Acquires AmerUs/trade update

Aviva PLC
13 July 2006


News release



Not for release, publication or distribution, in whole or in part, in or into
the United States, Canada, Australia or Japan.



13 July 2006



AVIVA ACQUIRES AMERUS, LAUNCHES £900 MILLION EQUITY PLACING AND ANNOUNCES STRONG
                             TRADING FOR FIRST HALF


Aviva plc ('Aviva'), the world's fifth(1) largest insurance and investment
group, today announces that it has agreed to acquire AmerUs Group Co. ('AmerUs')
in a transaction recommended by the Board of AmerUs, for approximately $2.9
billion(2) (£1.6 billion) in cash, financed by a £900 million equity placing,
internal resources and external debt.

Aviva also announces a strong trading performance for the first half of the
current financial year.


Highlights



•        The acquisition of AmerUs will transform Aviva's US business,
establishing a leading position in a high-growth segment of the world's largest
savings market



•        Aviva H1 2006 EEV operating profit will not be less than £1.65 billion
(2005: £1,318 million); worldwide life and pensions sales growth is broadly in
line with Q1 (up 20% at Q1 2006); interim dividend expected to be around 10%
higher compared with H1 2005



•        AmerUs is a leader in the high-growth US equity-indexed market, ranking
#1 in sales of equity-indexed life insurance and #3 in sales of equity-indexed
annuities, with $1.6 billion of revenues and $327 million of operating income
before tax in 2005(3)



•        With earnings increasing by 27% CAGR over the last 5 years and growing
margins, AmerUs fits with Aviva's strategy of targeting profitable growth in the
US, European, and Asian long-term savings markets



•        AmerUs will be merged with Aviva USA and the combined team will be led
by Tom Godlasky, CEO of AmerUs.  The headquarters will be in Des Moines, Iowa,
and the combined business will be called Aviva



•        Aviva will pay $69 in cash per share of AmerUs, a 10% premium to the
closing price on 6 July 2006(4), which represents 12.5x the estimated earnings
per share(5),(6) of AmerUs in 2007, 1.7x the adjusted book value(7),(8) of
AmerUs (as at 31 March 2006) and 1.9x the estimated European Embedded Value7,
(9) of AmerUs (as at 31 December 2006)



•        Aviva anticipates annual pre-tax cost savings of approximately $45
million(10). Significant revenue benefits will be realised from the enhanced
distribution platform and the superior financial strength and ratings of Aviva



•        Aviva expects the transaction to be accretive to Group IFRS and EEV
operating earnings per share by 2007 and 20086,9, respectively, and to have an
annual post-tax return on investment of over 10%10,(11) by 2009



•        The acquisition will be financed partly by a £900 million underwritten
placing of new Aviva shares, further details of which are being separately
announced today, and the balance from internal resources and external debt



Richard Harvey, Group Chief Executive of Aviva said:

'I'm pleased to announce both a strong trading update and an important strategic
move to transform our US business with the acquisition of AmerUs.

'AmerUs is a well-managed, innovative and fast-growing business.  This
acquisition establishes a leadership position within a key segment of the
world's largest long-term savings market.  In a single move the combination of
AmerUs' national distribution networks and the resources and expertise of Aviva,
provides the platform for significant profitable growth in the US.'

Thomas Godlasky, Chief Executive Officer of AmerUs said:

'We are looking forward to joining forces with one of the world's leading
insurers.  With the support and financial strength of Aviva, we will be able to
further enhance the growth opportunities of our combined operations and take the
new business to the next level.'

Trading update for Aviva

The directors of Aviva expect that, for the half-year ended 30 June 2006, EEV
operating profit before tax will be not less than £1.65 billion (2005: £1,318
million) and IFRS operating profit before tax will be not less than £1.35
billion (2005: £943 million).



Aviva's life and pensions new business sales growth and margins are expected to
be broadly in line with those achieved for the first quarter of 2006. Aviva
reported life and pensions new business sales up 20% to £6,788 million on a
PVNBP basis with margins of 3.5%, in the first quarter of 2006.



Aviva's general insurance operations are expected to deliver a combined
operating ratio ('COR') below 93%, ahead of its stated target of 98%, and
reflects favourable weather related claims experience in the UK which
contributed an estimated £125 million to the underwriting performance. Aviva
reported a COR of 95% for the half-year ended 30 June 2005.



The 2006 interim dividend will be announced at the same time as the half year
results and will be an increase of around 10% compared to the 2005 interim
dividend.



Aviva will disclose its results for the half-year ended 30 June 2006 in full on
9 August 2006.



Trading update for AmerUs

AmerUs today announced its second quarter sales results for 2006:



'The company reported its annuity sales were $625.7 million, up 21 percent over
first quarter of 2006.  Sales of life insurance products were $33.3 million, up
12 percent over first quarter of 2006.



The company also reported that, while it is still working to finalize second
quarter earnings results, it believes adjusted net operating income results will
be in line with First Call mean estimates.'




NEWSWIRES:  There will be a conference call today for wire services at 07:45 hrs
(BST) on [phone] Quote: Aviva, Richard Harvey



ANALYSTS:  A conference call with investors and analysts will take place at 08:
30 hrs (BST).  The dial-in number is 020 7162 0025 for participants in the
United Kingdom and [phone] for international participants.   A
remote replay will be available for 15 days from 13 July 2006 until midnight on
28 July 2006 on [phone].  The access code for the replay is 712652.
A slide presentation and a replay of the conference call will also be accessible
on the Aviva Group website www.aviva.com later today.



Strategic rationale

The acquisition of AmerUs establishes a leading presence for Aviva in selected
high-growth segments of the US retirement and savings markets, providing an
excellent fit with Aviva's strategy.  Aviva will gain a leading position in the
fast growing equity-indexed annuity market, a core US tax-deferred savings
product, which currently represents only 13% of the individual annuity market.
In a single, financially attractive move, Aviva's US presence will expand
four-fold and will represent 9% of Aviva Group's life and pensions PVNBP in
2005, on a pro forma basis, providing further geographical diversification.



Positioned for growth in the United States



Aviva considers the US retirement and savings market to be strategically
attractive.  With an estimated $13 trillion of retirement assets, the US is
expected to continue to be the single largest savings market over the next
decade, representing more absolute growth in life and pension products than any
other region of the world.  Driving this growth is the expected retirement of
approximately 77 million 'Baby Boomers'.  These favourable demographic trends
have already contributed to increased market sales of equity-indexed annuities
from just over $5 billion in 2000 to $27 billion in 2005, representing a
compound annual growth rate of 39%.  As a result of this transaction, the
combined business will be well positioned to benefit from continued growth.



Delivering profitable growth



As a leading provider of equity-indexed life and annuity products to this market
segment in the United States, AmerUs has an enviable track record of sustained
growth, operating from an efficient and scalable platform.  Net income has
increased from $72.9 million in 2001 to $188.8 million in 2005, representing a
compound annual growth rate of 27%.  AmerUs' business model is capital efficient
with short product payback periods, and attractive new business profitability,
which delivered an unlevered IRR of 12% for annuities and 14% for life product
sales in 2005, respectively(12).



Enhanced distribution and financial strength to accelerate growth



The combination of Aviva and AmerUs is expected to offer significant revenue
opportunities.  The new company will benefit from significantly broader
distribution.  Aviva USA currently distributes its products via a network of
5,500 independent agents, specialist brokers and bank distribution agreements.
AmerUs sells its products through a broad-based distribution system with
national scale. Proprietary distribution represented 83% of its annuity sales in
2005.  Life products are marketed through diversified channels.  Aviva believes
that there is a compelling case for the new company to be rated A+ by A.M. Best,
in line with Aviva USA's current A.M Best rating, which will improve access to
additional distribution.





Management and organisation



The new combined organisation will be led by Tom Godlasky, current AmerUs CEO,
with senior management drawn from AmerUs and Aviva USA.  The management team for
the new organisation has proven industry expertise and a strong track record.
The business will be headquartered in Des Moines, Iowa, the current headquarters
of AmerUs.  The combined business will be called Aviva.



Financial impact



Aviva and AmerUs have entered into a definitive merger agreement which offers
AmerUs shareholders $69 per share in cash.  This values AmerUs at approximately
$2.9 billion2 (£1.6 billion), and represents a premium of 10% to its closing
price on 6 July 20064.



The purchase price represents 12.5x the estimated earnings per share5,6 of
AmerUs in 2007 and 1.7x the adjusted book value7,8 of AmerUs as at 31 March 2006
(both stated on a US GAAP basis) and 1.9x estimated European Embedded Value7,9
as of 31 December 2006.



The merger of AmerUs with Aviva USA is expected to generate annual cost savings
of $45 million10 before tax by 2008.  These savings will arise from the
elimination of duplicate operations and reduced corporate overhead.  Integration
costs are expected to be approximately $50 million before tax.



Aviva expects the acquisition to be accretive to IFRS and EEV operating earnings
per share by 2007 and 20086,9, respectively, including synergies.  The post-tax
return on investment is anticipated to be over 10%10,11 by 2009, based on EEV
operating earnings after tax including synergies.



Financing of the acquisition



Cash consideration for the entire share capital of AmerUs is approximately $2.9
billion2, and in addition Aviva will assume approximately $700 million of AmerUs
debt and preferred stock.  Aviva intends to raise approximately £900 million
($1.7 billion) from an underwritten placing of new ordinary Aviva shares.  The
placing represents approximately 45% of the aggregate transaction value and
approximately 5% of the issued ordinary share capital of Aviva.  The remaining
funding requirement will be sourced from Aviva's internal resources and external
debt.  Further details of the placing have been separately announced by Aviva
today.



Closing and other conditions



The acquisition, which will be effected through a statutory merger in the United
States, is subject to approval by a majority of AmerUs' common shareholders
present and voting at a meeting thereof to be convened as soon as practicable,
and certain conditions including customary insurance and other regulatory
consents.  The transaction is expected to close by the end of the fourth quarter
of 2006.



The parties have agreed that AmerUs will make a payment to Aviva of $90 million
if the merger agreement is terminated in specified circumstances, including the
withdrawal of the recommendation of the transaction by the AmerUs board, or the
acceptance of a competing bid by the AmerUs board, or the rejection of the
transaction by AmerUs' shareholders following a bid for AmerUs by a third-party.



ENQUIRIES:

Aviva plc

Andrew Moss, Group Finance Director                       [phone]
Philip Scott, Group Executive Director                    [phone]



Analysts and investors
Charles Barrows, Investor Relations Director              [phone]



Media

Hayley Stimpson, Director of External Affairs              [phone]
Sue Winston, Head of Group Media Relations                 [phone]
Rob Bailhache, Financial Dynamics                          [phone]



Financial Advisers and Brokers

JPMorgan Cazenove Limited, Lazard & Co., Limited and Morgan Stanley & Co.
Limited are acting as joint financial advisers to Aviva.  Hoare Govett Limited,
JPMorgan Cazenove Limited and Morgan Stanley & Co. International Limited are
acting as joint bookrunners and joint brokers to the Placing.



This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote for approval in any jurisdiction,
nor shall there be any sale, issue or transfer of the securities referred to in
this announcement in any jurisdiction in contravention of applicable law.  This
announcement is not an offer of securities for sale in the United States and
securities may not be offered or sold into the United States absent registration
under the U.S. Securities Act 1933, as amended, or an exemption therefrom.
There will be no public offering of securities in the United States, the United
Kingdom or elsewhere.



This announcement contains statements about Aviva and AmerUs that are or may be
forward looking statements. All statements other than statements of historical
facts included in this announcement may be forward looking statements.  Without
limitation, any statements preceded or followed by or that include the words '
targets', 'plans', 'believes', 'expects', 'aims',' intends', 'will', 'may', '
anticipates', 'estimates', 'projects', 'assumes', 'seeks', 'predicts', 'would',
'should', 'possibly', 'potential' or, words or terms of similar substance or the
negative thereof, are forward looking statements.  Forward looking statements
include statements relating to the following: (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii) business
and management strategies and the expansion and growth of Aviva's or AmerUs'
operations and potential synergies resulting from the acquisition; and (iii) the
effects of government regulation on Aviva's or AmerUs' business.


Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements.  Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof.  Aviva
disclaims any obligation to update any forward looking or other statements
contained herein, except as required by applicable law.


Appendix 1: Further Information on AmerUs Group

AmerUs Group, headquartered in Des Moines, Iowa, was founded in 1896 as a mutual
insurer.  It completed its initial public offering in 1997 and fully
demutualised in 2000. Its shares are traded on the New York Stock Exchange under
the ticker symbol 'AMH' and its website is www.amerus.com.  AmerUs has $24.7
billion of total assets and $1.7 billion of shareholders' equity, as 31 March
2006.



AmerUs offers a range of protection and accumulation products, which in 2005
contributed approximately 47% and 53% of pre-tax operating income, respectively.
The company is among the 20 largest fixed life insurers and annuity providers in
the United States, and over the past several years it has increasingly focused
its operations and capitalised on the high-growth opportunities within the
equity-indexed product space.



AmerUs is the third largest underwriter of equity-indexed annuity products in
the United States, with a market share of approximately 9% in 2005.
Equity-indexed annuities provide customers minimum guaranteed benefits from
their savings account and the potential for higher returns based on the
performance of an index, typically the S&P 500. Deposits for equity-indexed
annuity products represented approximately 91% of AmerUs' total accumulation
annuity product deposits in 2005, and have grown from $1.3 billion in 2003 to
$2.4 billion in 2005 at a compound annual growth rate of 35%.



AmerUs is the leading underwriter of equity-indexed life insurance in the United
States, with a market share of approximately 50% in 2005. Equity-indexed life
insurance provides flexible protection and savings benefits.  As with
equity-indexed annuities, customers have the potential for higher returns from
their savings fund based on the performance of an index. Sales of equity-indexed
life products represented approximately 80% of AmerUs' total protection product
sales in 2005, and have grown from $51.6 million in 2003 to $94.1 million in
2005, a compound annual growth rate of 35%.





Biography of Thomas Godlasky, Chief Executive Officer of AmerUs



Tom Godlasky is Chairman, President, Chief Executive Officer of AmerUs Group.
Mr. Godlasky joined AmerUs Group in 1995, and was appointed to the board and the
position of president and chief operating officer of AmerUs Group in November
2003.



Mr. Godlasky received a bachelor of science degree in urban and regional
planning from Indiana University of Pennsylvania and holds a master's degree in
public administration from the University of Pittsburgh. He is a graduate of
Harvard Business School's Advanced Management Program and is a Chartered
Financial Analyst.



Financial information on a US-GAAP basis extracted from AmerUs' 31 December 2005
10-K report (audited) and 31 March 2006 10-Q report (audited) is provided below.


Selected Financial Data                As of or for the Year Ended         As of or for the Three
$ in millions, except share data               December 31,                Months Ended March 31,
                                           2003       2004       2005             2005         2006
Summary Income Statement:
Total revenues                          1,653.5    1,590.1    1,615.2            353.9        470.4
Benefits and expenses                   1,384.1    1,329.8    1,303.5            282.9        340.2
Income from continuing operations         269.4      260.3      311.7             71.0        130.2
Net income from cont. operations          160.6      189.2      191.2             61.5         78.2
available to common shareholders

Net income from continuing
operations available to common
shareholders per common share:
Basic                                      4.10       4.81       4.84             1.55         2.02
Diluted                                    4.05       4.60       4.43             1.43         1.86

Dividends per common share                 0.40       0.40       0.40               NM           NM

Summary Balance Sheet:
Total invested assets                    17,984     19,186     20,037           19,153       19,773
Total assets                             21,584     23,171     24,830           23,470       24,725
Notes payable                               622        571        556              571          556
Total liabilities                        20,174     21,547     23,128           21,879       23,070
Total stockholders' equity                1,410      1,624      1,702            1,591        1,654


Appendix 2: Further Information on Aviva Group

About Aviva Group

Aviva is the world's fifth1 largest insurance group and the largest insurance
services provider in the UK. The company is one of the leading providers of life
and pension products in Europe and is actively growing its long-term savings
businesses in Asian markets, Australia and the USA. Aviva's main activities are
long-term savings, fund management and general insurance, with premium income
and investment sales from continuing operations of £35 billion and £317 billion
of assets under management as at 31 December 2005. Aviva has approximately
59,000 employees serving 30 million customers worldwide.

About Aviva USA

Aviva USA is a niche player in the US life and savings market.  Aviva USA
provides traditional, universal and term life products, as well as a range of
annuities, including equity-indexed annuities, structured settlements and wealth
transfer products. The company is headquartered in Boston, MA, has over $6.5
billion as of June 30, 2006 in assets under management and approximately 400
employees.  It distributes via a network of 5,500 independent agents and
specialist brokers and via distribution agreements with several leading banks
(Washington Mutual Inc., M&T Bank Corporation, and HSBC plc).  It has a strong
growth track record with new business premiums growing by a compounded annual
growth rate of 18% from 2000 to 2005 on a PVNBP basis.






                                   END NOTES



--------------------------


(1) Based on worldwide gross written premiums in 2005.


(2) Based on fully diluted share count of 42.7 million, as of 7 July 2006.
Assumes treasury method for PRIDES settlement.


(3) US GAAP.  Pre-tax operating income represents total revenues less benefits
and operating expenses, including $22.6 million of eliminations.


(4) Over the closing price of an AmerUs share of $62.51 on 6 July 2006, the day
before Aviva confirmed it was in discussions with AmerUs.


(5) Based on mean Thomson Financial earnings per share estimate of $5.52 for
fiscal year ending 31 December 2007; as of 6 July 2006.


(6) Save for the statements relating to the trading update for Aviva for the
first six months of 2006, which include a profit estimate in relation to that
period, nothing in this announcement should be construed as a profit forecast or
be interpreted to mean that Aviva's future earnings per share, or those of the
combined group, will necessarily match or exceed the historical published
earnings of Aviva and/or AmerUs.


(7) Based on fully diluted share count as of 7 July 2006 of 44.8 million
assuming gross method for PRIDES, and calculated pre transaction costs and other
costs related to change of control.


(8) Book value based on US GAAP, adjusted for other comprehensive income and
preferred stock.


(9) The statements that the acquisition is expected to be accretive to IFRS and
EEV operating earnings per share by 2007 and 2008, respectively, relate to
future actions and circumstances, which, by their nature, involve risks,
uncertainties and other factors. These statements do not constitute a profit
forecast and should not be interpreted to mean that earnings for that year or
any subsequent financial period would necessarily match or be greater than those
for any preceding financial period.  AmerUs does not provide EEV or IFRS
financial information, therefore all references to EEV figures and impact on EEV
and IFRS operating earnings are based on Aviva management estimates.


(10) The expected cost savings have been calculated on the basis of the existing
cost and operating structures of the Aviva and AmerUs groups.  These statements
of estimated cost savings and one-off costs for achieving them relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and other factors.  Because of this, the cost savings referred to may not be
achieved, or those achieved could be materially different from those estimated.
This statement is not intended to be a profit forecast and should not be
interpreted to mean that the earnings per share in 2006 or in any subsequent
financial period, would necessarily match or be greater than those for the
relevant preceding financial period.


(11) The basis for return on investment includes all integration and other costs
related to change of control.


(12) Allowing for capital at 325% of the NAIC Company Action Level risk-based
capital requirement.


                      This information is provided by RNS
            The company news service from the London Stock Exchange