22nd Nov 2005 09:00
Aviva PLC22 November 2005 News release 22 November 2005 Aviva announces joint venture with AIB Aviva plc ("Aviva") today announces a new bancassurance joint venture in Irelandbetween its wholly-owned Irish subsidiary, Hibernian Group plc ("Hibernian"),and Allied Irish Banks plc ("AIB"). This will create a leading force in theIrish life and pensions market and bring further opportunities for growth inthis market. • The agreement creates a new channel for business that is complementaryto Hibernian's highly successful intermediary distribution network, by providingexclusive access to Ireland's largest retail bank with over 280 retail outletsand 1.6 million customers. • The joint venture brings together Hibernian Life & Pensions Ltd ("Hibernian Life & Pensions"), the third largest company in the Irish long-termsavings market, and AIB-owned Ark Life Assurance Company Ltd ("Ark Life"), thefourth largest. • Hibernian will own 75.01% of the new combined operation, with apro-forma estimated Embedded Value on a European Embedded Value basis for thenew operation of €1,326 million as at 31 December 2004. • Sales on an annual premium equivalent basis ("APE") from the combinedentities were €226 million on a pro-forma basis for 2004. • The management of the investments of current Ark Life policyholders,which totalled €2.6 billion as at 31 December 2004, will transfer to HibernianInvestment Managers Ltd ("HIM"), a wholly-owned subsidiary of Morley FundManagement, Aviva's UK-based fund management business. • The exclusive bancassurance distribution agreement with AIB is forfive years and may be renewed for further five-year periods up to 2031. • The vehicle for the joint venture will be Hibernian Life Holdings Ltd("HLH"). HLH is the parent company of Hibernian Life & Pensions. HLH willacquire all the shares of Ark Life from AIB in exchange for a 24.99% stake inHLH and a balancing cash payment of €195.4 million. The cash payment alsoreflects the management of Ark Life funds by HIM. A further deferred cashpayment of up to €10 million is payable subject to the fulfilment of certainperformance criteria. Philip Scott, executive director, Aviva Life International, said: "Aviva is oneof the leading providers of life and pensions products in Europe. By leveragingour extensive international experience in bancassurance we aim to become themajor player in the bancassurance market in Ireland. We are delighted to be inpartnership with AIB where the combination of our long-term savings expertiseand AIB's retail strength positions us well for future growth." Bryan Jenkins, chief executive, Hibernian, said: "This is a transformationaldeal for Hibernian. Joining forces with Ireland's biggest retail bank confirmsour position as a leading life company in Ireland. This partnership will bringus broader distribution capability, building on the already strong relationshipwe have with our broker partners. It provides us with an opportunity tosignificantly grow our life business while achieving operational economies ofscale by bringing the two companies together. The deal will offer customersgreater product choice and access to a wider range of fund options and managers,which will be available through the AIB network from mid-2006." Donal Forde, managing director, AIB Republic of Ireland, said: "Since 1991, AIBhas built an extremely successful bancassurance business through Ark Life. Thisjoint venture marks the formation of a new leading player in the life, pensionsand investments market in Ireland. In combining the proven distributioncapability of AIB with the international bancassurance experience of Aviva, webelieve that we have devised an innovative formula that will provide acomprehensive range of quality products to our customers." The new joint venture will employ approximately 800 staff. Tony O'Riordan,currently managing director of Hibernian Life & Pensions, will become managingdirector of the joint venture. Completion of the transaction is subject to the approval of the EuropeanCommission and the Financial Regulator. The deal is expected to complete in thefirst quarter of 2006. Hibernian General Insurance Limited does not form partof the transaction and remains wholly-owned by Aviva plc. - ends - Enquiries: Analysts/Investors:Charles Barrows, investor relations director +44 (0)20 7662 8115Nicole Marques, investor relations manager +44 (0)20 7662 8302 Media:Hayley Stimpson, director of external affairs (Aviva) +44 (0)20 7662 7544Sue Winston, head of group media relations (Aviva) +44 (0)20 7662 8221Kela O'Riordan, group media relations manager (Hibernian) +353 1 617 8164Rob Bailhache, Financial Dynamics +44 (0)20 7269 7200 Notes to editors: Hibernian • Hibernian is Ireland's largest composite insurer, ranked first forgeneral insurance and third for life and pensions by premiums. It is awholly-owned subsidiary of Aviva plc, one of Europe's leading insuranceproviders. • The Embedded Value of Hibernian Life & Pensions on a European EmbeddedValue basis ("EEV") was €859 million as at 31 December 2004 and the companywrote €817 million of new business on a present value of new business premiums("PVNBP") basis in the 12 months to 31 December 2004. Sales on an annualpremium equivalent ("APE") basis for the 12 months to 31 December 2004 were€126m. • The operating profit of the Hibernian Group, including Hibernian GeneralInsurance, was €282 million as at 31 December 2004 and gross assets on an EEVbasis were €10,075 million as at 31 December 2004. AIB • AIB Group is Ireland's leading financial services company with over 800offices and over 22,800 full time employees worldwide. Its activities areconducted through 4 operating divisions - AIB Republic of Ireland, AIB Bank GB &NI, AIB Capital Markets and AIB Poland (70.5% shareholding in Bank Zachodni WBKS.A.). Its main operations in the US are carried out through its interest in M&TBank Corporation in which it has a 23.3% shareholding. • At 31st December 2004, AIB Group recorded pre-tax profits of €1.43billion, with total assets of €102.24 billion Ark Life • Ark is the exclusive provider of life and pensions retail product toAIB's retail bank in the Republic of Ireland. The company distributes throughAIB's branch network of over 280 retail outlets, serving 1.6 million customers. • Ark Life was established in 1991 and has been at the forefront of thedevelopment of bancassurance within the Irish market. • The Embedded Value of Ark Life as at 31 December 2004 was €467 million(adjustments to bring this figure in line with Aviva's European Embedded Valueprinciples are not expected to change this figure materially). The company wrote€100 million of new business on an annual premium equivalent ("APE") basis inthe 12 months to 31 December 2004. • The operating profits of Ark were €55 million in the 12 months to 31December 2004 and the profit before tax was €72 million. • The gross assets of Ark were €4,779 million as at 30 June 2005. Aviva and bancassurance • Aviva is one of the leading providers of life and pensions to Europe andhas substantial positions in other markets around the world, making it theworld's sixth largest insurance group based on gross worldwide premiums. • Aviva's principal business activities are long-term savings, fundmanagement and general insurance, with worldwide premium income and retailinvestment sales from continuing operations of £40 billion and assets undermanagement of £280 billion. • The Aviva media centre at www.aviva.com/media includes corporateprofiles, images, company and product information, and a news release archive. • Aviva has significant experience in bancassurance with sales from thischannel accounting for almost 26% of the group's life and pension sales for thenine months to 30 September 2005. The group has the following majorbancassurance arrangements: - Spain: Partnerships with five leading Spanish savings banks, giving accessto 4,000 branches and approximately 10 million customers - Italy: Partnerships with UniCredit Group, Banca Popolare Italiana Group,Banca delle Marche and Gruppo BPU, and distribution agreement with a number ofsmaller banks, in aggregate giving access to over 5.5 million customers throughmore than 3,300 branches - Singapore: Partnership with DBS (Development Bank of Singapore) givingaccess to approximately 4 million customers for life and general insuranceproducts - Hong Kong: Partnership with DBS giving access to approximately 1 millioncustomers for life and general insurance products - France: Partnership with Credit du Nord which has access to 600 branchesand 1.3 million customers - India: Distribution agreements with 17 banks giving access to over 37million customers - The Netherlands: Partnership with ABN AMRO gives access to over 5 millioncustomers through ABN AMRO's nationwide network of 570 branches - UK: Partnership with The Royal Bank of Scotland giving access to more than2,200 branches and 15 million customers for life and pensions products. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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