DLG founder responds to Aviva takeover bid

Insurance veteran Peter Wood has said Aviva must raise its bid for Direct Line Group (DLG) if it wants to be successful in its takeover attempt.

Wood established DLG as the UK’s first telephone-only insurer in 1985 and left the company in 1997.

The firm has been the subject of major takeover interest in 2024, more recently from rival insurer Aviva, which submitted a £3.3bn acquisition proposal in November 2024.

DLG rejected the bid, saying the offer was “highly opportunistic and substantially undervalued the company”.

Speaking to the Mail on Sunday, Wood said Aviva needed to raise its offer by “several hundred million pounds” if it wanted to secure control of its rival.

Winslow comment

DLG’s rejection of the bid comes amid it going through a major transformation programme designed to improve its financial position.

In the 12 months to 31 December 2023, the firm recorded an operating loss from its ongoing operations of £189.5m. This was a major downswing from 2022, when the firm recorded a loss of £6.4m.

Chief executive Adam Winslow, who joined the insurer in March 2024 from Aviva, is currently aiming to remove at least £100m of costs by the end of 2025 on a run-rate annualised basis.

However, Wood said: “He is trying to do a good job, but it’s a three or four-year job.”

And analysts believe ”that engaging with Aviva makes sense”.

Investment bank Peel Hunt said: “There is downside risk to DLG’s standalone strategy and retaining some upside in an Aviva-DLG combination could be an attractive proposition.”