Mr Wood, who founded the insurance company, which sells policies by telephone, is paid most of his salary as a profit- related bonus. Last year he received a pounds 6m bonus when Direct Line made a pounds 15m profit.
The company is expected to make profits of about pounds 50m - nearly a quarter of Royal Bank's group forecast profit of pounds 200m. City forecasts suggest that next year Direct Line could produce profits of around pounds 90m.
For the first time, Direct Line is announcing its results seperately from Royal Bank, which will unveil its figures the following week, prompting speculation that it is preparing itself for flotation in the near future. Analysts believe the business could be worth between pounds 800m and pounds 1bn on the strengthof its motor business alone.
However, Royal Bank has played down the flotation rumours and insists that it has no plans or the foreseeable future. Norrie Morrison, banking analyst for Kleinwort Benson, does not believe Direct Line is being groomed for flotation.
'There are plenty of reasons why a flotation would not be attractive to Royal Bank. The insurance cycle may turn down in the near future which would hurt the flotation value, Royal Bank might suffer from a heavy tax charge rom the flotation and the bank is already doing very nicely out of the profit flow from Direct Line,' he said.
Direct Line launched a big advertising campaign or its home insurance products in August with the aim of becoming the leader in this field within five years. The company has particularly target people who normallybuy their insurance through building societies.