Aviva yesterday confirmed that it had agreed to sell RAC Limited to the Carlyle Group for one billion pounds.

The deal is expected to be completed towards the end of the third quarter of this year and values RAC at 17 times last year's net earnings.

Aviva said the decision to sell RAC was taken in line with its strategy of focusing on insurance and savings business, adding that the sale would increase its net assets by £0.6 billion.

Andrew Moss, Chief Executive of Aviva, said, "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."