End of the road for RAC at Aviva

23rd Jun 2011 07:55

Asset manager The Carlyle Group is to buy roadside assistance provider RAC from insurance giant Aviva for one billion pounds.The transaction values RAC, the UK's second largest driver-membership scheme provider, at 17 times 2010 net earnings, Aviva said.The current RAC management team, led by RAC's managing director Angela Seymour-Jackson, will be retained. Carlyle said it is fully supportive of the team's strategy to profitably grow the business.Based on 31 December 2010 results, the transaction will increase Aviva's net assets by £0.6bn and tangible net assets by £1.0bn, equivalent to around 37p per share. Aviva's insurance group directive (IGD) surplus will improve by £0.2bn. The accounting profit on disposal is expected to be £0.6bn, Aviva said.Aviva will retain the RAC (2003) pension scheme; at the end of 2010 the scheme had an international accounting standard 19 (IAS19) deficit of some £160m. On completion, Aviva will make a one off contribution of £67m into the scheme. Aviva said the disposal is consistent with its strategy to focus on insurance and savings businesses in its priority markets.--jh