Aviva to sell Aviva USA for US$1.8 billion
LONDON -- (Marketwire) -- 12/21/12 -- *T
21 December 2012
AVIVA TO SELL AVIVA USA FOR US$1.8 BILLION
Aviva plc ("Aviva") announces that it has agreed to sell Aviva USA
Corporation, its US life and annuities business and related asset
management operations ("Aviva USA"), to Athene Holding Ltd ("Athene"),
for US$1.8 billion (GBP1.1 billion)1. Aviva will retain the North
American asset management activities of Aviva Investors that are
focused on third parties, and Aviva plc assets outside of the USA.2
The transaction represents significant further progress in narrowing
the group's focus on businesses and markets where Aviva enjoys
leadership positions and is able to generate attractive returns with a
high probability of success. The transaction will increase Aviva's pro
forma economic capital surplus coverage ratio by 17 percentage points
to 165%3 (or the economic capital surplus by approximately GBP1.1
billion) placing the group within its target range of 160-175% of
required capital (FY11: 130%). The sale will reduce the group's credit
risk exposure by approximately 25%, and also reduce the sensitivity of
the group's economic capital results to credit spread movements by
John McFarlane, chairman of Aviva plc, said:"The sale of Aviva USA is an
important step forward in the delivery of
our strategic plan. It considerably strengthens Aviva's financial
position, increases group liquidity and improves our economic capital
surplus whilst also reducing its volatility. "The disposal of the US
business, combined with the recent settlement
with Bankia, represents a successful end to the year and sets us up
well for 2013."
Aviva will receive sale proceeds of US$1.55 billion (GBP1.0 billion) in
cash, after the repayment of external debt. Of this, an amount of up to
$250 million may be received in the form of an interest-bearing vendor
loan, repayable in cash within 12 months of completion. Cash proceeds
will increase central group liquidity and will be used for general
The transaction values Aviva USA at 7.9x 2011 US GAAP earnings5 and
0.6x US Statutory Capital Surplus at 30 June 2012. Had the transaction
occurred at 30 September 2012, Aviva's IFRS net assets would have
reduced by GBP2.3 billion to GBP9.3 billion, IFRS NAV per share would
have reduced from 397p to 318p, and MCEV NAV would have increased by
Aviva USA generated an IFRS operating profit6 of GBP223 million in 2011
and held GBP3.2 billion IFRS net assets7 and GBP39 billion IFRS total
assets as at 30 June 2012.
Athene Holding is a life insurance holding company focused principally
on the retirement market and whose business, through its subsidiaries,
is focused primarily on issuing and reinsuring fixed and equity indexed
Completion, which is subject to regulatory approvals, is expected in
Goldman, Sachs & Co. and Morgan Stanley and Co. International plc acted
as financial advisers to Aviva.
NigelPrideaux +44 (0)20 7662 0215
Andrew Reid +44 (0)20 7662 3131
Charles Barrows +44 (0)20 7662 8115
Notes to editors:
Impact of this transaction
. The group's pro forma IGD solvency surplus would have decreased by
GBP0.3 billion had the sale taken place on 30 September, however this
is offset by a GBP0.4 billion increase on the transfer of Aseval to
Bankia, announced on 18 December 2012. Taking into account both these
transactions the group's pro forma IGD solvency ratio would have been
172% compared to 165% at 30 September 2012.
. Had the transaction occurred at 30 September 2012, the accounting
loss on sale would have been GBP1.2 billion.
. The accounting loss on sale reflects the excess of Aviva USA IFRS NAV
over the proceeds received, offset by certain unrealised gains which
are required to be recognised in the group income statement upon
sale. Previously these gains had been recognised in equity only.
About Aviva USA
. Aviva USA is a provider of indexed life insurance and indexed
annuities with more than 930,000 customers and employs 1,800 people.
. In July 2006, Aviva acquired AmerUs Group Co for $69 per share in
cash, valuing AmerUs at approximately $2.9 billion (GBP1.6 billion),
Aviva also assumed approximately $700 million (GBP400 million) of
AmerUs debt and preferred stock.
. Aviva USA is headquartered in West Des Moines, Iowa and has offices
in Topeka, Kansas and Melville, New York.
. Aviva USA's CEO is Christopher Littlefield, and CFO is Brenda Cushing.
About Aviva Investors North America
. Aviva Investors is the global asset management business of Aviva.
. As of 30 September 2012, Aviva Investors North America had $82
billion in assets under management and 247 employees in Chicago,
New York, Boston, Louisville and Toronto.
. Aviva provides 43 million customers with insurance, savings and
. We are the UK's largest insurer and one of Europe's leading
providers of life and general insurance.
. We combine strong life insurance, general insurance and asset
management businesses under one powerful brand.
. We are committed to serving our customers well in order to build a
stronger, sustainable business, which makes a positive contribution
to society, and for which our people are proud to work.
. The Aviva media centre at www.aviva.com/media includes images,
company and product information and a news release archive
. For broadcast-standard video, please visit
http://www.aviva.com/media/video/. Follow us on twitter:
1 Headline price equates to cash payment of $1,550m plus retirement of
an external loan financing agreement of $257m. Total US dollar headline
price is converted to pounds sterling at GBP1/$1.62.
2 The US-based asset management operations of Aviva Investors, which
manage the funds of Aviva USA, will form part of the transaction.
Following the acquisition by Athene Holding, the associated funds will
be transferred to Athene Holding. The asset management operations of
Aviva USA had assets under management of GBP38 billion at 30 June 2012.
3 The estimated pro forma economic capital position as at 30 September
2012 includes the impact of the transfer of Aseval to Bankia, announced
on 18 December 2012. The term 'economic capital' does not imply capital
as required by regulators or other third parties.
4 Based on the Group's 30 September 2012 economic capital credit risk
5 Adjusted for loan interest to Aviva
6 Pre-tax and after adjusting for the perimeter of the transaction,
which includes the retention of Aviva Investors' US-based third party
asset management business by Aviva.
7 GBP3.2bn represents the net assets of the business including the
This information is provided by RNS
The company news service from the London Stock Exchange
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