Wednesday, September 20, 2017

Aviva to sell Friends Provident for US$443m

Aviva has agreed a deal to sell Friends Provident International to RL360 Holding Company, a unit of International Financial Group, for a total of £340 million (US$443 million).

Having bought Friends Provident in 2015, Aviva has now concluded that the the business, which manages wealthy clients in Asia and the Middle East, is not central to its strategy of focusing on a small number of markets where it has scale and profitability or a distinct competitive advantage.

Chris Wei, executive chairman, Aviva Asia & FPIL, described the sale is a “good outcome” for Aviva. “It allows us to focus on the significant opportunities we have to grow Aviva’s business across Asia through digital and disrupting the traditional insurance industry.”

The deal represents a multiple of 3.2 times Friends Provident’s 2016 net asset value, resulting in an increase of about £100 million in Aviva’s Solvency II capital surplus.

The transaction will also create an IFRS loss on disposal of about £130 million, which Aviva said is primarily due to the intangible assets held on its balance sheet from the acquisition in 2015.

The sale will allow Aviva to further reallocate capital to businesses that can achieve leading market positions and deliver better returns.

Subject to customary regulatory approvals, the transaction is expected to be completed in early 2018.

Aviva said the disposal is expected to be positive to the group’s cash dividend-paying capacity as Friends Provident made a loss after tax of £2 million in 2016.

RL360, previously known as Royal London 360, is a life assurance firm and provider of offshore savings and investment products.

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