The £150 million share buyback programme of Direct Line Insurance Group Plc (DLG) has been suspended because of the coronavirus pandemic.
“Given the uncertainty as a result of COVID-19, we’ve taken the prudent decision to pause our share buybacks until the situation becomes clearer,” said DLG chief financial officer Tim Harris in a statement.
“The Direct Line Group capital position remains strong, and solvency has moved as expected in line with our sensitivity analysis following recent market movements. 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.”
So far the insurance group has bought back approximately £29 million of shares in the market. DLG noted that all of the repurchased shares will be cancelled.
Meanwhile the company, which has reinsurance cover totalling £18.5 million for travel claims, also revealed that its gross reported travel claims related to coronavirus had increased from around £1 million on March 03 to £5 million on March 15.
“An increase in claims following further travel restrictions imposed by the Foreign & Commonwealth Office (FCO) is expected, although it is too early to estimate the potential impact,” added DLG. “The group has implemented measures to help mitigate this, including pausing new travel insurance sales and restricting cover for new travel bookings.”
