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Aviva sells its US business for $1.8 billion

Staff writer ▼ | December 21, 2012
Aviva announced that it will sell Aviva USA Corporation, its US life and annuities business and related asset management operations, to Athene Holding for $1.8 billion.
Aviva
AvivaAviva announced that it will sell Aviva USA Corporation, its US life and annuities business and related asset management operations, to Athene Holding for $1.8 billion.


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. The transaction, expected to be complete in 2013., represents a further progress in narrowing the group's focus on businesses and markets where Aviva is the leader and is in a position to generate attractive returns.

The transaction will increase Aviva's pro forma economic capital surplus coverage ratio by 17 percentage points to 165% (or the economic capital surplus by approximately 1.1 billion pound) placing the group within its target range of 160-175% of required capital. 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 approximately 30%.

John McFarlane"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," said John McFarlane, chairman of Aviva plc.

Aviva will receive sale proceeds of $1.55 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 corporate purposes.

The transaction values Aviva USA at 7.9x 2011 US GAAP earnings and 0.6x US Statutory Capital Surplus 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 annuities.


 

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