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PRIVACY
Professional Services

Close Brothers announces strategic shift in lending, prioritising commercial insurance over personal lines

The lender said it would start to focus on insurance products designed for businesses, which the firm said offered better risk-adjusted returns and long-term growth potential

Close Brothers headquarters in London(Image: Googlemaps)

Close Brothers has announced plans to downsize its premium finance division, aiming to reduce expenses and concentrate on its business-oriented services.

The financial institution declared on Wednesday that it would shift its focus towards insurance products tailored for businesses within its commercial lines, citing superior risk-adjusted returns and prospects for long-term growth, as reported by .

Consequently, the bank will move away from personal insurance offerings like home, car, and travel policies, turning its attention to business-centric coverages such as property, cyber, and liability insurance.

Following the news, Close Brothers saw its shares plummet by over seven percent in early trading, dropping to 379.60p.

As part of this strategic realignment, the FTSE 250 bank anticipates a 30 percent contraction in its premium finance loan book over the forthcoming three years, with an expected short-term impact on operating profit.

However, the group is targeting higher income per case and enhanced profitability and returns in the longer term.

Close Brothers projects annual savings of £20m by 2030, although the restructuring efforts are estimated to incur costs of £15m.

In its semi-annual report, the bank noted 2.3m customers and a loan book valued at £958m, with a relatively balanced split between personal and commercial lines at £441m and £517m respectively.