In news that will doubtless affect the UK motor insurance market, Aviva have revealed that they are expecting to sell the breakdown cover UK company RAC as a result of their desire to focus insurance and savings.

The sale looks likely to go through to the private equity firm the Carlyle Group, with 1bn the expected fee for the company, who will continue to maintain relations with Aviva in a commercial sense.

Carlyle have already promised that there will be no job cuts as a result of the acquisition.  However, industry experts have already noted the similarities to the sale of the AA in 2004, which subsequently led to 3,400 cuts in employment.

Unions reactions to the sale have been varied.  The TUC noted the deal as being ‘irresponsible capitalism’, but Unite revealed that they had personally received assurances against job loss.

Speaking on behalf of Aviva, group chief executive Andrew Moss commented that ‘The sale of RAC is another important step for Aviva and realises significant value for our shareholders. Together with the recent partial disposal of Delta Lloyd, it demonstrates clear delivery of our strategy and provides the flexibility to deepen our presence in the priority markets where we have strength and scale.’

It will be intriguing to see how the takeover will affect the RAC in the long term.

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