PROCEEDS FROM SALE OF AUS LIF

RNS Number : 2492U

Aviva PLC

22 June 2009

 



22 June 2009

AVIVA REALISES PROCEEDS From SALE OF AUSTRALIAN LIFE BUSINESS OF 

A$925 million

• Aviva to sell Australian life business and wealth management platform to National Australia Bank 

• Total cash proceeds of A$925 million (£452 million)

• Total cash proceeds represent 16 times 2008 net earnings 

• Provides increased financial flexibility and improves IGD surplus by £0.4 billion 

Aviva plc ('Aviva') announces that it is to sell Aviva Australia Holdings Ltd, its Australian life and pensions business and wealth management platform ('Aviva Australia') to National Australia Bank ('NAB').  

The expected proceeds of A$925 million (£452 million) comprise A$825 million cash consideration from NAB on completion, with a further amount of A$40 million representing a dividend to be paid by Aviva Australia prior to completion, and a forecast amount of A$60 million representing a net asset adjustment to be paid post completion.   

The sale supports Aviva's strategy of focusing on the key growth markets in Asia where leading positions can be achieved. The decision to sell these businesses is based on the belief that it would be challenging to reach a leading position in Australia in the foreseeable future in an increasingly consolidated market.  Aviva currently ranks ninth in the life market and its wealth management platform is ranked eighth. 

Andrew Moss, Aviva CEO said: 'This transaction realises excellent value for Aviva shareholders at around 16 times 2008 net earnings and demonstrates the underlying value of our business. It gives us greater financial flexibility and we can redeploy the capital to other markets which we believe will deliver better returns to our shareholders over the next few years.'  

Simon Machell, CEO Asia Pacific, Aviva, said: 'I am delighted that National Australia Bank will acquire Aviva Australia. Looking ahead, we will focus on the significant long-term growth markets of Asia, in particular, China and India. Here we have quickly developed strong market positions and have become the second largest foreign life insurer in China in just six years.'

Aviva Investors' Australian operation was not part of the sale process. As a global asset management business Aviva Investors remains committed to the Australian market where it is focused on building its external funds under management, benefiting from the growth of the pensions market. 

The sale is subject to regulatory approval and is expected to close in the third quarter of 2009.  

The proceeds will be retained by the group and are expected to enhance the group's IGD surplus by approximately £0.4 billion, compared to 31 March 2009. In 2008, Aviva Australia contributed 2.6% to group IFRS operating profit and 2.3% to embedded value on an MCEV basis. Aviva Australia generated an IFRS net profit after tax of £28 million, and contributed £335 million to group IFRS net assets and £2.3 billion to group IFRS total assets for the year ending 31 December 2008. 

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Enquiries:

Media (UK)

Hayley Stimpson, external affairs director                         [phone]

Conor McClafferty, Finsbury                                              [phone]

Media (Australia)

Amanda Lee, FD Third Person                                          [phone]

Analysts

Charles Barrows, investor relations director                     [phone]

Jessie Burrows, head of investor relations                        [phone]

Susie Yeoh, investor relations manager                            [phone]

Notes to editors:

• Total cash proceeds converted to sterling at exchange rate of A$2.05/£1.

• Aviva is the world's fifth* largest insurance group, serving 50 million customers across Europe, North America and Asia Pacific. It is the largest insurance services provider in the UK and one of the leading providers of life and pension products in Europe 

• Aviva's main business activities are long-term savings, fund management and general insurance, with worldwide total sales of £51.4 billion and funds under management of £381 billion at 31 December 2008.  

• Aviva's operations in Asia Pacific are in Australia, China, Hong Kong, India, Malaysia, Singapore, South Korea, Sri Lanka and Taiwan. 

• Aviva Investors is the global asset management business of Aviva plc with £236 billion of funds under management as at 31 December 2008. The company operates with 1,300 employees in 15 countries across Asia Pacific, Europe and North America.

• As at 31 December 2008, Aviva Australia represented A$830 million of group MCEV net assets and A$690 million of group IFRS net assets

• Aviva Australia's wealth management platform, Navigator Australia, had A$12.4 billion of funds under administration as at 31 December 2008.  

• The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive.

*based on gross worldwide premiums at 31 December 2007

 

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