
Aviva 'firmly on track' to buy Glasgow employer Direct Line
The company also reported net flows of £2.3bn into its wealth business compared with £2.7bn in the first quarter of 2024, as the growth of its investment platform was more than offset by the outflow from a large workplace scheme which switched to another provider.
The insurer issued the updated to investors after competition watchdog announced on Wednesday that it has opened an investigation into Aviva's takeover of Direct Line, which was agreed at the end of last year. The deal would combine the UK insurance operations of the two companies, covering products such as car and home insurance, and it looks set to have ramifications for the sizeable workforces both have in Scotland.
Direct Line is a major employer in Glasgow and had around 1,000 members of staff in Scotland at the start of 2024, although it has cut jobs over recent months as the company has fended off predators. Under the takeover deal agreed in December, Aviva and Direct Line plan to cut between 5% and 7% of their combined employee base, which would equate to between 1,650 and 2,300 jobs, based on respective staff numbers of around 23,000 and 10,100 for Aviva and Direct Line at their last annual report dates. The cuts are designed to wring about £125 million of annual cost savings from the deal.
At the time the deal was agreed in December, Aviva had around 1,000 people working at Maxim Park near Glasgow and about 1,100 staff in Perth.
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The phase one investigation by the Competitions and Markets Authority will give the watchdog up to 40 working days to identify whether the deal may lead to a 'realistic prospect of a substantial lessening of competition'. The deal will be cleared if the CMA, which will report back with its findings by July 10, finds no competition concerns.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: 'Aviva's prowess as an insurance titan shone through in the first quarter with strong signals across the board. The benefits of recent acquisitions are starting to manifest with both new business and the Probitas deal driving general insurance premiums up 12% to £2bn in the UK and Ireland. Meanwhile, last year's acquisition of assets from AIG helped spur a 19% increase in protection and health sales. And despite a major client loss, net flows into wealth were positive at 5%.
'Acquisitions remain where it's at with the £3.7bn takeover of Direct Line Group anticipated to close in the middle of this year. That is, however, subject to approval by the Competition and Markets Authority, which launched its review yesterday [Wednesday]. The CMA has 40 days to opine on the deal.
'Aviva's rock-solid balance sheet means it should be able to absorb the motor insurance specialist without compromising on its 6.8% dividend yield. Guidance for operating profit of £2bn by 2026 remains unchanged. That's not including the takeover so expect some refreshed targets should the deal complete in the summer.'
Aviva declared it was confident of meeting previously announced targets, including an operating profit of £2bn by 2026, though it said it expects to 'reframe' targets following completion of the Direct Line deal.
Amanda Blanc, group chief executive officer of Aviva, said: 'Aviva has got off to a great start in 2025. We continue to trade strongly, serving our customers well, growing profitably right across the group, and demonstrating the resilience of our diversified business in a period of market volatility.'
Ms Blanc added: 'The acquisition of Direct Line is firmly on track. Direct Line shareholders voted overwhelmingly in favour of the transaction, and we expect to complete the deal in the middle of the year.
'We continue to be very positive about the outlook for 2025. Our balance sheet is strong, we have a clear customer-focused strategy which we continue to deliver at pace and our market-leading businesses are growing well, especially in capital-light areas. We are increasingly confident about Aviva's prospects and meeting our financial targets.'
Shares in Aviva closed up 2.24%, or 12.8p, at 584.8p.

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