Aviva’s credit rating is at risk following a £3.7bn Direct Line deal
Aviva’s credit rating could be downgraded if its £3.7 billion takeover of rival home and car insurer Direct Line goes ahead.
Specialist ratings agency AM Best said it was scrutinizing Aviva’s long-term credit and financial strength scores due to uncertainty over the deal’s impact on its finances.
Aviva has a financial strength score of A+ and an AA- credit rating, the second highest from AM Best.
Direct Line shareholders are expected to approve the acquisition in the first quarter of 2025. The deal is expected to close mid-year.
Aviva closed the deal with Direct Line just before the Christmas Day deadline
AM Best said: ‘The ratings will be revised until the group’s credit fundamentals are clearer post-acquisition.’
The Direct Line acquisition is expected to add £3 billion to Aviva’s annual insurance revenues, which stood at £18 billion last year.
Aviva is the largest general insurer in Britain and the addition of Direct Line, which has top three positions in the home and car insurance markets, will strengthen its place.
Aviva closed the deal just before the Christmas Day deadline.
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