The UK’s largest car insurer Direct Line beefed up Brexit contingency plans on Tuesday by putting more money aside to protect against a market meltdown.
The company, which owns the Churchill and Green Flag brands, said it would raise capital buffers to a ratio of 170%, equivalent to an extra £120 million, calling it a “prudent” measure in the face of political uncertainty.
The FTSE 100 giant is a significant investor in UK corporate debt and a plunge in the credit markets could hit the balance sheet.
Incoming chief executive Penny James, who replaces Paul Geddes in May, said the company was “comfortable” with its Brexit preparations.
Direct Line has stepped up preparations for motorists travelling to Europe after Brexit, offering green cards, which are used to show proof of insurance, to motorists.
“We are waiting to see the direction of travel. If it becomes clear we are heading for a hard Brexit we will actively start contacting our customers,” said James.
The Motor Insurers’ Bureau, in conjunction with the Department for Transport, is also setting up stations at ports so people can get green cards before going abroad.
The company, which mends around 200,000 cars a year, may also be hit by delays at ports for spare parts.
Its first new brand in 25 years was also launched to focus solely on price comparison sites. Darwin, which uses pricing models using machine learning, will be available this summer
Operating profits for the year to end-December fell 6.4% to £601.7 million.
