HUNDREDS of jobs could be at risk in the region after the RAC agreed to a takeover by insurance group Aviva.

Norwich Union owner Aviva was last night poised to buy the RAC after agreeing a "transformational" £1.1bn deal for the motoring group.

The UK's biggest general insurer said the proposed tie-up created a "powerful force", with significant potential for increased sales of financial services to the breakdown group's 6.7 million roadside assistance customers.

However, the deal is likely to come at a cost to the combined UK workforce of 24,000, which Aviva plans to reduce by 1,700 through the removal of dual roles and the use of administrative offices overseas.

An Aviva spokeswoman said it employed 363 people in its general insurance services at a call centre in Newcastle.

And RAC Insure has a division in Darlington with about 300 workers.

But the spokeswoman said the 3,000 people employed by Norwich Union's life insurance operation in York would be unaffected.

It is expected the merger of the operations could achieve annual savings of £80m by next year.

The RAC, which traces its history back more than 100 years, has agreed to the takeover, although the cash- and-shares offer still requires the backing of shareholders and could yet be defeated by a rival offer.

Although it is traditionally known for its roadside recovery service, the RAC's portfolio of businesses ranges from the BSM driving school to travel insurance and vehicle leasing.

Aviva director Patrick Snowball said: "When it comes to their car, we will help our customers learn how to drive it, buy it, insure it and, if things go wrong, get them back on the road fast."

Norwich Union launched its roadside rescue service two years ago - using RAC services - and has since attracted about 275,000 customers. It said it wanted to increase RAC's customer base from 6.7 million customers to 7.3 million by the end of 2007.

Hilary Cook, of Barclays Stockbrokers, said it was unlikely private equity houses would better Aviva's offer, as they would be unable to achieve the same savings from a takeover.

Yesterday's deal was announced as Aviva revealed worldwide operating profits rose 25 per cent to £2.34bn last year.

Aviva said about 900 RAC and Norwich Union jobs were expected to go through the combination of support functions, with another 800 lost through the offshoring of office jobs. It said it did not plan to move any customer-facing operations overseas.

It said: "Wherever possible, reductions in staff numbers will be achieved through natural staff turnover and redeployment, although some compulsory redundancies are likely."