RSA bids for Aviva stake

Monday, August 16, 2010

RSA, one of Aviva’s largest competitors within the UK insurance sector, has made a £5 billion bid to acquire a large portion of its rival organisation. John Napier, the chairman of the RSA is thought to have approached Lord Sharman, the chairman of Aviva by letter within the past couple of weeks. The proposal is thought to be dealing with Aviva’s general insurance operations within the United Kingdom and other areas including Ireland and Canada.

According to reports, Aviva rejected the proposal out of hand, as Aviva believes that it should maintain a strategy of providing composite insurance, which offers both general and life insurance products. The proposal was not even run past shareholders affected by the potential decision before it was turned down.

RSA has been demonstrating success in the industry over recent months, following the intervention of Andy Haste, the chief executive of the company. Analysts are unsure whether RSA will consider offering a more substantial offer to secure an element of their rival Aviva. The two companies are not currently thought to be in discussion about the offer.

Aviva and RSA have both shown positive results for the first half of the year, although the offer was made prior to Aviva’s figures being released publicly. It is thought that RSA are looking to expand their operations, and securing a chunk of Aviva would achieve this goal. Had they been successful, investors would have been forced to undertake significant fundraising to come up with the required amount for the acquisition.

Analysts suggest that there is currently no need for policyholders with Aviva’s life or general insurance business to have any concern about a potential takeover of elements of the business. Aviva is one of the UK’s biggest insurers, strengthening their brand recently through an active sponsorship of athletics events and a wide-reaching advertising campaign.