You can’t walk away from the kind of stock market disaster served up by Direct Line this month without a senior executive carrying the can.
Shareholders will have been looking for someone to take a bit of responsibility and chief executive Penny James has agreed with the board she will step down – the statement open to interpretation on whether she jumped or was pushed.
AJ Bell’s Russ Mould said: “It was not so much the decision to scrap the dividend in and of itself which did for James, it was more what lay behind it.
“Direct Line had been happily buying back its own shares less than a year ago and left its capital buffers too bare to cope with a period of extreme weather events in 2022, which while unusual shouldn’t have been enough to put Direct Line in such a perilous position.
“Where James probably warrants more sympathy is on the inflationary pressures which are continuing to bite across the whole industry. However, none of its major peers have found themselves in Direct Line’s predicament yet.
“Chief commercial officer Jon Greenwood stepping up as acting chief executive sounds exactly like what it is – a temporary move. Chair Danuta Gray will have to get the next appointment right if she’s to avoid coming under greater scrutiny herself.
“What happens next with dividends will also be in focus for investors – there has to be a risk of no dividend for 2023 either as the company looks to rebuild its capital position. Which would be truly lean times for a shareholder base who had got used to a generous stream of income.”