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Aviva ends disposal spree with Poland exit

This is the life insurer’s eighth disposal in eight months
Aviva ends disposal spree with Poland exit
  • Polish business sold to Allianz for €2.5bn
  • Shareholders can look forward to “a substantial return of capital”

Life insurer Aviva (AV.) has completed “the planned refocus” of its portfolio with the sale of its Polish arm to Allianz (DE:ALV) for €2.5bn (£2.1bn) in cash. This is its eighth disposal in eight months.

The divestment brings total cash proceeds from chief executive Amanda Blanc’s strategy to £7.5bn, just shy of the entire market value assigned to the group when the shares traded at their steepest discount to book value last May.

The deal – struck at an impressive 130 per cent premium to Solvency II own funds – will also allow Aviva to concentrate solely on what Blanc sees as the group’s strongest franchises in the UK, Ireland and Canada. Debt will also be reduced and Aviva plans to make “a substantial return of capital to shareholders” in due course.

Despite the narrower focus, the sale’s premium to carrying value translates to a 10 per cent increase in pro-forma net asset value per share, to 493p. The strategy, together with the supportive rise in bond yields, has been warmly received by investors, who have bid up the shares to 403p. Buy.

Last IC View: Buy, 395p, 04 Mar 2020