According to a major investor with both RSA and Aviva, the recent £5 billion bid to buy out Aviva, which has both general, life, and other professional liability insurance products, would have to be higher by approximately 10 per cent in order to make the deal worthy.
When Martin Brown, one of Ignis Asset Mangement’s investment managers, saw that RSA had only offered £5 billion for its general insurance arm, he immediately knew that it was an undervaluation of the personal and commercial insurance giant’s business potential. As his asset management group holds stock in both corporations, about one and a half per cent in RSA and slightly less than one per cent in Aviva, Mr Brown immediately saw the issues clearly.
RSA did indeed undervalue Aviva’s worth, Mr Brown continued, but not nearly as much as other experts are estimating, as he emphatically declared that simply increasing the offer by 10 per cent would be sufficient to either entice the company into considering it, or make it obligatory to have Aviva’s shareholders decide the issue via vote.
RSA has commented that, despite its bid for Aviva’s general insurance arm being rejected, it still is open to further discussion. Aviva has taken a different stance, stating that, like many companies that offer both general insurance in addition to more specialised fare such as life or business insurance, it wishes to remain a company that can offer a composite of insurance cover.
There are no clear indications that RSA will come back to the table with an offer that will be more attractive to Aviva, but many industry experts with ties to RSA have insisted that the company has a great deal of interest in the buyout, believing it can reduce costs by approximately £300 million if it can manage to combine Aviva’s business unit with their own.
Paul Mumford, a spokesman for Cavendish Asset Management, another entity that owns shares of Aviva, commented recently as well, stating that while Aviva’s current business model is just fine, he did believe that there was probable scope for some improvement of RSA’s offer.