Aviva has confirmed RSA made a bid for its general insurance arm last week but says the £5bn price tag was too low.
In a statement to the stock exchange this morning, Aviva says the GI market is currently at a cyclical low and business performance does not reflect its full earning potential.
It says having both life and non-life businesses delivers significant capital and earnings benefits and allows Aviva to operate with substantially less capital than two stand-alone businesses.
The provider says there are significant synergies from its current model in terms of a single global brand, cross selling opportunities and shared back office systems.
It also says the GI business is highly cash generative which supports the group and shareholder dividends.
Aviva chairman Lord Sharman says: “The Aviva Board considered RSA’s proposal carefully with a clear focus on maximising value for Aviva shareholders. 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.”
Aviva group chief executive Andrew Moss (pictured) says: “The progress we’re making in reshaping and transforming Aviva was evident in the 21 per cent increase to £1.27 billion of operating profits at our interim results and we firmly believe this strategy will continue to deliver superior value for our shareholders.”