With shareholders having now approved the takeover and the deal set for completion in mid-2025, the implications for both businesses, as well as the broader industry, are profound.
This merger will create the largest UK-regulated general insurer, pushing Aviva’s gross written premium (GWP) beyond the £10bn mark – the first time such a feat has been achieved.
While this cements Aviva’s position at the top of the UKGI market, it also raises important questions about competition, cost efficiencies, and the long-term impact on the sector.
A logical move with strategic benefits
DLG has a strong heritage in the personal lines market, and the additional volume it brings will further strengthen Aviva’s market position, allowing the company to expand its customer base while benefiting from economies of scale.
However, DLG has faced a number of challenges in recent years, particularly regarding its expense ratio.
Our analysis of insurer Solvency and Financial Condition Reports (SFCRs) indicates that DLG has consistently reported a higher-than-average expense ratio over the past four years, and while the business returned to operating profit in 2024, cost pressures remain a concern.
To address these issues, DLG chief executive Adam Winslow has already announced a £100m annual cost-saving target, and Aviva now has an opportunity to drive even greater efficiencies once the deal is completed.
Indeed, the insurer has already identified an additional £125m in potential synergy savings within three years of the deal completing, something that will go a long way to helping to drive down DLG’s expense ratio.
Aviva expects significant savings from shared infrastructure, IT integration, and reinsurance efficiencies. However, the most substantial cost reductions will come from workforce consolidation, with up to 2,300 roles potentially at risk as the company looks to remove overlapping roles.
Market implications and regulatory scrutiny
Beyond the immediate operational impacts, this deal raises broader questions about competition in the UK insurance market.
The Competition and Markets Authority (CMA) is likely to review the merger closely, particularly in the highly competitive motor insurance sector, where DLG and Aviva currently hold the second and third-largest market shares, respectively.
Our analysis shows that the newly combined entity will control more than £4.5bn in GWP in the motor insurance sector alone – nearly double that of its closest competitor Admiral.
However, given the breadth of options available to consumers, the UKGI marketplace remains highly competitive. While regulatory scrutiny is a given, it is unlikely that the CMA will block the deal outright, particularly given the overall market dynamics.