British insurer Aviva rejects £5 billion RSA offer

British insurer, Aviva PLC has rebuffed an advance from rival RSA Group which was looking to acquire the firm's general insurance operations for a consideration of a £5 billion.

RSA, the UK's biggest commercial insurer, made the move last month in a letter from chairman John Napier to his counterpart at Aviva, Lord Sharman.

However Aviva, which had been operating as Norwich Union until recently could not be persuaded to split its general and life insurance businesses.

The pair run as one division by Mark Hodges, promoted as chief executive of Aviva UK in January who oversaw the expensive re-brand of Norwich Union to Aviva.

It is understood that the companies are not in talks at present, however the market obviously expecting RSA would pay more. Aviva shares were higher by as much as 7 per cent early Friday.

According to analysts, RSA, the £4bn company behind the 'More Than Insurance' brand, would need to raise a lot more money to fund the acquisition if Aviva ever agreed to sell.

The prospect of consolidation in the sector, though, sent Aviva shares 13.7p higher to 381p and leading to a rally for other players, although the FTSE 100 Index failed to benefit as it dropped 21.5 points to 5244.5.