Direct Line deserves to be taken over! Founder Sir Peter Wood slams ‘abysmal’ performance

The insurance tycoon who founded Direct Line believes the company has been run “so abysmally” that it deserves to be taken over.

Sir Peter Wood, 77, set up Direct Line as the UK’s first telephone insurer in 1985. He left the company in 1997.

Wood told The Mail on Sunday the group had been managed “terribly” for years, making it an easy target for predators. He said it should be sold to a bidder who offered a “decent” price.

Belgian rival Ageas last week proposed a takeover worth £3.1bn, which Wood, who owns no shares, said was not enough.

Direct Line, owner of brands such as Churchill and Green Flag, rejected Ageas’ offer.

The offer was announced just two days before new chief executive Adam Winslow began his role at the FTSE 250-listed company.

Wood, 77, said Direct Line’s board was right to reject Ageas. He said executives should consider any higher offers presented in the future.

“They had no choice but to reject that agreement,” he said. “But the business has been doing so poorly for so long that I don’t think they have the right not to accept a decent offer.”

Ageas had proposed paying Direct Line investors through a combination of cash and shares, which Wood described as “messy”.

“It’s obviously been a target because the share price was so low,” he said. “It has great brands and it’s a pretty big business, so I’m sure other people will come after it.”

Direct Line has warned about profits several times in recent years. In January 2023, the company canceled its dividend after admitting that it had been surprised by an increase in claims related to bad weather. Within weeks she split from CEO Penny James.

Direct Line posted a £76m loss in September and sold a commercial insurance unit for £520m in an effort to shore up its balance sheet.

The company was once the UK’s largest car insurer and its “little red phone” was synonymous with the brand. Wood controlled the business, but had no direct stake, instead receiving huge salaries.

The tycoon is one of Britain’s most successful insurance businessmen. He has started seven companies, including Esure, and was an early backer of GoCompare. In 2021 he founded the investment group SPWOne, which was part of a consortium that took over funeral company Dignity last year.

Direct Line is the third London-listed company to be approached in recent days. Electrical goods retailer Currys has rejected two offers from US hedge fund Elliott and rejected interest from Chinese online retailer JD.com.

Meanwhile, a bid for logistics company Wincanton from French rival CMA CGM was rejected by US group GXO. Línea Directa declined to comment.