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LONDON, Jan 10 (Reuters) - Shares in UK insurers fell on Wednesday, with traders pointing to an article in the Insurance Post that quoted the Financial Conduct Authority’s Head of Insurance Matt Brewis as saying premium finance was a “poor product”.
At 1258 GMT, Direct Line shares were down 5.8%, and Admiral shares were down 5.9%, falling to the bottom of the FTSE 350.
In a note, Berenberg equity analysts said the weakness in UK motor insurers could be attributed to the article in the Insurance Post that was published on Tuesday. They said the implication from the report was there could be changes to the way insurers price premium finance products.
"(The article) has reignited the discussion around premium finance, and while the FCA has talked negatively about it (the product) in the past, we believe the recent comments, which have been made publicly, are more negative than they have been in the past. In our view, it’s reasonable that there is some underperformance in the sub-sector today," said Thomas Bateman, equity research analyst (insurance) at Berenberg.
The FCA declined to comment formally when contacted by Reuters.
The FCA has previously published information about its work on premium finance, including a
letter to CEOs
in September 2022 that said firms must consider whether such products represent fair value to customers.
Direct Line declined to comment, while Admiral was not immediately available to comment when contacted by Reuters. (Reporting by Lucy Raitano; Editing by Amanda Cooper and Chizu Nomiyama)
