Powerhouse UK insurer Direct Line has scrapped its plan to offload part of its pension liabilities following the central bank’s interest rate cut and Britain’s decision to leave the European Union.
Direct Line, one the biggest insurance firms in the UK, had been negotiating with an external investor to hand over part of its defined benefit retirement scheme,
Sky News reported. The talks were held until the historic EU referendum in June.
However, company executives concluded in recent weeks that the costs of pursuing the deal outweighed the projected benefits, according to the report.
Insider sources told
Sky News that the Brexit vote, the resulting market volatility and monetary policy decisions also affected Direct Line’s move to abort the planned offloading of its pension scheme.
The pensions that were under discussion at Direct Line were part of a defined benefit scheme that dated back to when the insurance firm was still wholly owned by Royal Bank of Scotland.
The latest news on Direct Line followed the company’s announcement of its half-year financial results two weeks ago.
The insurer reported a 5.2% decline in pre-tax profits as the introduction of Flood Re impacted the business.
Pre-tax profits fell from £315 million to £298.5 million while operating profits also went down to £323.6 million.
Direct Line’s gross written premiums, however, rose by 3.9% to £1.6 billion.
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