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7 September 2012 | Anna Reynolds

Direct Line Group has announced plans to save £100 million by 2014 through effective procurement, cost reductions and redundancies.

The announcement follows results of the group’s overall profits for the first half of 2012, which at £82.8 million were significantly down from £142.2 million in the same period of 2011.

A spokesperson said: “Effective procurement is fundamental to helping Direct Line Group [DLG] achieve its cost saving objectives right across the business. The DLG procurement team will continue to work with the business to maximise cost opportunities and achieve best value sourcing.”

The UK’s largest motor insurance company is also closing its call centre in Teeside and making 891 redundancies. It would not comment on from which areas of the business these job cuts would be made.

The group is currently owned by the Royal Bank of Scotland (RBS) however it will soon operate entirely as a standalone company following EU regulations to sell the business by 2013. Direct Line blamed some of the loss in profits on the restructuring that has taken place during the ongoing separation from RBS. It said it was confident that once the group has full ownership of its cost-base, further savings will be made.

It said it will continue its use of cost-saving initiatives in line with its business transformation plan, which includes reducing administration costs and improving marketing efficiency.

CEO Paul Geddes, said: “We are now beginning to see the benefits of our transformation plan in pricing, risk, claims as well as capital management actions and operational efficiency.”