The deal is worth GBP520m with potential further consideration of up to GBP30m contingent upon certain earn-out provisions. On top of this, Direct Line estimates that over time it will release capital of up to GBP270m, of which GBP170m will be released when the transaction is approved by the company’s shareholders as a Class 1 transaction.
Direct Line will remain active in the direct small business commercial lines insurance space, capitalising on its strong position via its brands Direct Line and Churchill. The deal is expected to increase Direct Line’s solvency capital ratio by around 45 percentage points on day one.
Philip Jarvis, partner at A&O, commented: “It’s fantastic that we’ve had the opportunity to support Direct Line on this important transaction, further demonstrating the strength and capacity of our insurance practice to enable key clients to achieve their strategic objectives”.
The deal was led by David Broadley, Philip Jarvis and Claire Coppel with support from senior associates Marcus Gwyer and Preethi Correa and associates Serena Shah, Ben Brooks, Paul McKay and Helena Marrion.
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