DLG says it ‘cannot be certain about actions of Aviva’ after £3.7bn takeover agreed

Direct Line Group (DLG) says that it “cannot be certain about the actions of Aviva” after agreeing to be acquired by the firm.

The transaction, which was announced in December 2024, values each DLG share at 275 pence and values the entire diluted share capital of the group at approximately £3.7bn.

It is expected the deal will close around mid-2025.

In a trading update today (4 March 2025), DLG said it felt it had “adequate resources to continue in operational existence on a standalone basis for at least 12 months from 3 March 2025”.

As a result, the directors have adopted the going concern basis in preparing consolidated financial statements. This means a company is expected to continue operating for the foreseeable future.

”As a standalone business, the directors believe that the group and company have sufficient financial resources to meet their financial needs, including managing a mature portfolio of insurance risk,” the insurer said.

“The directors believe the group and company are well positioned to manage its business risks successfully in the current economic climate.”

DLG also stated that while the directors would expect Aviva to continue to deliver long-term value from the group’s ongoing operations, they note “that it is beyond their control as to whether Aviva would undertake any restructuring of the group’s legal entities”.

“Therefore, given the potential change in control, the directors consider these conditions to constitute a material uncertainty, which may cast significant doubt over the company’s and, therefore, the group’s ability to continue as a going concern.

“The directors would not expect this to impact the continued operation of the group’s core insurance activities.”

It is not unusual for language of this nature to be included from a technical accounting standards perspective in takeover situations because the target directors are not in a position to be certain of the bidder’s plans.

Figures

The statement came as DLG announced that it had managed to secure a £395m increase in ongoing operating profit in 2024 following a heavy loss the previous year.

Last year, DLG announced that it had recorded an operating loss from its ongoing operations of £189.9m in the 12 months to 31 December 2023.

DLG said this had increased to a profit of £205m in 2024, while gross written premium (GWP) increased from £2.98bn to £3.73bn year-on-year.

Chief executive Adam Winslow said that “while we need to plan appropriately for this potential takeover [from Aviva], we need to make sure we don’t take our foot off the accelerator when it comes to delivering business change”.

And DLG said that while “directors cannot be certain about the actions of Aviva should a deal complete”, they also felt “the ability of the group to continue as a going concern should not be adversely affected by the transaction should it proceed”.

“In making this assessment, they have considered many factors, including the strategic fit of Aviva for the group, as well as Aviva’s record of executing transactions, including integrating a number of acquisitions and of delivering profitable growth,” DLG said.