CMA launches probe into Aviva's 3.7 billion pound Direct Line takeover

By Ryan Hewlett

May 14 - (The Insurer) - Britain's antitrust watchdog has launched an investigation into London-listed Aviva’s planned 3.7 billion pound ($4.9 billion) takeover of rival Direct Line Insurance Group.

The Competition and Markets Authority confirmed on Wednesday that it would probe the deal, which would see Aviva become Britain's largest home and motor insurer.

The CMA said it had started a so-called phase one investigation into the planned takeover, which gives it up to 40 working days to evaluate the deal’s impact on competition in the UK personal lines insurance sector.

The watchdog has asked interested parties to comment on the proposed transaction to assess whether the tie-up could result in a “substantial lessening of competition”. The deadline for comment is May 29, with findings due to be published in July.

Direct Line shareholders voted in favour of its proposed takeover by Aviva at a special meeting in March. The move paved the way for the deal to close in mid-2025.

Aviva agreed in December to pay 3.7 billion pounds for Direct Line, which had rebuffed two lower bids from Belgian insurer Ageas earlier in 2024.

In its full-year results published in late February, Aviva said the acquisition of Direct Line marked an acceleration of its strategy to power returns through capital-light businesses, which now make up more than 56% of its operating profits.

The deal will create a leading UK P&C insurer, with a share of around a fifth of the country’s home and motor insurance markets.

Aviva, which is due to report first quarter figures on Thursday, saw its shares trade slightly lower in early trading at 573.72 pence apiece, down 0.10% on Tuesday’s close.