11th Sep 2020 14:59
(Alliance News) - Aviva PLC on Friday said it has agreed to sell a majority stake in its Singapore unit in a deal which the insurer explained will bolster its finances and aid in its bid to reduce debt.
Last month, new Chief Executive Officer Amanda Blanc stamped her authority on the insurer by announcing the company would reduce its focus on Asia and Europe in a strategy shift, to instead focus on the UK, Ireland and Canada.
Aviva said it will net SGD2.7 billion, about GBP1.6 billion from the consortium of buyers, led by Singapore Life Ltd. The deal will create one of Singapore's "leading insurance companies".
"The combination brings together Aviva Singapore's scale and leading franchise with Singlife's innovative and digitally focused capabilities. In Singapore, the new business will be initially branded as Aviva Singlife," Aviva explained.
The consideration is comprised of SGD2.0 billion in cash and marketable securities, SGD250 million worth of vendor finance notes and 25% stake in the new group.
Aviva noted the deal would have strengthened its June 30 net asset value by GBP700 million, its Solvency II capital surplus by GBP500 million and "group solvency ratio on a shareholder basis by approximately 4 percentage points".
"The proceeds will be used to further strengthen Aviva's central liquidity and will be considered as part of Aviva's broader capital management and debt reduction objectives," Aviva noted.
The company expects the deal to close by January 2021.
Blanc said: "The sale of Aviva Singapore is a significant first step in our new strategy to bring greater focus to Aviva's portfolio. We have achieved excellent upfront value for shareholders but have also retained an investment in a leading Singapore life business with attractive long term growth potential. The proceeds from the sale will further strengthen our financial position and enhance our ability to meet our strategic objectives."
Aviva shares were 3.2% higher at 298.00 pence each in London on Friday afternoon.
By Eric Cunha; [email protected]
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