Aviva has agreed a deal to buy rival insurer Direct Line in a £3.7 billion swoop. The FTSE 100 insurer is set to purchase its smaller competitor after a £3.3 billion was bid turned down in November.

Aviva's acquisition of Direct Line for $4.6 billion will significantly boost its market position in the U.K. personal lines, especially motor insurance. The deal is expected to generate £125 million ...