Aviva (AV.) is to sell its US life and annuities operation and related asset management business to life insurance group Athene Holding for £1.1bn. But it will retain the North American asset management activities of Aviva Investors, where it has $82bn (£50.4bn) of assets under management. The announcement came hot on the heels of news that the UK insurer has reached agreement with Spanish group Bankia whereby it will transfer its entire holding in joint venture Aseval to nationalised Spanish bank Bankia for £494m.
The Spanish deal is subject to approval by the arbitration court in Madrid to which both parties have applied to have the legal proceedings between the two parties terminated. A dispute arose after Aviva claimed that an exclusive distribution agreement with the group’s original joint venture partner Bancaja was compromised when Bancaja and six other Spanish savings banks were rescued and joined together to form Bankia. This, Aviva claimed, breached the joint venture distribution arrangement because Caja Madrid, the largest savings bank within the new merged lender, already has a similar arrangement with Spanish insurer Mapfre. Subject to court approval, Aviva expects to receive the proceeds by the end of April 2013. Aviva’s other operations in Spain will be unaffected, and it will continue to serve 1.2m customers through several bancassurance partnerships. In 2011, Aseval contributed sales of £393m and life operating profits of £88m on an IFRS basis, while in the same year Aviva USA generated IFRS operating profits of £223m.
The latest moves form part of a strategy to trim Aviva’s significant spread of activities and build up greater financial strength. Both transactions are set to increase the group’s pro forma Insurance Group Directive (IGD) solvency ratio from 165 per cent in September to 172 per cent.
