Aviva investors urge RSA deal rethink

17 August 2010 0:00 am | Updated: 17 August 2010 8:29 am | By Lee Jones

Some of Aviva’s leading investors have urged the UK insurer to reconsider the £5bn offer from RSA for its UK, Ireland and Canadian general insurance business.

According to the Financial Times, several of the firms biggest investors have urged a rethink on the deal that Aviva considered too weak.

Standard Life investment director Euan Stirling told the FT: “If RSA were to come back with a more serious bid, a slightly raised bid, then Aviva would have to take that more seriously.”

Yesterday, Aviva chairman Lord Sharman said the £5bn offer did not reflect the “synergies” of running life and non-life businesses alongside each other. He said: “Given the compelling strategic and financial benefits to Aviva shareholders of retaining the GI business, its upside potential and the terms offered by RSA, the board was unanimous in rejecting this proposal.”

But RSA retorted with a dismissal of Aviva’s assessment. In a statement to the stock exchange yesterday, it argued that Aviva’s recent weak equity returns and new business strain on the GI side of the firm, coupled with additional impending Solvency II capital demands on non-life business, proved the proposal made sense to both parties.

It said: “The transaction represents in-market consolidation in geographies and lines of business that RSA knows well and in RSA’s view, would give rise to significant cost synergies estimated at £300m per annum pre-tax.”

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