Aviva has sold its French operations, here’s the word from the press office;
Amanda Blanc, Chief Executive Officer of Aviva, said:
“The sale of Aviva France is a very significant milestone in the delivery of our strategy. It is an excellent outcome for shareholders, customers, employees and distributors. The transaction will increase Aviva’s financial strength, remove significant volatility and bring real focus to the Group.
Aéma Groupe has a strong heritage in the French insurance industry and this transaction will propel it to a top 5 position in the French market. I am confident Aéma Groupe will be an excellent owner of Aviva France.”
The transaction covers the French life, general insurance, and asset management businesses and the (75%) shareholding in UFF (“Aviva France”). A further update will be provided with Aviva’s results on 4 March 2021, however the estimated financial impact on Aviva as at 31 December 2020, is:
- Increase of Solvency II capital surplus by c. £0.8bn and Solvency II cover ratio by c. 22 percentage points
- Increase of excess capital above 180% Solvency II cover ratio by c. £2.1bn and centre cash by c. £2.8bn
- Reduction in IFRS net asset value of c. £0.5bn
Aviva expects to use the increased capital and cash to support its previously communicated capital framework of debt reduction, investment for long-term growth and return of excess capital to shareholders. Part of the cash proceeds (up to £0.5 billion) will be used to accelerate repayment of some of the Group’s internal loan with Aviva Insurance Limited.
Aviva France is the largest part of the Group’s manage-for-value portfolio and has not remitted any dividends to Aviva plc in 2020. Aviva France’s core business is capital intensive and this transaction will reduce the volatility in the Group’s solvency ratio by removing exposure to interest rate risk from the Eurofonds guaranteed life insurance product.
As part of the transaction with Aéma Groupe, Aviva has agreed to customary warranties and indemnities. This includes a specific indemnity agreement in respect of the ‘known price’ contracts, written by Abeille Vie between 1989 and 1997, that would share the risk in the unlikely scenarios of certain costs in respect of these contracts rising above Aviva France’s already appropriate existing provisions. This will have a negligible impact on Aviva’s solvency position.
The transaction is subject to consultation and customary conditions, including regulatory approvals, and is expected to complete by the end of 2021.
Aéma Groupe is a leading French mutual insurer, with 8m customers, revenues of over €8bn and €7.4bn of equity, created in January 2021 as the result of the combination of Aésio and Macif. Customers and agents of Aviva France will continue to receive the same high quality of service from the business and there is no impact to customer policies as a result of this announcement. Management and employees of Aviva France will transfer with the business, which is planned to operate as a standalone autonomous entity within the Aéma Groupe, ensuring continuity of service.