RBS 2012 Annual Report Download - page 92

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Business review continued
Direct Line Group continued
2011 compared with 2010
Operating profit rose by £749 million in 2011, principally due to the non
repeat of the bodily injury reserve strengthening in 2010, de-risking of the
motor book, exit of certain business segments and more benign weather
in 2011.
Gross written premium fell £200 million, 5%, as the business continued to
drive improved profitability through reduced volumes in unattractive
segments. This was partially offset by growth in Commercial and
International.
Total income fell £432 million, 10%, following the exit of personal lines
broker, a decline in premiums reflecting reduced motor volumes and
higher reinsurance costs to reduce the risk profile of the book.
Net claims fell £1,160 million, 30%, due to the non recurrence of bodily
injury reserve strengthening in 2010, actions taken to de-risk the book,
the exit of certain business segments and more benign weather in 2011.
Total direct expenses rose by £9 million principally driven by project
activity to support the transformation plan.
Investment income fell £12 million, 4%, reflecting decreased yields on the
portfolio in 2011, partially offset by higher realised gains.
At the end of 2011, Direct Line Group's investment portfolios comprised
primarily cash, gilts and investment grade bonds. Within the UK portfolio,
£8.9 billion, and the International portfolio, £827 million, there was no
exposure to sovereign debt issued by Portugal, Ireland, Italy, Greece or
Spain.
Total in-force policies fell 6% in the year due to planned de-risking of the
motor book and the exiting of certain other segments and partnerships,
including personal lines broker.