Despite this, Direct Line maintained confidence in its ability to remain independent. The company’s CEO, Adam Winslow, highlighted its return to profitability in the first half of 2024, despite a slight decline in active policies from £9.2 billion to £8.9 billion.
Regulatory Scrutiny
The proposed merger has drawn attention for its potential market impact. Mark Andrews, insurance director at consulting firm Altus, anticipates a thorough review by the Competition and Markets Authority (CMA), particularly concerning motor insurance. The combined entity would hold a dominant 20% market share, twice that of its closest competitor, raising concerns over reduced competition.
Financial Analysts Weigh In
Investment analysts suggest the increased offer could expedite the deal. Dan Coatsworth of AJ Bell remarked that Aviva’s strategic approach—starting with a lower bid and incrementally increasing it—appears to be working. “Direct Line’s board has indicated it’s good enough,” Coatsworth said.
Next Steps
Aviva faces a Christmas Day deadline to submit a firm bid under U.K. rules requiring formal offers within 28 days of their announcement. Both companies have remained tight-lipped on the likelihood of regulatory hurdles delaying the deal.
Advisors on the Deal
Direct Line is advised by Slaughter and May, with Morgan Stanley and RBC Capital Markets serving as joint corporate brokers. Financial advice is being provided by Robey Warshaw. Aviva’s financial advisors include Citigroup Global Markets Ltd. and Goldman Sachs International.
Broader Implications
If finalized, this deal could reshape the competitive landscape of the U.K. insurance sector, creating a dominant player and sparking potential regulatory reforms.
