Aviva has taken further steps to turn RAC into a standalone business, fuelling speculation it is preparing to sell the company.
Insurance Times understands Aviva has been separating RAC from the rest of the group, creating new management roles, so it is a standalone business well-positioned for a sale.
Bryan Spinks, who was previously Aviva head of corporate marketing has become the latest figure to move over to RAC.
He will join a team led by Angela Seymour-Jackson, who took up a newly-created role of RAC managing director in December last year. She was previously distribution director of Aviva UK life.
Aviva has also created a new role of chief financial officer in recent months, which was taken up Diane Cougill, former UK general insurance chief risk officer.
Another notable face to leave Aviva is David Tysers. He left his role as Aviva director of insurance marketing to become RAC sales and marketing director.
The changes follow in the wake of strong signals from chief executive Andrew Moss in the last six months that there would be a focus on core businesses and a disposal of non-core assets.
Although Aviva was remaining tight-lipped about the changes, Insurance Times understands that Aviva wants RAC as a standalone business so the option for a smooth sale is available when the market conditions are right.
Despite difficulties with its potential deficit, the main company within RAC – called RAC Motoring Services – has been posting profits just above £50m in 2008 and 2009.
When Aviva bought RAC for £1.1bn in 2005, it expected the firm to make £250m pre-tax profits by 2008.
RAC has a breakdown recovery business and an insurance arm with a panel of underwriters.
The potential for an RAC sell-off has been picked up by City analysts.
Panmure Gordon analyst Barrie Cornes, speaking in an analyst note, said: “Having announced a new strategy last year, focused on 12 countries (UK, France, Ireland, Italy, Poland, Spain, Russia, Turkey, Canada, US, China and India) rather than the 28 in which it currently operates, we anticipate that there will be a number of disposals starting, we believe, in the next few months.
” In our view, the RAC business purchased in 2005 for £1.1bn (£566m in cash and the balance in shares) could be one of the businesses considered for disposal given the lack of natural fit with the rest of the UK business.”
Market sources suggested Aviva would not let the business go cheaply, although in Aviva would struggle to recoup the £1.1bn in today’s market.
A source said: “I’d be surprised if they let the business go for less than they paid for it.
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