Aviva disposes Friends Provident for £340m to raise capital

UK insurer Aviva is selling its Asia and Middle East life business Friends Provident International (FPIL) to RL360 Holding Company, a subsidiary of International Financial Group, for a total consideration of £340 million.

The sale of FPIL will allow Aviva to further reallocate capital to more profitable businesses that can achieve deliver superior returns.

Aviva stated that following a strategic review of FPIL it has concluded that the business is not central to the group’s strategy to focus on a small number of markets where it has scale and profitability or a distinct competitive advantage.

The £340 million consideration represents a multiple of 3.2x FPIL’s 2016 net asset value, according to the statement. The transaction will result in an increase of approximately £100 million in Aviva’s Solvency II capital surplus. It will also create an IFRS loss on disposal of approximately £130m, which is primarily due to the intangible assets held on Aviva’s balance sheet arising from Aviva’s acquisition of FPIL in 2015.

In 2016, FPIL made a post-tax loss of £2 million and did not remit any cash to Aviva Group. As a result, a disposal of FPIL is expected to be positive to Aviva’s cash dividend paying capacity.

The transaction is subject to customary regulatory approvals and is expected to complete in early 2018.

Chris Wei, executive chairman, Aviva Asia and FPIL, said: "The sale of Friends Provident International Limited 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."

Don't miss our monthly insurtech email newsletter - sign up today

Today’s stories

Syndicates empowered to act faster by Lloyd’s – if a hard market ever returns

Nexus strikes ZON Re deal to enter US MGA market

Vizion Insurance adds former Aon exec as founding partner

McLarens appoints global marine head

Lockton unveils new CEO and president as Spencer departs

IAG shaves costs by merging Australian units under new CEO

Chubb replaces North America life sciences head

AmTrust hires PartnerRe senior exec for strategy role

Beazley expands environmental coverage to Canada with Zurich hire

Did you enjoy reading this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.