(Reuters) - British insurer Aviva (LON:AV) has reached an agreement to buy smaller rival Direct Line (LON:DLGD) in a 3.7 billion pound ($4.65 billion) cash-and-stock deal, the companies said on Monday, creating the UK's largest home and motor insurer.Aviva and Direct Line had reached a preliminary agreement in early December. Aviva had until Christmas Day to make a formal offer or walk away under UK takeover rules.($1 = 0.7957 pounds).investing.com