Citi analyst opposes RSA bid

Citigroup analyst James Quin claims RSA mistakenly included £150m in RAC profits in its Aviva bid calculation despite not wanting to buy the RAC, the Times reports.

That would make RSA’s bid proposal 13 times Aviva’s full-year earnings, rather than the 9.8 times. RSA was said to have rushed to meet City analysts to deny any error.

Small firms outperform

The Guardian said the same City analysts, James Quin, argued against big mergers in insurance.

He said: "While size may have some attractions, we struggle to find an example of large-scale M&A in the non-life sector that has achieved its goals – indeed, both Aviva and RSA are themselves examples of where this thinking has gone wrong.

"The most profitable and highly rated operators – Admiral in UK motor, or Amlin in wholesale risks – are not successful because of scale but because they are very good at what they do.

"We see no correlation between size and returns, and a negative one between size and stock market rating."

Resolution to buy RSA leftovers

The Independent reports that Clive Cowdery’s Resolution confirmed that it might buy the parts of Aviva not sold to RSA. Jon Hack, Resolution's acquisition specialist, confirmed Aviva had the right combination of life business and asset management that could interest Resolution.