Aviva credit rating at risk after £3.7 billion Direct Line deal

Aviva could have its credit rating cut if its £3.7bn takeover of rival home and motor insurer Direct Line goes through.

Specialist ratings agency AM Best said it had put Aviva’s long term credit and financial strength scores under review due to uncertainty over how the deal will affect its finances. 

Aviva has a financial strength score of A+ and an AA- credit rating, the second highest available from AM Best. 

Direct Line shareholders are expected to approve the takeover in the first quarter of 2025 with the deal set to be completed by the middle of the year. 

AM Best said: ‘The ratings will remain under review until the group’s post-acquisition credit fundamentals are more clear.’

The acquisition of Direct Line is expected to add £3bn-plus to Aviva’s annual insurance revenues, which hit £18bn last year.

Aviva is the biggest general insurer in the UK and the addition of Direct Line, which has top three positions in the home and motor insurance markets, will cement its place. 

Aviva sealed the deal just before the Christmas Day deadline.

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