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 <.FTSE> 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.

(Reporting by Rahul B in Bengaluru; Editing by Bernard Orr)