Aviva plc (LON:AV) has announced the acquisition of AIG Life Limited from Corebridge Financial, Inc., a quoted subsidiary of American International Group, Inc., for consideration of £460m. The transaction builds upon Aviva’s momentum in the protection market, where Aviva has delivered strong organic growth through an award winning2 business. Aviva’s protection business offers high quality customer propositions and continual improvements to the experience of customers and intermediaries. The acquisition positions existing AIG Life UK customers to benefit from Aviva’s expertise and financial strength.
· Aviva to acquire AIG’s UK protection business for consideration of £460m
· Supports Aviva’s strategy to grow capital-light businesses
· Accelerates Aviva’s growth in the attractive UK protection market, broadening distribution and adding 1.3m1 individual protection customers and 1.4m1 group protection members
· Delivers significant capital and expense synergies
AIG Life UK provides a full suite of individual and group protection products, with 1.3m1 individual protection customers and 1.4m1 group protection members.
Amanda Blanc, Group Chief Executive Officer of Aviva, said:
“This acquisition brings significant strategic and financial benefits to Aviva. It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the Group towards capital-light growth. We look forward to welcoming our new customers and colleagues to Aviva.”
AIG Life UK complements Aviva’s approach with a focus on innovative solutions and strong partnership distribution. The combined protection business will benefit from AIG Life UK’s successful SME and high net worth propositions and will reach more customers through AIG Life UK’s relationships with regional and corporate IFAs, as well as other key partners. The combined businesses will create a more efficient platform from which to serve existing and new customers.
The transaction, which is being funded through internal resources, delivers strong financial returns with an expected low-teens IRR (including integration and restructuring costs). As part of the transaction, Aviva will also re-capture the economics of the business that AIG Life UK reinsures internally to the wider AIG Group.
The transaction consideration represents 0.9x AIG Life UK’s Solvency II Own Funds, after adjusting for expected capital synergies. The estimated impact on the Group’s Solvency II shareholder cover ratio would have been a reduction of c.5 percentage points as at 30 June 2023.
The acquisition is consistent with our capital management framework, which remains unchanged. We continue to anticipate further regular and sustainable capital returns in the future. The transaction is subject to customary closing conditions including regulatory approvals and is expected to close in the first half of 2024.
