British motor insurer Direct Line's operating profit dropped 95% in 2022 after inflation drove up the cost of motor repairs and it warned that 2023 would be impacted by higher than previously expected claims inflation.
Operating profit from ongoing operations of £32.1m compared with £590m a year earlier. The company had flagged an expected underwriting loss for 2022 earlier this year.
The company has hit a rough patch resulting in an unexpected dividend cut, a sharp fall in its shares and the threat of a possible credit rating downgrade. Its CEO stepped down in January.
In addition to inflation, the company pointed to higher weather-related claims, challenging investments, and regulations as factors that affected the company's profit.
"2023 earnings are expected to be impacted by higher than assumed claims inflation on Motor business written during 2022 and in early 2023, alongside continued macroeconomic uncertainty," the company said.