In a joint statement today (6 December) they said: “The board of Direct Line remains confident in Direct Line’s prospects as a standalone company and continues to have conviction in the capabilities of the newly established leadership team to deliver the announced strategy.

“That said, the board of Direct Line has carefully considered the proposal with its advisers and consulted with Direct Line shareholders during the offer period, and has concluded that the proposal is at a value that it would be minded to recommend to Direct Line shareholders should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced on such financial terms, subject to agreement of all other terms and conditions of an offer and completion of reciprocal customary due diligence.

“Direct Line shareholders would own approximately 12.5% of the issued and to be issued share capital of Aviva. The Direct Line board believes that, in addition to the attractive headline value per share, the combination would provide the opportunity to deliver significant synergies, creating substantial additional value for both sets of shareholders.

“Aviva believes in the strong strategic and financial logic for a combination of Direct Line into the Aviva group, details of which were set out in Aviva’s announcement of 27 November 2024.”

In early reaction Matt Britzman, senior equity analyst, Hargreaves Lansdown said: “Direct Line has finally relented, accepting Aviva’s 275p per share offer after resisting an earlier proposal in recent weeks. The deal, a mix of cash, shares, and a small dividend, delivers a 73% premium to Direct Line’s pre-offer price. Direct Line’s board had been holding out, insisting they could make it on their own. But even they had to admit that Aviva’s proposal is a golden ticket they’d struggle to match independently. Confidence in their solo strategy aside, this offer was just too good to pass up.

“Let’s not sugarcoat it: Direct Line has hit some serious potholes lately. Market share has been sliding, underwriting hasn’t exactly been flawless, and regulators have been knocking on the door. But with a fresh leadership team at the wheel, the company has been working on a bold turnaround plan. For Aviva, the price is pushing the limit of good value but snapping up Direct Line could be a strategic jackpot. It cements their place as a heavyweight in the UK home and motor insurance markets and brings fresh opportunities to steer Direct Line’s transformation, while squeezing out efficiency gains from their combined scale.”

Clive Beagles and James Lowen, the co-managers of JOHCM UK Equity Income Fund believe the proposed Direct Line transaction looks positive from a strategic and earnings accretive perspective.

There are also important capital diversification benefits as well as likely significant synergies. They believe it will create a powerful position in the UK general insurance market, which should help continue the re-rating of Aviva, which is a process in motion, driven by the changes in group structure and capital allocation since Amanda Blanc became CEO.

Clive Beagles, senior fund manager, commented: “We are surprised that Direct Line rejected the offer outright given the headline price but also, cognisant that part of the offer is in paper, where the dividend uplift and upside vs Direct Line standalone looks significant.”

James Lowen, senior fund manager, continued: “One only has to look at the uplift in the DS Smith share price since the initial offer from International Paper, to see the power of this dynamic. If we were shareholders in Direct Line we would be looking at this impact as well as the headline price.”

The Insurance, Wealth & Retirement (IWR) unit saw sales up 12% to £19.7bn (HY23: £17.6bn) while Solvency II operating capital generation rose 17% to £722m (HY232: £618m).

Solvency II shareholder cover ratio was 205% (FY23: 207%) and centre liquidity (Jul 24) stood at £1.5bn (Feb 24: £1.9bn).

Amanda Blanc, group chief executive officer, said: “Sales are up. Operating profit is up. The dividend is up. Our plan to deliver more for customers and shareholders is working really well.

“We have achieved another six months of excellent trading. We have generated growth right across Aviva, thanks to our leading positions in attractive markets such as workplace pensions and general insurance in the UK and Canada.

“Aviva continues to benefit significantly from the balanced and diversified business we have built and lead. We are the only UK insurer which can look after customers’ entire insurance, wealth and retirement needs, and this is paying off. We have 270,000 more customers this year and 4.9 million UK customers have more than one policy with us.”

She continued: “We are the number one provider of workplace pensions and are planning to launch a new venture and growth capital strategy. This will open up new investment opportunities for our pension customers and could help unlock billions of pounds of investment into unlisted growth companies.

“We remain very positive about Aviva’s prospects. Trading conditions across the UK, Ireland and Canada, are excellent. And the UK market, our largest, is highly attractive and growing. We see many reasons to invest here, including greater economic stability and political certainty. This encouraging backdrop – and Aviva’s continued strong financial performance – means we are increasingly confident we can deliver even more for our customers and shareholders.”

Among other highlights, in Canada Aviva further reported growing Commercial Lines with large, multi-national client wins, and its RBC partnership growing by double-digits.

“At the beginning of the year we completed the acquisition of Optiom O2 Holdings. This will support Aviva’s capital-light growth in the attractive Canadian market and strengthens Aviva Canada’s specialty lines business and distribution capabilities”, the statement said.

In Wealth, Aviva said it had been “cementing our position as the number one UK player, now with over £180 billion of assets. In the first half we delivered strong flows in our number one Workplace & Platform businesses, increased leads into Succession Wealth, and re-launched Direct Wealth with hybrid advice”.

In Health, the insurer said it “recently set an ambition to reach £100 million of operating profit by 2026 (growing from £65 million in 2023), whilst in Protection we’re now the clear number one, with the acquisition of AIG’s UK Protection business in April. We’re also continuing to deliver disciplined growth in Retirement, which remains a core component of our model and growth ambitions”.

Others, however, believe the decision is more nuanced, and say the problem lies in the regulatory design of the FCA’s Consumer Duty and Assessment of Value regulation as opposed to with the platforms themselves.

In July this year – the same month that the Consumer Duty rules first came into force – Fidelity took the decision to restrict investors from buying into certain funds and trusts on its platform which it deemed to be poor value.

The FCA’s 121-page paper on Consumer Duty states that companies “must take proactive and reactive steps to avoid causing harm to customers through their conduct, products, or services… their design, terms and conditions, marketing, [sales] and support”. It added that this should be implemented with a degree of “reasonableness”, meaning the rules and guidance “must be interpreted in line with the standard that could reasonably be expected of a prudent firm”.

The first product that Fidelity shielded new investors from buying into was the RIT Capital Partners investment trust which, at time of writing, is trading on a 24.1% discount to its net asset value. Residing in the IT Flexible Investment sector, the investment company has lost 16.1% during the past 12 months, 3.9% over three years and 1.7% over five years. However, it has gained 71.9% in the past decade. Its listed ongoing charges figure – which is applied to the underlying net asset value of its portfolio – stands at 1.6%.

Since then, there have been a further 14 funds and investment trusts that Fidelity platform clients can no longer access – although a small number of these restrictions come from the investment firms themselves, for example Royal London Global Equity Select’s units are now limited issue.

Funds and trusts which Fidelity has proactively prevented investors from buying into include: MIGO Opportunities Trust, AVI Global Trust, Momentum Multi-Asset Value Trust, CT Global Managed Portfolio Income, LF Odey Opus, LF Brook Continental European, Jupiter Fund of Investment Trusts, four different share classes of VT Argonaut European Alpha, Abrdn Private Equity Opportunities investment trust, Premier Miton Worldwide Opportunities and GVQ Opportunities. It has also prevented clients from buying into any Valu-Trac Epic funds.

In October this year, Interactive Investor decided to follow in Fidelity’s footsteps and prevent investors from buying into certain products they deemed to be poor value, although the firm does not provide a published list of these products. Other platforms that are willing to restrict investments into some funds and trusts include Aviva, Barclays Smart Investor and HSBC.

To read more, visit the December edition of  Portfolio Adviser Magazine

The global asset manager has appointed Oskar Geldof as head of BeNeLux.

Geldof has over 20 years’ experience and joins after a decade at Fidelity International where he was head of institutional sales for the Netherlands.

GSB Capital

The global wealth manager has hired Natasha Nathanielsz as client impact manager.

Nathanielsz brings 20 years’ experience in banking, customer service, and bank office administration support.

Evelyn Partners

The financial services company has expanded its Bristol financial planning team, hiring Bronwen Lancaster as partner, Joy Wisniewski as associate director of financial planning, and Chris Iles as a financial planner.

Lancaster has 20 years’ experience and joins Evelyn Partners from law firm, Irwin Mitchell.

Wisniewski joins from Hartsfield, where she spent 9 years, and previously worked as an advanced financial planner in banking in Australia.

Iles joins from Schroders Personal Wealth where he was a chartered financial planner.

Franklin Templeton

The investment service firm has appointed Maximilian Beeck as head of wholesale Switzerland.

Starting his career at UBS, Beeck has also previously worked at Janus Henderson and Allianz Global Investors.

Natixis Investment Managers

The asset manager has appointed Laura Kaliszewski as global head of client sustainable investing.

Kaliszewski joined Natixis in 2020 and has more than 15 years‘ experience in sustainable and impact investing, portfolio management, credit and risk with firms such as Deutsche Bank and JPMorgan.

Charles Stanley

The wealth manager has announced Abbas Owainati as head of asset allocation and Amish Patel as head of equity research.

Owainati has held roles as a macro strategist and economist at Quilter Investors.

Patel was previously a senior equity analyst at Talisman Global Asset Management and has worked at Quilter Cheviot and Janus Henderson.

WisdomTree

The asset manager has appointed Eva Casey as director of Ireland and Channel Islands sales.

Casey has 13 years’ experience in the asset management industry and joins WisdomTree from the institutional business team at State Street Global Advisers (SSGA).

Prior to SSGA, Casey spent seven years at Invesco, and has worked at Société Générale and Aviva Investors.

Walker Crips Financial Planning

The investment service has hired Joanne Crewe and Paul Gooch as financial planners.

Crewe has spent 23 years advising clients at Pannells Financial Planning Ltd before its acquisition.

Gooch also worked at Pannells Financial Planning Ltd, spending two decades advising clients and being part of the senior leadership team.

PGIM Investments

The investment manager has announced Rochus Appert as country head of Switzerland.

Appert has 30 years’ experience in the Swiss financial industry and joins from Columbia Threadneedle where he was most recently head of discretionary sales, Switzerland.

Appert has previously worked at BMO Global Asset Management, State Street Global Advisers, Credit Suisse and WestLB.

Kleinwort Hambros

The private bank has hired Gene Salerno as its new chief investment officer (CIO).

Gene brings over 20 years’ experience of cross-asset expertise and innovation.

He has headed investment strategy for SG Kleinwort Hambros, and since 2020, has been chief transformation officer.

AAB Group

The accountancy firm has hired Emma Lancaster as chief executive.

Succeeding Graeme Allan who has been at AAB for more than 16 years, Lancaster brings 15 years of board level experience in CEO and CFO roles in private equity backed, international, and people-based businesses.

Independent Governance

The pensions trusteeship and governance services has made four new hires.

This includes Yogen Mauree and Kate Tollis as trustee directors, alongside Peter Clarke as trustee manager, and Charlotte Bracken as marketing manager.

Mauree has joined from Signet Capital as head of risk management.

Tollis brings 25 years’ experience, joining from IGG as head of scheme governance and secretariat alongside roles for the British Airways (DB) pension schemes.

Newton Investment Management

The investment manager has appointed Liliana Castillo Dearth to lead the firm’s emerging market and Asia equities team.

Dearth has managed equity strategies for more than 20 years, most recently as portfolio manager at Wellington Management. Prior to Wellington, Dearth spent 18 years at AllianceBernstein.

Sarasin & Partners

The investment manager has announced six new hires.

These include two appointments from the charities team, Alexander True and Tania McLuckie – and four appointments from the private client team – Stephen Rothwell, Nick Wood, James Fishbourne and Graeme Bruce.

True, who joined Sarasin & Partners in 2014, brings over 15 years’ experience in financial services and charity portfolio management.

McLuckie has 10 years of investment experience across multi-asset and absolute return portfolios for charities, pensions, trusts and private clients.

Rothwell brings 25 years’ experience in the investment management and banking industry, working in management positions and with private clients and their advisers.

Wood, who joined Sarasin & Partners in 1998, is responsible for managing investment portfolios including trusts and pensions.

Fishbourne joined Sarasin & Partners in 2004 and is an investment manager with responsibility for private client portfolios.

Bruce who joined the firm in 2013 manages segregated international private client portfolios.

Belasko

Belasko has appointed Hannah Dunnell as managing director in its Guernsey office.

Dunnell brings 17 years’ experience in the local financial services industry, working across fund administration, corporate services and company secretarial services.

AIG Life UK provides individual and group protection products. It has 1.3 million individual protection customers and 1.4 million group protection members.

Amanda Blanc, group chief executive at Aviva, said: “This acquisition brings significant strategic and financial benefits to Aviva. It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth.”

The sale is expected to complete in the first half of 2024.

Focus on US

Peter Zaffino, chairman and chief executive of AIG and chairman of the board of directors of Corebridge, said: “This transaction is another positive step toward streamlining the Corebridge portfolio to focus on the life and retirement products that are driving positive results in the US.”

Kevin Hogan, Corebridge president and chief executive, added: “Corebridge is focused on leveraging our strong market position and the attractive dynamics of our core US products to deliver enhanced value to stakeholders.

“Since acquiring the UK life business in 2014, we have built a well-established provider of life insurance, critical illness and income-protection products in the UK. We look forward to working closely with Aviva to ensure a smooth transition for employees, customers and distribution partners.”