INSURANCE group Direct Line posted a 9.3% increase in operating profits of £461.2m for the year ended December 31, today.

The company, which employs 500 staff in Liverpool, was floated by Royal Bank of Scotland last October.

It also announced a return to underwriting profit with a combined operating ratio (COR) of 99.2%, an improvement of 2.6%.

COR shows claims and expenses as a percentage of premium income, where anything below 100% means a profit.

Direct Line said its capital position remains strong and enjoys improved balance sheet efficiency by raising £500m of long term subordinate debt and paying £1bn of dividends to RBS group prior to its flotation.

Chief executive Paul Geddes said: “We have made good progress since the beginning of our transformation plan and our 2012 performance is further evidence that we have made the right strategic decisions and are executing our plans well, with an increase in operating profit from ongoing operations of 9.3% to £461.2m.

“However, there is no room for complacency as we face a competitive market, particularly in UK motor, where there are also expected to be significant legal reforms.

“Our transformation plans target further benefits and we have made substantial progress on our target to achieve £100m of gross annual cost savings in 2014.”

He added: “We will maintain our firm focus on value and underwriting discipline, consistent with achieving our 98% combined operating ratio target for 2013.”