London-headquartered insurer Aviva has agreed to sell its entire 80% shareholding in the Italian life insurance joint venture, Aviva Vita S.p.A, to its partner UBI Banca.
Aviva previously announced a commitment to refocus its portfolio, and this transaction represents just that.
On completion, Aviva will receive €400 million in cash consideration. The transaction represents a multiple of 8.4x Aviva Vita’s 2019 IFRS profit after tax, 1.0x Solvency II Own Funds at 30 June 2020 and 1.2x net asset value at 30 June 20201.
In addition, a subordinated loan of €40 million provided by Aviva Italia Holding S.p.A. to Aviva Vita, will be repaid in full at completion.
The transaction would increase Aviva’s net asset value as at 30 June 2020 by £0.12 billion, strengthen Aviva’s Solvency II capital surplus by £0.22 billion and increase its Solvency II coverage ratio on a shareholder basis by approximately 4 percentage points.
In 2019, Aviva Vita’s IFRS profit after tax was £523 million and it did not pay a dividend.
The gross assets of Aviva Vita were £16.32 billion as at 30 June 2020. The proceeds will be used to further strengthen Aviva’s central liquidity and will be considered as part of Aviva’s broader capital management and debt reduction objectives.
The transaction is expected to be complete in the first half of next year and is still subject to regulatory approval and other customary closing conditions.
