The UK’s Competition and Markets Authority (CMA) has cleared Aviva’s £3.7 billion takeover of Direct Line Insurance Group, paving the way for the creation of the country’s largest home and motor insurer.
The CMA, which launched an initial review of the deal in May, announced on Tuesday, 1st July, that it would not refer the acquisition for a more detailed investigation. The regulator’s approval allows the transaction to proceed as planned.
Agreed initially in December 2024, the deal is Aviva CEO Amanda Blanc’s most significant strategic move to date, giving the combined group a dominant 20% share in both the UK’s home and motor insurance markets. The merger positions Aviva to rival other major insurers, such as Legal & General and Prudential, in market value.
However, the consolidation will come at a cost to jobs. As previously announced, up to 2,300 roles, about 5 to 7% of the combined workforce, are expected to be cut over the next three years due to overlapping functions. Aviva employed over 23,000 people at the end of 2023, while Direct Line had just over 10,000.
The deal is projected to deliver annual pre-tax cost savings of £125 million within three years; however, achieving these savings will require one-off integration costs of approximately £250 million. Aviva also confirmed it will increase its dividend by a “mid-single-digit percentage” following the deal’s completion, but will pause share buybacks for the next year.
Under the terms of the acquisition, Direct Line shareholders will receive 0.2867 new Aviva shares, 129.7 pence in cash, and up to 5 pence as a dividend.
Leadership changes will follow the merger. Direct Line CEO Adam Winslow, who previously worked at Aviva, is expected to step down shortly after the transaction closes. He will be succeeded by Jason Storah, Aviva’s current UK & Ireland General Insurance CEO. Direct Line CFO Jane Poole is also departing and will be replaced by Aviva’s Stephen Pond.
On the day of the CMA’s announcement, Aviva’s shares rose slightly by 0.60p to 619.80p, while Direct Line shares increased 0.15% to 307.05p.
