Royal Bank of Scotland said it had raised £787m sterling from the sale of 30% of the company's shares.
The initial public offering was priced at 175 pence per share, close to the middle of the range originally set and valuing the business at £2.6 billion.
The shares were trading at 181 pence in early deals.
RBS said it would sell 450 million Direct Line shares, representing 30% of the business, with a 15% over-allotment option.
There had been concerns that investor appetite for the initial public offering would be damaged by British competition regulators investigating the car insurance market, due to suggestions that consumers were being overcharged.
However, UK analysts said the price for Direct Line stock was a "reasonable outcome".
The sale benefited from strong demand from British retail investors, who have had few opportunities to participate in large-scale IPOs in recent years.
On a conference call with reporters, Direct Line chief executive Paul Geddis said retail investors had purchased between £5,000-6,000 worth of shares on average and had taken up 15% of the shares sold.
RBS is selling Direct Line in return for winning approval from European Union regulators for a bailout during the 2008 financial crisis that left it 82% state-owned. The price was near the mid-point of the 160 to 195 pence range set by the British bank when it launched the IPO on September 28.
RBS has been under pressure to secure a good price for the business, with taxpayers sitting on a loss of £21.5 billion after Britain pumped in £45 billion to rescue the bank.
"This is another important milestone in RBS Group's restructuring plan," said RBS Finance Director Bruce Van Saun.
RBS said it would hold a 65.3% stake in Direct Line, assuming the overallotment option was taken up. Under the EU directive, RBS must sell more than 50% of Direct Line by the end of 2013 and the rest of its holding a year later.
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