(Adds details on policies, analyst comment, share price)
Feb 9 (Reuters) - Britain’s largest motor insurer Direct Line Insurance Group said on Friday that 2017 pretax profit would rise year-on-year and be ahead of market expectations, helped by favourable claims.
Direct Line, whose brands include Churchill and Green Flag, said it expects to report a profit before tax of about 540 million pounds ($746.23 million) for the year ended Dec. 31.
The company said it benefited from lower than expected weather claims.
The better-than-expected results drove Direct Line shares 2.8 percent higher to 379 pence on Friday.
They were the top gainer on the UK’s blue chip index at 1254 GMT.
Gross written premiums are expected to rise to 3.40 billion pounds for the period from 3.27 billion pounds a year ago, Direct Line said.
Direct Line said it would consider a return of capital to shareholders and would announce it along with its annual results later this month.
Direct Line said it had strong momentum in its motor business, with in-force policies for home and motor under the Direct Line, Churchill and Privilege brands, as well as rescue policies under the Green Flag brand adding 350,000 more customers year-on-year.
RBC Capital Markets said in a client note that Direct Line has a track record of delivery and these results are no exception, adding that any special dividend with the 2017 results could be stronger-than-expected.
The brokerage has an “outperform” rating on the stock with a target price of 435 pence.
The average premium paid for motor insurance in Britain jumped 9 percent in 2017 to the highest level since 2012, the Association of British Insurers (ABI) said in January.
The average premium paid over 2017 was 481 pounds ($671), 40 pounds higher than a year earlier. ($1 = 0.7236 pounds) (Reporting by Rahul B in Bengaluru; Editing by Bernard Orr)