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Línea Directa Aseguradora SA (BME:LDA) reported strong financial results for the third quarter of 2025, with significant growth in premiums and a substantial increase in profitability. The Spanish insurer’s stock closed at €1.256 on October 27, down 1.27% despite the positive results.
Executive Summary
Línea Directa delivered impressive financial performance for the first nine months of 2025, with gross written premiums (GWP) reaching €843.8 million, up 11.4% compared to the same period last year. Net income surged 46.4% year-over-year to €59.7 million, while the company’s portfolio expanded to 3.65 million policies, representing an 8.1% increase.
The company’s growth significantly outpaced the overall Spanish insurance market, which grew by approximately 9% during the same period. This outperformance was driven by strong results across all business segments, with particularly robust growth in the motor and health insurance lines.
As shown in the following comprehensive overview of key financial metrics:
Quarterly Performance Highlights
Línea Directa’s combined ratio improved to 93.4% in 9M 2025, a 2.0 percentage point decrease from 95.4% in the same period last year. This improvement was driven by a 1.1 percentage point reduction in the loss ratio to 72.3% and a 0.9 percentage point decrease in the expense ratio to 21.1%.
The company’s detailed financial results show a significant improvement in the technical insurance result, which increased by 55.4% to €51 million, while the insurance and financial result grew by 48.1% to €78.9 million.
As illustrated in this detailed breakdown of financial performance:
By business segment, motor insurance remained the largest contributor to premiums (81%) and policyholders (73%), followed by home insurance at 15% of premiums and 21% of policyholders. Health insurance represented 4% of premiums and 3% of policyholders, while other lines accounted for the remainder.
The following chart shows the distribution of premiums and policyholders across different lines of business:
Detailed Financial Analysis
The improvement in Línea Directa’s combined ratio was driven by better loss experience and increased operational efficiency. The company maintained tight cost control and achieved greater efficiency in customer acquisition, resulting in a 0.2 percentage point reduction in the administrative expense ratio and a 0.7 percentage point decrease in the acquisition expense ratio.
As shown in the following combined ratio analysis:
In the motor segment, which represents the company’s largest business line, gross written premiums increased by 11.8% to €684.7 million, while the combined ratio improved to 93.4% from 95.5% in the same period last year. The segment added 195,000 new customers year-on-year, with 53,000 coming in the third quarter alone.
The following chart details the motor segment’s performance:
The home insurance segment also performed well, with premiums up 7.3% to €125.6 million and a combined ratio of 88.2%, improving from 89.8% in 9M 2024. This segment maintained strong profitability with the combined ratio remaining below 90%.
The health insurance segment showed the highest premium growth at 13.9%, reaching €30.5 million, though it continued to operate at a combined ratio above 100% (131.0%, improved from 140.5% in 9M 2024). The company noted that it continues to improve the product mix, with specialist and comprehensive policies now accounting for 65% of the business compared to 58% in September 2024.
Investment Performance
Línea Directa’s investment portfolio delivered strong results, with the net investment result increasing by 18.9% to €32 million. This was driven by higher income from the fixed-income and equity portfolio, as well as good performance of investment funds.
The detailed breakdown of the financial result shows:
The company’s investment portfolio is primarily composed of fixed-income securities, with corporate bonds accounting for 45% and government bonds for 38%. Equity investments represent a smaller portion, with shares at 7% and equity mutual funds at 5%.
Financial Strength and Solvency
Línea Directa maintained a strong solvency position, with a Solvency II ratio of 189% as of 9M 2025, up from 185% at the end of 2024. This improvement reflects the company’s strong profitability and prudent capital management.
The following chart illustrates the evolution of the company’s eligible own funds:
Strategic Initiatives and Outlook
Línea Directa’s digital transformation strategy continues to drive growth, with 10% of new clients acquired through digital channels according to the earnings call. The company’s CFO, Carlos Rodriguez Huarte, emphasized the focus on disciplined growth, stating, "Disciplined growth is a different story, and we only seek the latter." He also highlighted that "pure online clients’ risk profiling is better than call center clients."
Looking forward, the company aims to maintain a combined ratio in the mid-90s and plans premium adjustments aligned with the Consumer Price Index, estimated at 2.3-3%. Additionally, there is potential for a second dividend announcement before year-end, signaling confidence in future cash flows.
While the company’s financial performance has been strong, investors should be aware of potential risks including intense competition in the insurance sector, economic fluctuations that may affect consumer spending and insurance demand, potential regulatory changes, and the ongoing need for investment in digital transformation to maintain competitive advantage.
Full presentation:
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