Aviva sells Asian GI business

Aviva PLC
07 September 2004


News release

7 September 2004

             AVIVA TO SELL ITS GENERAL INSURANCE BUSINESSES IN ASIA
                          TO MITSUI SUMITOMO INSURANCE


•  Aviva to sell its general insurance businesses in Asia to Mitsui
   Sumitomo Insurance

•  Total cash consideration of £249 million (US$450 million)


Following a strategic review of its businesses in Asia, Aviva plc ('Aviva') is
to focus on its long-term savings businesses in the region.  Aviva therefore
announces that it has entered into an agreement to sell its general insurance
operations in Asia (the 'Businesses') to Mitsui Sumitomo Insurance Co Ltd 
('MSI'), the second largest general insurer in Japan, for £249 million (US$450
million) in cash.


Aviva will retain and develop its long-term savings operations in the region,
which operate under the Aviva brand and have a separate management team,
platform and distribution networks to the Businesses.


Under the terms of the agreement, MSI will acquire all of Aviva's general
insurance businesses in Asia.  These comprise the general insurance business of
Aviva Limited and the general insurance assets of Aviva Asia Pte Ltd in
Singapore; Aviva Insurance Berhad in Malaysia (including its branch in Brunei);
Aviva Insurance (Thai) Co Ltd in Thailand; P.T. Aviva Insurance in Indonesia;
Dah Sing General Insurance Co Ltd in Hong Kong; and Aviva's branch operations in
Hong Kong, the Philippines, Marianas, Macau and Taiwan. The transaction will be
achieved through share purchase of Aviva's interests in joint venture
operations, business purchase and asset purchase in Singapore, and transfer of
Aviva's general insurance branch operations in Hong Kong, Philippines, Marianas,
Macau and Taiwan.


In the twelve months ended 31 December 2003, the Businesses reported gross
premiums written of £173 million (US$283 million), operating profit attributable
to Aviva before tax of £21 million (US$35 million) and a combined operating
ratio 91%. As at 31 December 2003, the Businesses had net assets of £44 million
(US$79 million) (based on 31 December 2003 exchange rates) and a letter of
credit in relation to Hong Kong of £27 million (US$48 million) for which MSI
will make its own arrangements on completion.


The sale is expected to complete in a number of territories by the end of 2004,
with the remaining following thereafter. It is subject to the regulatory process
and approval by the other shareholders of the Businesses. Had the sale of the
Businesses been completed on December 31, 2003, it would have resulted in an
estimated increase in Aviva's reported net asset value per share of 7 pence to
509 pence.


Richard Harvey, group chief executive said:


'This is an excellent deal for Aviva's shareholders. The price is equivalent to
approximately 2% of our market capitalisation. In contrast, the Businesses
account for 1.1% of Group operating profit.


'It is also a very good deal for staff. MSI is committed to maintaining the
existing operating structure and will run the Businesses as a separate division,
complementing its current focus on Japanese customers in the region.


'We remain fully committed to further developing our long-term savings business
in the region. We have established a strong platform in Singapore and Hong Kong
and have developed businesses in the emerging and rapidly growing life insurance
and long-term savings markets in India and China.  We will continue to increase
our focus and resources into the region, which represents a significant
long-term growth opportunity for us.'

                                    - ends -


Enquiries:


Analysts/Investors:

James Matthews, head of investor relations                 [phone]


Media in Asia:

Joyce Koh, brand and communications manager                [phone]


Media outside Asia:

Hayley Stimpson, director of external affairs              [phone]

Rob Bailhache, Financial Dynamics                          [phone]



Notes to editors:


Information on Aviva's general insurance businesses


Aviva has one of the largest general insurance networks in Asia with operations
in Singapore, Hong Kong, Malaysia, Thailand, Indonesia, Philippines, Marianas,
Macau, Brunei and Taiwan. It is also a leading provider of property and cargo
insurance in the region. In addition, Aviva has bancassurance distribution
networks in the region with leading regional banks, such as Development Bank of
Singapore and Standard Chartered Bank.  Aviva's businesses in Singapore, Hong
Kong, Malaysia and Thailand accounted for over 96% of its gross written premiums
in the region in 2003.


For the 12 months ended in December 31, 2003, total net written premiums from
the Businesses were £133 million (US$218 million), COR of 91% and operating
profit attributable (before tax) to Aviva of £21 million (US$35 million). The
net written premiums and operating profit achieved accounted for 1.6% of Group
general insurance net written premiums and 1.1% of Group operating profit before
tax for the twelve months ended 31 December 2003 as well as for 0.6% of Group
net assets as at 31 December 2003. The regional headquarters are in Singapore,
with approximately 1,400 employees across the region as at 31 December 2003.


Information on long-term savings operations to be retained and developed in Asia


Aviva is retaining its long-term savings businesses in Asia.  These include:


•  Singapore: Aviva entered the Singapore life market in July 2001 through
the acquisition of the former Insurance Corporation of Singapore.  Since then
the company has grown to be the third largest provider of long-term regular
savings products.  Aviva Singapore's successful bancassurance partnership with
DBS Bank commands more than a 50% market share of the regular savings
bancassurance market.  It is also a market leader in both the third party
advisory firms market and employee benefits and healthcare segments.


•   Hong Kong: Aviva Hong Kong started operation in July 2002. The company
has a strategic partnership with DBS Bank which is the main distribution channel
and has achieved significant growth in the last two years.


•   India: Trading as Aviva Life Insurance, Aviva's Indian operation is a
joint venture with the Dabur Group, one of India's oldest and well-respected
business houses.  Since its establishment in June 2002, Aviva has pioneered
bancassurance via arrangements with four leading private and nationalized banks
in India - Lakshmi Vilas Bank (220 branches with a 2 million customer base),
Canara Bank (2,450 branches with 27 million customers), ABN AMRO Bank and
American Express Bank


•   China: Aviva set up its life insurance business in Guangzhou, China in
January 2003 through forming a joint venture partnership with China Oils and
Foodstuff Co. (COFCO). Aviva has also recently received licences to open
branches in Beijing and Chengdu later this month. Aviva and Bank of China
recently agreed to offer bancassurance in the Guangdong Province


Financial effects of the transaction


(1)   Subject to completion, the increase in net asset value per
share related to the sale of the Businesses to be reported in the Group's
financial statements for the year ended 31 December 2004 will differ from the
estimated 7 pence per share stated above. This will reflect:



(i)   Fluctuations in exchange rates; and

(ii)  Transaction costs associated with the disposal of the
Businesses.

(2)   Financial Reporting Standard 10 (FRS 10) requires that
goodwill arising on acquisitions be taken into account when calculating the
profit/loss on disposal of a business. Accordingly, the pre-tax accounting
profit/loss on sale to be reported within the Group's financial statements for
the year ended 31 December 2003 will be calculated after deducting acquired
goodwill carried on the balance sheet of £7 million.


Information on Mitsui Sumitomo Insurance Co Ltd


Mitsui Sumitomo Insurance Co Ltd ('MSI') is a leading general insurer in Japan
with a market capitalisation of JPY1,677 billion (US$15.2 billion). MSI provides
a wide range of property and casualty insurance products, primarily offering
cargo, marine and transportation, motor, fire, medical and personal accidents
insurance.


MSI has built an extensive regional footprint with operations in SouthEast Asia,
Hong Kong, China and South Korea.

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