March 19, 2020 / 7:38 AM / 10 days ago

Direct Line halts share buyback, sees rise in travel claims due to coronavirus

(Reuters) - UK’s biggest motor insurer Direct Line (DLGD.L) halted its 150 million pounds share buyback programme on Thursday and said it expected a jump in travel insurance claims, while motor insurance claims could fall temporarily due to the coronavirus outbreak.

The company added that travel claims related to the virus climbed to 5 million pounds on March 15 from around 1 million pounds on March 3.

Direct Line, which has struggled due to minimal rises in price of a motor insurance cover in the last couple of years, earlier this month said it expects coronavirus-related claims to be manageable.

The owner of Churchill, Green Flag and Privilege brands reaffirmed on Thursday that its capital position remains strong, with the potential impact of virus-related claims on its travel business still too early to estimate.

“We hope to be able to resume the share buybacks in due course, but it’s right we seek to preserve the Group’s strong balance sheet during this period of heightened uncertainty,” Chief Financial Officer Tim Harris said.

The insurer expects lower motor claims frequency in the short term as the British government has advised against non-essential travel.

(This story corrects share buyback amount to 150 million pounds from 250 million pounds in first paragraph)

Reporting by Muvija M in Bengaluru; Editing by Shailesh Kuber

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