Amanda Blanc, CEO of Aviva, said: “The sale of Aviva France is a very significant milestone in the delivery of our strategy. It is an excellent outcome for shareholders, customers, employees and distributors. The transaction will increase Aviva’s financial strength, remove significant volatility and bring real focus to the Group.
“Aéma Groupe has a strong heritage in the French insurance industry and this transaction will propel it to a top-five position in the French market. I am confident Aéma Groupe will be an excellent owner of Aviva France.”
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. Part of the cash proceeds (up to £0.5 billion) will be used to accelerate repayment of some of the Group’s internal loan with Aviva Insurance Limited.
Aviva France did not remit dividends in 2020
Aviva France is the largest part of the Group’s manage-for-value portfolio and has not remitted any dividends to Aviva in 2020. Aviva France’s core business is capital intensive and this transaction will reduce the volatility in the Group’s solvency ratio by removing exposure to interest rate risk from the Eurofonds guaranteed life insurance product.
As part of the transaction with Aéma Groupe, Aviva has agreed to customary warranties and indemnities. This includes a specific indemnity agreement in respect of the ‘known price’ contracts, written by Abeille Vie between 1989 and 1997, that would share the risk in the unlikely scenarios of certain costs in respect of these contracts rising above Aviva France’s already appropriate existing provisions. This will have a negligible impact on Aviva’s solvency position.
The transaction is subject to consultation and customary conditions, including regulatory approvals, and is expected to complete by the end of 2021.
Aviva announced Amanda Blanc as its new CEO last year.