Aviva: Direct Line buyout ‘firmly on track’ despite CMA investigation

Aviva expects its £3.7bn acquisition of Direct Line to be completed by the middle of this year despite a new investigation by the competition watchdog into the deal.

In a trading update, the insurance giant’s CEO, Amanda Blanc, said the acquisition was “firmly on track,” and cash to pay for the takeover had been ring-fenced.

Yesterday, the Competition and Markets Authority launched an investigation into Aviva’s buyout deal, stating it had begun an inquiry to establish whether the deal would result in a “realistic prospect of a substantial lessening of competition.”

The watchdog set a deadline of 10 July to make a decision, and has invited comment on the deal from interested parties until the end of May.

In March, 93 per cent of Direct Line shareholders voted for the takeover deal, after the group’s board had previously rejected a takeover event for less cash.

“Our strategy to move Aviva to a more capital-light business continues to deliver,” said Blanc in the trading update, adding that she expected to “reframe” profit expectations following the acquisition.

“We are already a majority capital-light business with 56 per cent of operating profit, and the acquisition of Direct Line will take us beyond 70 per cent as synergies and profits are delivered,” she added.

Aviva’s insurance arm grows

In the first quarter of 2025, Aviva’s general insurance premiums increased by nine per cent to £2.9bn, while retirement sales increased four per cent to £1.8bn.

Protection and health sales expanded rapidly, jumping 19 per cent to £126m as consumers turned to private health insurance amid lengthy NHS waiting lists.

Meanwhile, investors withdrew £906m from the firm’s investment arm throughout the quarter, though this was half of the £1.8bn pulled during the first quarter of 2024.

Aviva credited the outflows to withdrawals from clients pulling out of internal assets (which lost £470m) and strategic outflows from clients “previously part of the group”.

Despite the withdrawals, assets under management in the investment arm grew by one per cent to £240bn thanks to the impact of market movements and strong flows into the firm’s liquidity strategies.