In a significant strategic move, Close Brothers is exiting personal insurance finance to shift its attention toward bold growth in commercial premium finance. This decision marks a major turning point in the firm’s business model. The phrase commercial premium finance defines this transition, steering away from car and home insurance lending due to rising operational costs and increasing regulatory pressure.
Why Close Brothers Is Shifting to Premium financing
The departure from personal lines is primarily driven by escalating costs in motor financing. Regulatory scrutiny from the UK’s Financial Conduct Authority (FCA) has increased compliance demands, leading to mounting legal expenses and reputational risks. In Q3 2025, Close Brothers reported a net expense of £13.9 million up from £11.6 million the year before attributed mainly to motor finance provisions.
These challenges have compelled Close Brothers to scale down its personal loan book. Over the next three years, the company plans to reduce this segment by 30%, reallocating those resources to support its commercial premium finance growth strategy.
Refocusing Resources on Commercial Premium Finance
With the retreat from personal finance, Close Brothers is turning its sights to business-focused insurance lending. This includes areas like:
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Commercial property insurance
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Cyber insurance
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Employer liability coverage
These sectors are considered more resilient and less exposed to regulatory volatility. The firm believes commercial premium finance offers stronger long-term returns and fewer compliance challenges.
Internal reallocation of funds, staff, and technology will support this pivot. The company aims to increase efficiency and reduce risk while serving small and medium-sized enterprises (SMEs) with tailored finance solutions.
Learn how Premium Credit is also expanding its commercial offerings.
What This Means for Investors in Premium financing
The stock market reacted quickly to the announcement, with Close Brothers‘ shares dropping about 4% on the day. However, analysts point out that the stock recently surpassed its 200-day moving average, signaling investor optimism about the long-term prospects of commercial premium finance.
While short-term profits might dip, the shift is seen as a risk management tactic. Close Brothers has already provisioned £200 million this year to cover potential legal liabilities from past motor finance deals. Redirecting efforts to commercial premium finance could stabilize future earnings.
Impact on Consumers and Dealers in the Wake of Commercial Premium Finance
The exit from personal premium finance will affect both customers and dealerships. For years, Close Brothers has provided fast and accessible car and home insurance financing, building strong relationships with dealers and consumers alike.
Competitors like GoCompare and Premium Credit may absorb displaced customers. Dealers, particularly in the auto sector, could see reduced financing options for buyers, potentially leading to slower transaction rates.
On the other hand, businesses may benefit. Firms looking to finance insurance premiums for property or cyber coverage may find enhanced support as Close Brothers strengthens its Premium financing solutions.
The Broader Shift Toward Premium financing
Close Brothers isn’t alone in responding to changing financial landscapes. Regulatory reforms under the FCA have reshaped expectations around fair treatment and transparency in lending. Secure Trust Bank, for example, recently wound down its motor finance operations due to similar regulatory and cost pressures.
These industry-wide changes are pushing lenders to reevaluate product portfolios. The growing appeal of commercial premium finance lies in its potential for sustainability and profitability with reduced legal exposure.
Explore the UK finance trend report on FCA’s site
Challenges Ahead in Scaling Premium financing
Transitioning to a fully commercial model won’t be without challenges. Close Brothers must:
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Maintain investor trust during profit restructuring
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Rebuild internal processes to support B2B lending
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Win over a new base of commercial clients
Yet, the firm’s long standing reputation in premium finance gives it a solid foundation to lead in the business sector. Proper execution will be critical in expanding commercial premium finance offerings without compromising service quality.
Embedded Finance & Cross-Border Growth
Competitor Outlook in the Rise of Commercial Premium Finance
As Close Brothers narrows its scope, competitors may capitalize on the opportunity in personal lines. Premium Credit remains a strong contender, maintaining robust offerings across both individual and commercial segments.
Still, Close Brothers’ expertise and renewed focus may enable it to dominate the Premium financing space particularly in underserved sectors like cyber security and environmental liability insurance.
Strategic Vision Behind Commercial Premium Finance
The move by Close Brothers is more than a retreat; it’s a calculated advance into higher-value, lower risk territory. By prioritizing Premium financing, the firm positions itself to weather regulatory storms while tapping into the growing needs of the business insurance market.
Over the coming years, Close Brothers will be one to watch as it transforms its lending model to align with evolving industry standards. For investors, businesses, and industry observers, this pivot signals a future shaped by smarter, safer financial strategies.
