CMA initiates investigation into Aviva, with direct acquisition of £3.6 billion – Mortgage Strategy
The Competition and Markets Authority will investigate Aviva’s £3.6 billion acquisition direct line to study whether it weakens competition in the insurance market.
The investigation will also be one of the first tests for regulators, which have promised to speed up its inquiries under government pressure.
Its survey of insurers will assess whether the move will result in a “significantly reduced competition” in various regions where the company operates.
The regulator has 40 days in its Phase 1 survey to assess the possible impact of the deal on competition in the industry.
It sets a July 10 deadline, when regulators will give the merger a green light or conduct a more in-depth 2-phase investigation.
Aviva, the UK’s largest insurer, agreed to acquire direct lines in December, while the smaller company operates a variety of brands such as Churchill and Green Flag, which also offers home, travel, pets and life insurance.
Aviva sells a range of insurance, wealth, retirement and stock release products and has over 20 million customers.
Aviva by CEO Amanda Blanc (pictured). Adam Winslow, CEO of Direct Line over a year ago, joined the head of General Insurance Company of the UK and Ireland.
In February, Commerce Secretary Jonathan Reynolds said the watchdogs needed a “regulatory reset” and that authorities should get rid of “theoretical issues” that show “very little understanding of how businesses and the market actually operate.”
The business sector has issued “an advisory on a new strategic shift in competition and market power to accelerate this effort,” he said.
Sarah Cardell, CEO of the Competition and Markets Authority, welcomed this, adding: “We are already working to gradually change the operation of the merger regime in the coming months.”
The agency said its probe features would be characterized by “rhythm, predictability, proportionality and process” and published the Merger Charter, which articulates its new way of working.
The move comes after Doug Gurr, former Amazon chief who was appointed interim chairman of the competition agency in January, unexpectedly succeeded Marcus Bokkerink as the government struggled to push its momentum to cut the traditional tape festival.
The Financial Services Group said its retirement sales rose 33% from 12 months ago to £9.4 billion, driven by its highest volume purchase annuity sales year to £7.8 billion.
But the stock released new premiums fell 38% to £265 million, “due to low levels of market activity and maintaining pricing discipline to ensure adequate return on investment to support our annuity business”.
