Direct Line to prioritise profits in bid to shake off Ageas interest
The new boss at Direct Line is bringing forward his plans for turning around the business in an attempt to rebuff a £3.1bn takeover bid from Belgian insurers Ageas.
Adam Winslow, who has only been at the helm of Direct Line for a week, is expected to set out a focus on profitability alongside Direct Line’s full-year results on 21 March, as he looks to improve the fortunes of the embattled insurance group.
The FTSE 250 company’s cost base, thought to be higher than many of its immediate rivals, is said to be under the new boss’s magnifying glass after the company was forced to issue two profit warnings in two years.
The firm is also exploring ways to differentiate its various brands, which, in addition to the eponymous Direct Line, include Churchill, Privilege and the commercial arm NIG.
In February, Direct Line rejected what it called a “highly opportunistic” bid from rival Ageas that valued the firm at 233p a share, a premium of 43 per cent.
The cash-and-shares offer, which sent the ailing share price up 37 per cent, would need to be raised to between 270p and 300p to be in with a greater chance of success, according to analysts at the investment bank Jeffries.
It looks increasingly likely that Ageas will come back with an improved offer after it appointed Deutsche Bank to work alongside its existing list of advisors on the bid.
Any bid would need to be made by 27 March, six days after Direct Line’s results.
Winslow’s appointment comes after previous CEO Penny James’s departure from the firm last year due to an unexpected increase in weather-related claims.
He previously served as UK and Ireland general insurance chief at Aviva.
Direct Line has been approached by City PM for comment.