Direct Line has driven off takeover efforts by Belgium's Ageas, with the UK company's shares closing more than 11% lower on the first day of trading after the news was revealed.

Brussels-headquartered Ageas said on Friday evening that "consistent with its financial discipline" it had decided not to make a further offer for Direct Line. The decision came a day after Direct Line, which employs about 1,000 in Scotland, promised to slash costs by £100 million while posting a surge in annual operating losses.

Ageas 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. The latter implied a value of 237p per Direct Line share, roughly a 3% premium on the first approach.

READ MORE: Direct Line boss looks to cut costs to fend off predators

Both putative offers were rejected by Direct Line as “uncertain, unattractive” and “highly opportunistic”.

Ageas chief executive Hans De Cuyper said he was "convinced" the decision to pull out was correct under the circumstances, and would allow the group to stay true "to who we are and what we stand for in terms of maintaining a friendly approach and respecting our financial discipline". At least one top 10 shareholder in Ageas was reportedly opposed to the deal, describing it as "aggressive" given the Belgian group's own weak performance of late.

“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."

The company added: “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."

The Herald: Adam Winslow took over as chief executive of Direct Line at the beginning of this monthAdam Winslow took over as chief executive of Direct Line at the beginning of this month (Image: Agency)

Last week Direct Line posted an operating loss of £189.5m 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 a market challenged by the rising cost of auto repairs.

There were some reasons for optimism within those results as aggressive price hikes have caught up with cost inflation. New policies are being written at levels in line with a net insurance margin of more than 10%, which is back in the land of profitability.

However, analysts have also cautioned that there is still some way yet to go before the business achieves full recovery.

READ MORE: Direct Line rebuffs second takeover offer from Belgian rival

New chief executive Adam Winslow, who took over at the beginning of this month, has promised to cut the company's cost base by £100m by the end of next year. The former head of Aviva UK 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 losses, or perhaps alternatively a reduction in headcount over time. Mr Winslow has said staff would be the first to be informed in the event of cuts.

Shares in Direct Line closed yesterday's trading 23.6p lower at 185.4p, a decline of 11.3%.