Highway Insurance Holdings has added a third subsidiary to its retail division with the purchase of Direct Motorline for £4m.

The Ipswich-based telebroker handles more than 33,000 private car and commercial vehicle policies through a panel of 25 insurers. It generates an income of £3.7m from a GWP of more than £13m. Highway expects the business to produce a pre-tax profit of about £500,000 for the year ending December 2005.

The company joins A Quote Insurance Services and Elite Underwriting as part of Highway Retail's 80,000-policy business.

Highway Retail managing director Paul Cosh said: "We now have the ability to handle incoming calls with greater efficiency by directing them to areas of our business with spare capacity.

"We are also looking at a new telephony system and expanding the use of software provider CDL across the business."

Neil Hames, director of Direct Motorline, will head up the Ipswich operation, with Highway chief executive Andrew Gibson and Paul Cosh on the board.

The Direct Motorline business is expected to relocate to Highway's Ipswich premises early next year.

Cosh said: "The acquisition will place Highway Retail in a position to grow considerably in the next few years."

Highway Retail is believed to be in negotiations to purchase another three or four businesses and is close to signing at least one deal before the end of the year.