TIDMAV.
RNS Number : 0165Q
Aviva PLC
23 February 2021
23 February 2021
Aviva approves sale of its French Business for EUR3.2
billion*
Aviva's strategic transformation to focus on its strongest
businesses in the UK, Ireland and Canada has taken a major step
forward with the sale(1) of Aviva France to Aéma Groupe for
EUR3.2bn(2) in cash.
Key highlights:
-- Significantly strengthens Aviva's capital and liquidity with
an increase in excess capital(3) of c. GBP2.1bn and centre cash(3)
of c. GBP2.8bn
-- Realises significant value for shareholders: all cash
consideration at 0.8x Solvency II own funds(4)
-- Provides security to employees and continuity of service to customers under new ownership
Amanda Blanc, Chief Executive Officer of Aviva, said:
"The sale of Aviva France is a very significant milestone in the
delivery of our strategy. It is an excellent outcome for
shareholders, customers, employees and distributors. The
transaction will increase Aviva's financial strength, remove
significant volatility and bring real focus to the Group."
"Aéma Groupe has a strong heritage in the French insurance
industry and this transaction will propel it to a top five position
in the French market. I am confident Aéma Groupe will be an
excellent owner of Aviva France."
The transaction covers the French life, general insurance, and
asset management businesses and the (75%) shareholding in UFF(5)
("Aviva France"). A further update will be provided with Aviva's
results on 4 March 2021, however the estimated financial impact on
Aviva as at 31 December 2020, is:
-- Increase of Solvency II capital surplus(3) by c. GBP0.8bn and
Solvency II cover ratio(3) by c. 22 percentage points
-- Increase of excess capital above 180% Solvency II cover
ratio(3) by c. GBP2.1bn and centre cash(3) by c. GBP2.8bn
-- Reduction in IFRS net asset value(3) of c. GBP0.5bn
Aviva expects to use the increased capital and cash to support
its previously communicated capital framework of debt reduction,
investment for long-term growth and return of excess capital to
shareholders. Part of the cash proceeds (up to GBP0.5 billion) will
be used to accelerate repayment of some of the Group's internal
loan with Aviva Insurance Limited.
Aviva France is the largest part of the Group's manage-for-value
portfolio and has not remitted any dividends to Aviva plc in 2020.
Aviva France's core business is capital intensive and this
transaction will reduce the volatility in the Group's solvency
ratio by removing exposure to interest rate risk from the Eurofonds
guaranteed life insurance product.
As part of the transaction with Aéma Groupe, Aviva has agreed to
customary warranties and indemnities. This includes a specific
indemnity agreement in respect of the 'known price' contracts,
written by Abeille Vie between 1989 and 1997, that would share the
risk in the unlikely scenarios of certain costs in respect of these
contracts rising above Aviva France's already appropriate existing
provisions. This will have a negligible impact on Aviva's solvency
position.
The transaction is subject to consultation and customary
conditions, including regulatory approvals, and is expected to
complete by the end of 2021.
Aéma Groupe is a leading French mutual insurer, with 8m
customers, revenues of over EUR8bn and EUR7.4bn of equity, created
in January 2021 as the result of the combination of Aésio and
Macif. Customers and agents of Aviva France will continue to
receive the same high quality of service from the business and
there is no impact to customer policies as a result of this
announcement. Management and employees of Aviva France will
transfer with the business, which is planned to operate as a
standalone autonomous entity within the Aéma Groupe, ensuring
continuity of service.
In 2019, Aviva France's IFRS profit after tax was GBP293m(6) .
The gross assets and IFRS net asset value of Aviva France were
GBP91.2bn(7) and GBP2.4bn(7) respectively as at 30 June 2020. The
French asset management operations of Aviva Investors will form
part of the transaction. As at 30 June 2020, these asset management
operations had assets under management of GBP105bn(7) and generated
IFRS profit after tax of GBP33m(6) in 2019.
Notes:
1. Aviva has entered into an exclusive Memorandum of Understanding with Aéma Groupe
2. The consideration includes EUR1.1bn in respect of Aviva France's intra-group debt
3. Using estimated 31 December 2020 position and GBP/EUR FX spot rate of GBP1/EUR1.12
4. Using 30 September 2020 position and GBP/EUR spot rate of GBP1/EUR1.10
5. L'Union Financière de France, a wealth manager listed on the Paris Bourse
6. Using 2019 average GBP/EUR FX rate of GBP1/EUR1.14
7. Using 30 June 2020 GBP/EUR FX spot rate of GBP1/EUR1.10
*This announcement contains inside information. The person
responsible for making this announcement on behalf of the Group is
Kirstine Cooper (Group Company Secretary).
-ends-
Enquiries :
Media:
Andrew Reid +44 (0)7800 694 276
Sarah Swailes +44 (0)7800 694 859
Analysts:
Jakub Rosochowski +44 (0)7385 382 206
Notes to editors :
-- For information on how Aviva is helping our people, customers
and communities impacted by COVID-19 visit:
www.aviva.com/covid-19-our-response/
-- We exist to be with people when it really matters, throughout
their lives - to help them make the most of life. We have been
taking care of people for more than 320 years, in line with our
purpose of being 'with you today, for a better tomorrow'.
-- In 2019, we paid GBP33.2 billion in claims and benefits on
behalf of our 33.4 million customers.
-- Aviva is invested in our people, our customers, our
communities and our planet. We are committed to playing our role in
tackling the climate crisis. We were the first international
insurer to go operationally carbon neutral in 2006 and we are
champions of renewable energy and energy storage at our offices. We
have invested GBP6bn in green assets since 2015 and we are a member
of the UN Net Zero Asset Owner Alliance. We helped found the World
Benchmarking Alliance (WBA) which was launched in 2018.
-- Aviva is a Living Wage and Living Hours employer and provides
market-leading benefits for our people, including flexible working,
paid carers leave and equal parental leave. Find out more at
www.aviva.com/social-purpose
-- We will focus on the UK, Ireland and Canada where we have
leading market positions and significant potential. We will invest
for growth in these markets. Our international businesses in Europe
and Asia will be managed for long-term shareholder value. We will
also transform our performance and improve our efficiency. Our
transformation will be underpinned by managing our balance sheet
prudently, reducing debt and increasing our financial
resilience.
-- Total group assets under management at Aviva group are GBP522
billion (HY20) and our Solvency II capital surplus is GBP11.8
billion (Q320). Our shares are listed on the London Stock Exchange
and we are a member of the FTSE 100 index.
-- For more details on what we do, our business and how we help
our customers, visit www.aviva.com/about-us
-- The Aviva newsroom at www.aviva.com/newsroom includes links
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