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

Outspoken: Sir Peter Wood, who set up Direct Line in 1985

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-only insurer in 1985. He left the company in 1997.

Wood told The Mail on Sunday that the group had been managed ‘terribly’ for years, making it a sitting duck for predators. He said it should be sold to a bidder offering a ‘decent’ price.

Belgian rival Ageas proposed a £3.1 billion takeover last week, which Wood, who does not own any shares, said was not enough.

Direct Line, which owns brands including Churchill and Green Flag, rejected the Ageas bid.

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

Wood, 77, said Direct Line’s board was right to rebuff Ageas. He said executives should consider any higher bids tabled in future.

‘They had no option but to turn that deal down,’ he said. ‘But the business has been run so abysmally for so long that I don’t think they’ve got any right not to take a decent offer.’

Ageas had proposed paying Direct Line investors through a mixture of cash and stock, which Wood described as ‘messy’.

‘It’s obviously been a target because the share price was so low,’ he said. ‘It’s got great brands and is a fairly large business so I’m sure other people will come for it.’

Direct Line has warned on profits multiple times over the past few years. In January 2023 the company scrapped its dividend after admitting it had been caught out by a surge in claims linked to bad weather. Within weeks it parted ways with chief executive Penny James.

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

The firm was once the biggest motor insurer in the UK and its ‘little red telephone’ was synonymous with the brand. Wood controlled the business but did not own a direct stake – receiving huge pay packets instead.

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

Direct Line is the third London-listed company to receive an approach in recent days. Electricals retailer Currys rejected two bids from American hedge fund Elliott and rebuffed interest from Chinese online retailer JD.com.

Meanwhile a bid for logistics firm Wincanton from French rival CMA CGM was gazumped by American group GXO. Direct Line declined to comment.

This post first appeared on Dailymail.co.uk