16th Apr 2014 07:58
LONDON (Alliance News) - Aviva PLC Wednesday said it has moved to further simplify its Italian business, building on the sale of its stake in Eurovita, by agreeing changes that will restructure its life joint ventures in the country in a transaction that that will require a GBP25.0 million balancing payment.
Aviva Italy has been simplifying and consolidating its core partnerships, and exiting non-core businesses since 2012. It is now focused on growing non-life and life protection and developing further its retail distribution.
In November 2013, Aviva agreed a deal to sell its entire 39% stake in Italian life insurer Eurovita Assicurazioni SpA to US private equity investor JC Flowers for EUR33.0 million in cash.
In a statement Wednesday, Aviva said it has agreed with UBI Banca Scpa and UniCredit SpA to restructure the life joint ventures. The insurer's current structure in the country is complex. It has two joint ventures with UBI Banca. Aviva owns 50% of one of those joint ventures, while the other is 50%-owned by Aviva Spa, its joint venture with UniCredit. In addition, Aviva owns minority equity stakes in three of UBI Banca's subsidiary banks.
As part of the restructuring, Aviva will increase its holding to 80% of the joint ventures that offer products to UBI Banca customers, with UBI Banca owning 20%.
Aviva said it will extend its distribution agreement with UBI Banca by five years to 2020, focused on savings and life protection products.
Under the plans, Aviva SpA will also sell the minority equity investments to UBI Banca, decoupling the indirect relationship between UniCredit and UBI Banca.
Aviva SpA, in which Aviva will retain a 51% stake, will enter a new five-year distribution agreement with UniCredit offering selected products, and increased capital efficiency. Aviva said it will make a GBP25.0 million balancing payment to fund the transaction, which it expects to be "broadly neutral" to its economic capital and International Financial Reporting Standards net asset value.
Morgan Stanley acted as financial advisor to Aviva in the transaction, which is subject to customary approvals.
"This is an important step in the turnaround of our Italian business. Together with the sale of our stake in Eurovita, this transaction will simplify the structure of Aviva in Italy, increase value of new business and improve our capital efficiency," Aviva Europe Chief Executive David McMillan said in a statement.
Aviva shares were Wednesday quoted at 497.00 pence per share, up 1.14%.
By Samuel Agini; [email protected]; @samuelagini
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