Aviva announced yesterday that it has agreed to sell its entire 80% shareholding in the Italian life insurance joint venture, Aviva Vita S.p.A. The Transaction represents another important strategic milestone as Aviva delivers on its commitment to refocus its portfolio.
On completion, Aviva will receive c.€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 2020. 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 £0.1 billion, strengthen Aviva’s Solvency II capital surplus by £0.2 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 £52 million and it did not pay a dividend. The gross assets of Aviva Vita were £16.3 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.
Customers of Aviva Vita will continue to deal with the Company as usual and there is no impact to customer policies as a result of this announcement. The Transaction is subject to customary closing conditions, including regulatory approval, and is expected to complete in the first half of 2021.
Aviva has three other operating insurance entities in Italy:
- Aviva SpA, a 51% owned life insurance joint venture with UniCredit (2019 Solvency II Own Funds of €0.8 billion)
- Aviva Life SpA, a 100% owned life insurance entity (2019 Solvency II Own Funds of €0.2 billion)
- Aviva Italia SpA, a 100% owned general insurance entity (2019 Solvency II Own Funds of €0.2 billion)
Aviva continues to evaluate how it manages these businesses to maximise shareholder value.
Amanda Blanc, Chief Executive Officer of Aviva, said:
Our strategy is about focus and delivery. The sale of Aviva Vita is another important step forward as we reshape our portfolio and follows the recent announcement of the majority sale of our Singaporean business. We will continue to be decisive as we seek to transform Aviva for the benefit of our shareholders.