(Reuters) -Shares in UK's Direct Line Insurance soared over 36% in early trade on Thursday after it rejected a 3.28 billion pound ($4.16 billion) takeover offer from bigger rival Aviva, saying it "substantially undervalued" the company.

Goldman Sachs Group Inc. has switched sides to advise Aviva Plc on its £3.3 billion ($4.2 billion) takeover bid for Direct Line Insurance Group Plc, only eight months after helping the target successfully defend against another suitor.

Direct Line topped gains on the FTSE 250 mid-cap index, while Aviva's shares fell around 3 per cent to be the top percentage loser on the blue-chip FTSE 100 index.

Direct Line’s shares surged as investor’s hoped the rejection might pave the way for a second takeover bid from the U.K.’s largest insurance company

Direct Line Insurance Group Plc shares surged as much as 39% after the insurer rejected a £3.3 billion ($4.2 billion) takeover bid from Aviva Plc, the second suitor it’s rebuffed this year.