Aviva plc (LON:AV) has reached a significant milestone in the execution of strategy, with the agreement to sell its entire shareholding in Aviva Poland1 to Allianz for a cash consideration of €2.5 billion, valuing the acquired business2 at €2.7 billion. Aviva will now focus on its strongest businesses in the UK, Ireland and Canada where it has leading market positions and strong growth potential. The divestment of Aviva Poland is the eighth transaction Aviva has announced in the past eight months, and this successfully concludes the planned refocus of the Group’s portfolio.
Key highlights:
· Realises significant value for shareholders: all cash consideration at 16.9x IFRS profit after tax3, 5.7x IFRS net asset value3 and 2.3x Solvency II Own Funds3
· Significantly improves Aviva’s financial strength with an increase in excess capital3,4 of £1.5 billion and Solvency II cover ratio3,4,5 by c. 13 percentage points
· Uplift in IFRS net asset value3,4 of £1.8 billion, representing a 46 pence per share increase from 31 December 2020 IFRS net asset value per share of 493 pence
Amanda Blanc, Chief Executive Officer of Aviva, said:
“The sale of our Polish business is an excellent conclusion to the refocusing of our portfolio announced just eight months ago. The sale of our eight non-core businesses will generate total cash proceeds of £7.5 billion. We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential.”
“This transaction delivers excellent value for Aviva shareholders. It is also a very positive outcome for our customers, employees and distribution partners and we are confident that Aviva Poland will continue to prosper under Allianz ownership.”
There will be no impact on customers’ policies as a result of this announcement. Customers and distribution partners of Aviva Poland will continue to receive the same high-quality service from the business. The management and employees of Aviva Poland will transfer with the business.
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. The transaction is subject to customary closing conditions, including regulatory and anti-trust approvals, and is expected to complete within 12 months.
In 2020, Aviva Poland’s IFRS profit after tax was £130 million6. The IFRS gross assets and net assets value of Aviva Poland were £3.9 billion4 and £0.4 billion4 respectively as at 31 December 2020. Aviva Investors Poland, which manages funds of Aviva Poland, will be part of the transaction. The assets under management of Aviva Investors Poland was £3.7 billion4 at 31 December 2020 and IFRS profit after tax in 2020 was £4 million6.
Notes
1. Aviva Poland comprises Aviva’s interests in life insurance business in Poland and Lithuania, and its Polish general insurance, asset management and pensions businesses, including a portfolio of financial advice, digital distribution and price comparison businesses. The Aviva Poland business to be sold also includes Aviva’s 51% shareholding in life and general insurance joint ventures with Santander (Santander Aviva TUnZ and Santander Aviva TU, respectively).
2. Comprises Aviva Poland as defined above, plus Santander’s minority shareholding in the life, general insurance and pensions businesses which is also being acquired by Allianz. This excludes the value of Santander’s 49% shareholding in the life and general insurance joint ventures, which they will retain.
3. Estimated financial impact of the transaction on Aviva as at 31 December 2020, presented in isolation from impacts of other announced transactions.
4. Using 31 December 2020 GBP/PLN FX rate of £1/5.09 and GBP/EUR FX rate of £1/€1.12.
5. As reported on a shareholder basis.
6. Using 2020 average GBP/PLN FX rate of £1/5.01 and average GBP/EUR FX rate of £1/€1.13.
*This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).
