Direct Line has returned to profitability after posting an operating profit of £63.7m in its first half results, bouncing back from a £93.7m operating loss in H1 last year.

However, the insurer also revealed that it shed more than 488,000 customers, having increased the cost of its cover by as much as 31%.

Direct Line indicated that it is still being impacted by a fall in profitability of motor insurance policies written in H1 last year, before the group had hiked its prices to match the increase in inflation.

The insurer’s latest results, covering the six months to the end of June, revealed that gross written premiums and associated fees registered growth of 53.5%, %, largely as a result of the Motability partnership which began in September 2023.

Direct Line CEO, Adam Winslow, said that the actions that group have taken are “beginning to make a difference”, but also warned that “there is more to do”.

“We will continue to drive business transformation during the second half of 2024 and into 2025, as our new high calibre management team continues to arrive,” Winslow commented.

“[We] are working to deliver on our targets of at least £100m of gross cost savings, on a run-rate annualised basis, by the end of 2025 and a 13% net insurance margin in 2026.”

Reacting to Direct Line’s results, senior equity analyst at Hargreaves Lansdown, Matt Britzman, added: “It’s no secret that Direct Line has struggled over the past few years to deal with a challenging motor insurance market, and operational missteps have been a drag on performance.

But recent results have painted a better picture than investors have had for some time. Armed with a fresh management team focusing on core areas like motor and home insurance, there’s renewed optimism that Direct Line can get back on track – but stemming the outflow of customers will be a top priority.”

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