Aviva simplifies its Italian ventures

Insurer Aviva has reached agreements with UBI Banca and UniCredit to restructure and simplify its life joint ventures in Italy in order to facilitate cash remittances.

Aviva’s current structure in Italy is complex with two joint ventures with UBI Banca: one owned 50 percent by Aviva, and one owned 50 percent by Aviva SpA, itself a joint venture between UniCredit and Aviva. In addition, Aviva SpA owns minority equity investments in three of UBI Banca’s subsidiary banks.

The transaction is a significant simplification of Aviva’s life business in Italy. As part of the restructuring, Aviva will increase its holding to 80 percent of the joint ventures that offer products to UBI Banca customers, with UBI Banca owning 20 percent.

Aviva’s distribution agreement with UBI Banca will be extended from 2015 to 2020, focused on savings and life protection products. Aviva SpA will also sell the minority equity investments to UBI Banca. As a result, the indirect relationship between UniCredit and UBI Banca will be decoupled.

Aviva SpA, which will continue to be owned 51 perecent by Aviva, will enter into a new five year distribution agreement with UniCredit offering selected products, and increased capital efficiency, with Aviva making a balancing payment of approximately £25 million to fund the transaction.

David McMillan, chief executive officer of Aviva Europe, said: “This is an important step in the turnaround of our Italian business. Together with the sale of our stake in Eurovita, this transaction will simplify the structure of Aviva in Italy, increase value of new business and improve our capital efficiency.”