Aviva Sells Russian Unit for Cash as Insurer Joins U.K. Exodus
Aviva Plc (AV/), the second-biggest U.K. insurer by market value, sold its Russian unit as it scales back globally, becoming the third British financial company to retreat from the country in two years.
Blagosostoyanie, a private Russian pension fund, agreed to pay 35 million euros ($46 million) in cash for Aviva Russia, the London-based insurer in a statement e-mailed today. Andrey Dubinin, who led the unit since its entry into Russia in 2005, quit in May to join UBS AG (UBSN) in Geneva as a wealth manager.
“This transaction builds on the progress we have made to narrow Aviva’s focus,” Chief Executive Officer Mark Wilson said in the statement. The sale gives Aviva a “modest premium” to book value, according to the statement.
Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) both sold their retail banking operations in Russia in the past two years after failing to compete with state-run OAO Sberbank and VTB Group. Aviva Chairman John McFarlane has pledged to exit 16 businesses that tie up 6 billion pounds ($9.1 billion) of capital as he seeks to build up reserves depleted by Europe’s sovereign debt crisis.
Aviva’s capital has been hurt by the crisis more than any other U.K. insurer because it gets 40 percent of its life insurance operating profit from the euro region and holds more euro sovereign debt than competitors, according to data compiled by Bloomberg. In December, Aviva sold its U.S. life unit to Athene Holding Ltd. for $1.8 billion and its share of Spanish venture Aseval for 603 million euros to Bankia SA.
Moscow-based Blagosostoyanie, or Wellbeing in Russian, has about 6.4 billion euros of assets, making it one of Russia’s largest non-state pension funds, according to today’s statement. The deal, which is subject to the approval of Russia’s Anti-Monopoly Service, is expected to complete in the first half of 2013, according to statement.