (US$154.05 million) a year by the end of next year and said it planned to cut nearly 900 jobs as part of a plan to make it more profitable ahead of a stock market listing.
Direct Line, which also offers home, travel and pet insurance, said it expected to record ￡150 million of its ￡180 million restructuring costs this year or next year.
The company said these most recent cutbacks would allow it to save a further ￡130 million annually by next year, bringing its expected cost base for next year to about ￡1 billion.
Since its float in October last year, Direct Line’s shares have gained 17 percent, giving it a market value of about ￡3.29 billion. Direct Line’s shares closed at ￡2.19 on Tuesday on the London Stock Exchange.