By Jason Theodorou

Aviva has said that its board has rejected RSA’s £5 billion bid for its general insurance operation, arguing that shareholders would derive maximum value from keeping the business.

Aviva has argued that there are strategic and financial advantages to running the general insurance business, alongside its pensions and investments division. Shareholders have complained that Aviva did not consult them on the offer tabled by RSA.

Aviva shares rose by 5% on Friday, after RSA’s move was made public. Aviva is the UK’s leading general insurer, with 70% of its profits derived from life and pensions operations.

Lord Sharman, chairman of Aviva, said: ‘The Aviva board considered RSA’s proposal carefully, with a clear focus on maximizing value for Aviva shareholders’. The group argued that the general insurance market was weak, so its general insurance division was not performing at full capacity.

RSA made the offer on 28 July, and it was rejected by Aviva on 6 August.