Raising debt could also help Direct Line pay a dividend to its parent company.
Last October, the Telegraph reported that RBS is expected to receive
a payout from the business of up to £1bn ahead of the stock market
flotation. Direct Line is held on RBS’s books with a value of £4.3bn.

Last month, RBS appointed Mike Biggs chairman of the insurance business. Mr
Biggs is currently chairman of Resolution and former finance director at
Aviva.

At the time, Stephen Hester, RBS’ chief executive, said: “[Mike] brings
with him extensive insurance industry experience and a successful track
record in flotations in this sector.

“The successful divestment of Direct Line Group is one of our priorities
and we have confidence that Mike will help us get this done. The business
has been doing well and is increasingly ready to flourish as an independent
company.”

Direct Line is not the only motor insurer looking to list its shares on the
London Stock Exchange. Esure and Hastings Direct are also considering IPOs.