AA insurance policies leap

AA saw sales of motor policies soar as it looked set to recover from the scandal which embroiled its former chairman.

The company said its insurance services business continues to perform well, having seen the volume of motor policies jump 6pc to 629,000, which helped offset a 5pc drop in home policies to 818,000.

The trading update comes after a difficult year for the firm, having sacked its executive chairman Bob Mackenzie for gross misconduct last summer over a failed tie-up between its insurance division and Hastings Group. Reports linked Mackenzie’s dismissal to the attempted spin-off, which led to a physical clash between him and insurance chief Michael Lloyd.

New members for its roadside assistance arm increased 7pc.

But the cancellation of its free roadside membership service to its insurance customers in 2015 resulted in a near 1pc drop in paid members to 3.29m.

The number of breakdowns handled rose 1pc to around 3.68m, but it incurred higher costs after using third parties to supplement its own services.

The breakdown recovery and car insurance firm also brought forward a market update on a review – announced in September – to February 21 as it confirmed underlying earnings would meet forecasts of £390m to £395m for the year to January 31.

The firm said it had called on Mr Mackenzie to pay back more than £ 1.2m accounting for annual bonuses stretching from 2016 to 2017.