Last year was a busy one for the British insurance giant Aviva, announcing a slew of M&A transactions, culminating in the December announcement of its agreement to acquire Direct Line Group (DLG) for £3.7 billion.
Delivering an update in a Press briefing on Aviva’s full-year 2024 financial results – which saw the insurer report general insurance GWP of £12.2 billion, up year-on-year from £10.9 billion – group CEO Amanda Blanc (pictured) reported that the DLG deal is “on track”. This will create a leader in UK personal lines, she said, “accelerating Aviva as a capital-light business and bringing the best of Aviva to millions more customers”.
Blanc noted that one of the core reasons why Aviva believes it is a compelling investment is that it is the UK’s leading diversified insurer with a majority capital-light portfolio and the largest franchise of any UK insurer with 17 million customers. Aviva’s M&A strategy has tied in closely with that diversification piece, she said, in reference to whether the insurer is looking for any further bolt-on acquisitions.
“Let’s just play back the last year of Aviva’s life,” she said. “We completed the AIG acquisition in April of last year, which was a phenomenal acquisition for us, and put us at number one in both the individual and group protection markets. We’ve seen some real momentum having acquired that business. Then in August of last year, we completed the acquisition of Probitas which gives us a dual platform capability at Lloyd’s of London, and basically opens up £200 billion worth of distribution opportunities for us.
“Then, on December 23, we announced the DLG deal. So, I think we have been pretty busy and we have got quite a lot on our plate. It’s obviously key that we see all of those transactions deliver for us. We will always be looking at market opportunities - but I think if you look at Aviva, the strength of Aviva is in [as a] diversified business.”
“We don't really need to do any acquisitions,” she added. “But never say never.”
Blanc underscored the acquisition as a “really good opportunity” from a strategic rationale, she said, as it accelerates its move towards capital-light, which is an important part of its strategy. But it’s also an important deal in terms of its impact on Aviva’s personal lines franchise, which has performed very well in the difficult circumstances of the last four years of regulatory changes and supply chain challenges.
“What you see here is us building on that very strong franchise with strong brand acquisition from DLG,” she said. “There will be material capital synergies.”
Looking ahead to 2026, Blanc addressed whether delivering the material capital synergies expected as a result of Aviva’s dealmaking activity will put the insurer in a different peer group in terms of how it is rated, and how Aviva’s stock is re-rated as a result. She noted that Aviva identifies strongly with its diversified European peers. “We are not a UK life company,” she said. “Yes, we have some business in UK life, but actually we're a diversified insurer, more like the European composites.”
On the question of the re-rating of Aviva, Blanc highlighted the significant increase in share price Aviva has seen since she joined the company in July 2020. “I think we have already had a re-rating - but clearly our ambition is to go much further than that,” she said. “The acquisition of DLG takes us forward, because it gives us more capital-light business which means better returns - and that we can think about how we set our targets, which is more in line with the European composites.”
