Aviva to sell RAC

Aviva said it expects an accounting profit of £600m from the sale of the UK’s second-largest breakdown recovery group, and will use the proceeds to strengthen its balance sheet and invest in its main markets.

Brown Shipley fund manager John Smith, who holds Aviva shares within his portfolios, said: “It is a reasonable transaction for shareholders. It unlocks value and it was never really clear where RAC fitted within the Aviva business.”

Aviva, which operates in about 30 countries, has been trying to boost profit by concentrating on 12 markets where it makes most money.

As part of its plan, the company has walked away from less profitable businesses in Italy and the US.

The company also cut its stake in Dutch unit Delta Lloyd in April, netting £381m.

Aviva said it is confident of meeting its near-term financial targets.

Its shares have risen by around 10 per cent over the past six months and by nearly 30 per cent over the past year.

By contrast, shares in rival Prudential have risen three per cent and 25 per cent over the same two periods, respectively.