Shares in Direct Line have plunged in this morning's trading as markets opened for the first time after Belgian suitor Ageas said it is no longer interested in making a bid for the UK's second-largest motor insurer.

The group's shares were down by nearly 16% at one stage as investors digested the news that was released on Friday evening. As of 11am today they had recovered some lost ground, but were still trading more than 13% lower.

Ageas, which is headquartered in Brussels, sent an initial proposal to Direct Line on January 19 and followed this up with an improved cash and shares offer on March 13 which valued the business at approximately £3.2 billion. Both were rejected by Direct Line as “uncertain, unattractive” and “highly opportunistic”.

READ MORE: Thousands ditch Direct Line as car insurance premiums surge

“Throughout the entire process, Ageas has always sought engagement with Direct Line’s board,” the company said on Friday. “Ageas regrets that it has not been able to work collaboratively together with the board of directors of Direct Line towards a recommended firm offer.

“Ageas was not able to identify additional elements based on publicly-available information that would justify significant adjustments to the terms of its possible offer. Therefore, consistent with its financial discipline, Ageas has decided not to make a firm offer.”

Last week Direct Line - which employs about 1,000 in Scotland based predominantly in Glasgow - posted an operating loss of £189.5 million for the year to the end of December, up from £6.4m previously. The insurer, whose brands also include Churchill, Darwin, Privilege and Green Flag, has struggled in market challenged by the rising cost of repairs.

READ MORE: Talk of cost cuts makes uncomfortable reading for Direct Line staff in Scotland

New chief executive Adam Winslow has promised to cut the company's cost base by £100m by the end of next year. He is in the process of completing a "comprehensive strategic review" and will report back to shareholders in July.

It remains unclear whether this will lead to immediate job cuts or a reduction in headcount over time. Mr Winslow has said staff would be the first to be informed in the event of cuts.

Direct Line says it continues to believe in the company's prospects as a stand-alone business under the guidance of Mr Winslow, who previously headed up Aviva UK and took up his current position at the beginning of this month.