RSA's £5bn tilt at Aviva business falls at first hurdle

Aviva, the insurer formed out of brands including Norwich Union and Commercial Union, has turned down a £5bn offer from one of its rivals for its general insurance unit, it emerged yesterday.

Insurance sector insiders said RSA had approached Aviva with the offer, for its general insurance businesses in the UK, Ireland and Canada.

Until now, Aviva's strategy has been to operate both life and general insurance businesses. RSA, by contrast, is focused only on general insurance and is keen to expand.

The proposal was made in a letter from John Napier, the chairman of RSA, to Lord Sharman, chairman of Aviva, but was swiftly rebuffed.

A deal of this size would accelerate RSA's expansion plans and would have required the company to turn to investors for funds. However, Andy Haste, the company's chief executive, is respected in the City for having pulled off a string of small and medium-sized acquisitions, though the Aviva purchase would have been almost 10 times bigger than any previous deal.

Mr Haste also has the benefit of having already consulted shareholders about their willingness to participate in a fundraising. The idea was discussed last year amid speculation that RSA planned to bid for a string of businesses, including units of the Spanish bank Santander.

While insiders say there are no ongoing talks between the companies, Aviva shares rose sharply yesterday on speculation that RSA might return to the table with a more substantial offer. The company was 5.5 per cent up at 383p. It is also possible that another bidder could emerge.

It is thought that RSA has yet to rule out another offer, though the £5bn already tabled would represent a generous price. The earnings of the businesses in play are around £500m a year, implying a multiple of 10 times', while previous deals in the sector have typically been priced at seven or eight times' earnings.

The mooted deal underlines the febrile atmosphere in the insurance sector just now, which is undergoing another wave of consolidation. Resolution, the insurance acquisition vehicle for the industry, has just completed a £2.75bn deal to buy the UK life operations of France's Axa, and is thought to be closing in on another target.

Both Aviva and RSA declined to comment yesterday.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory