Only ‘signficant deterioration’ will cause motor rate rises – Esure founder Peter Wood

Esure founder Peter Wood predicts the motor market rates will only upturn if there is ‘significant deterioration’ in market profitability, according to analysts Berenberg.

Berenberg’s Sami Taipalus, an analyst who closely covers the Esure stock, said: “Led by Peter Wood, the founder of Esure and Direct Line, management offered a sobering outlook for the UK motor market.

“The group does not envisage an upturn in pricing until there is either a “significant deterioration” in market profitability or surplus reserves “run dry”.

“This is somewhat more cautious than the commentary from its peers, but very much in line with our own expectations of how the market will develop.”

Taipalus said Esure’s ‘strong balance sheet’ would see it through the tough market conditions.

“Esure retains a reserve margin of “over 15%”, leaving it well placed to absorb the expected deterioration in UK motor market profitability,” he said.

Berenberg put a hold recommendation on the stock.