Direct Line and Aviva's profits surge prior to their merger
Aviva Strengthens Market Position with Direct Line Acquisition
Aviva, the UK's leading diversified insurer, has completed the acquisition of Direct Line on July 1, 2025, marking a significant step forward in its growth, financial performance, and market position. The takeover, which received approval from the Competitions and Market Authority (CMA), is set to expand Aviva's customer base to over 21 million (about 4 in 10 UK adults) and position the company as a UK market leader in insurance and wealth management.
The acquisition has led to a 22% increase in Aviva's operating profit for the first half of the year, reaching over £1 billion before fully integrating Direct Line's results. Capital-light businesses, crucial for strong returns with lower capital requirements, are set to increase from 66% to over 70% of operating profit post-acquisition.
Amanda Blanc, group chief executive of Aviva, stated that the company has transformed its performance and prospects over the past five years. She emphasized that the acquisition of Direct Line will further enhance Aviva's market leadership, capital efficiency, and profitability, aligning with its focus on capital-light growth areas.
The integration of Direct Line is progressing quickly, with anticipated cost synergies and a broader customer base expected to strengthen underwriting profitability. Direct Line’s net insurance margin improved by 7.6 percentage points to 9.4%, indicating healthier underwriting results.
Aviva has increased its interim dividend by 10%, reflecting confidence in future growth. The company is well-capitalized, diversified, and offers an attractive yield, as noted by market analyst Adam Vettese of eToro. However, analysts have highlighted integration and climate-related claim risks as areas of concern.
Strong growth in Aviva's wealth and insurance divisions has contributed to the increase in profit. In-force premiums in Aviva's health business increased 14% to £1 billion, with the business on track to reach a 2026 operating profit target of £100 million. Aviva's general insurance premiums grew by 7% to £6.2 billion in the first half of 2025, with an operating profit increase of 29%.
The acquisition has also led to an increase in the number of customers with two or more policies. Aviva currently records 5.5 million customers with two or more policies and expects the addition of Direct Line to increase total customer count to 21 million.
Looking ahead, Aviva is well-positioned to accelerate growth in the capital-light areas of wealth, health, and general insurance. The wealth division is projected to achieve £280 million in operating profit by 2027. More details about the integration impacts will be provided at an 'In Focus' event in November.
[1] Aviva Press Release: Aviva completes acquisition of Direct Line Group [2] Financial Times: Aviva's shares rise as insurer reports strong growth [3] Reuters: Aviva's Blanc says acquisition of Direct Line will boost capital-light businesses [4] City A.M.: Aviva's Direct Line deal to make it UK's leading diversified insurer [5] Bloomberg: Aviva's Blanc says Direct Line acquisition will boost earnings, capital-light businesses
- The acquisition of Direct Line by Aviva has boosted the company's presence in the finance and business sectors, particularly in insurance and wealth management, positioning Aviva as a UK market leader.
- The growth in Aviva's wealth and insurance divisions, driven by the acquisition of Direct Line, has led to an increase in their operating profits and customer base, with a focus on capital-light growth areas to enhance profitability.
