Direct Line CEO calls for shareholder help as Aviva takeover looms

When 45 year-old Adam Winslow (pictured) left Aviva in March, he must have thought that that he had just been offered a massive opportunity and a chance to shine in his own right as head of Direct Line. His previous job wasn’t exactly a small one – as head of Aviva’s UK and Ireland insurance business he lasted three years, in a field that will have given him a lot of experience – and that was no doubt an exciting challenge after 8 years in life insurance with AIG. But this new role, with an £820,000 salary and the chance to earn another £6 million over the next three years was certainly enough to leave his previous boss, Dame Amanda Blanc.

Still, less than a year in, and now Winslow is doing his best to fend off a takeover bid from Aviva by urging shareholders to back his leadership team’s efforts to revive the company amidst the £3.3 billion bid from Aviva, telling them that he is still in the early progress of Direct Line's turnaround strategy and believes the business can flourish independently.

“We’re making excellent progress in the early stages of a significant turnaround,” Winslow said in an interview with The Sunday Times. This marks his first public statement since news of the Aviva bid, spearheaded by his former boss surfaced last week.

All but one of the executive committee have left since Winslow took the helm. He won’t have pleased Blanc by poaching  Jane Poole and Maz Bown from Aviva to be his finance director and CRO. He said, “I now have a new world-class team, which makes me more confident in our ability to deliver the plan … which will drive shareholder value.”

And while Winslow is courting investors – so, reportedly, is Blanc. “There’ll be a charm offensive to see whether Aviva can persuade the Direct Line holders to speak to the management to get them to engage,” one investor told The Sunday Times.

Read more: Goldman Sachs shifts sides in Aviva-Direct Line takeover bid

Direct Line, renowned for its brands like Churchill and Green Flag, has had a turbulent year, marked by profit warnings and leadership changes. Winslow is focused on cutting costs, improving operations, and boosting policy sales to rebuild shareholder value. Plans include cutting £100 million in costs by the end of 2024, partially achieved through slashing 550 jobs and introducing the Direct Line brand on price comparison websites.

The company rejected Aviva’s initial offer, which valued its shares at 250 pence—a substantial premium to the pre-bid price. Direct Line’s board described the proposal as “highly opportunistic” and said it undervalued the company. However, the bid has sparked investor interest, with shares jumping to 232 pence following the news, closing the gap with Aviva’s offer.

Winslow remains optimistic about Direct Line’s potential as a standalone company. “We’re a great company with great brands and a strong opportunity to create shareholder value,” he asserted. While acknowledging Aviva’s bid as a reflection of Direct Line’s appeal, Winslow emphasized his belief in the company’s turnaround story.

The takeover bid marks a pivotal moment for Direct Line. Some investors, including founder Sir Peter Wood, have suggested that a 10% increase in Aviva’s offer could be fair. Analysts speculate that Aviva may sweeten its bid to around 270 pence to sway shareholders.

Read more: Direct line to slash jobs

Under UK takeover regulations, Aviva has until December 25 to formalize its offer or withdraw.

Direct Line is no stranger to acquisition interest, having previously rejected a similar bid from Belgium’s Ageas earlier this year. With the insurer’s market capitalization at £2.1 billion, both Ageas and Aviva see potential in Direct Line’s brands and market position.

As Winslow looks to rally support for his independent vision, the next few weeks will be critical in determining whether Direct Line stays the course or becomes part of Aviva’s growing empire. "I respect Amanda Blanc; she’s doing her job. But I’ve got mine, which is to deliver value for our shareholders,” Winslow concluded.