Oct. 3 (Bloomberg) -- Aviva Plc rallied to a two-week high in London trading after it sold its U.S. business to Apollo Global Management LLC for a higher-than-expected $2.6 billion.
The stock climbed 1.4 percent to 413.1 pence, the highest level since Sept. 19, extending gains this year to 11 percent. Aviva said in December that the life-insurance and annuities business was priced at $1.8 billion when the companies agreed the deal.
“The additional $800 million of unexpected cash further de-risks Aviva’s financial position,” Jon Hocking, an analyst at Morgan Stanley in London with an overweight rating, said in a note to clients. It “modestly adds to solvency ratios, but more importantly will materially improve the cash position.”
Aviva, the U.K.’s second-largest insurer by market value, is rebuilding reserves depleted by the financial crisis. Chief Executive Officer Mark Wilson, who succeeded Andrew Moss this year, is eliminating jobs and cutting costs as the company shrinks a 5.1 billion-pound ($8.3 billion) internal loan.
“The sale of the U.S. business is another milestone for Aviva,” Wilson said in a statement. It “is a step toward our goal of creating a business focused on cash flow and growth,” he said.
Apollo’s Athene Holding Ltd. said it paid $1.55 billion for the Aviva unit, while the U.K. insurer said it gets $2.3 billion after a $290 million loan repayment. The higher-than-expected proceeds are tied to earnings and other financial results in the period from June 30, 2012, to Sept. 30, 2013, Aviva said.
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