Aviva readies IoM’s FPI for proposed US$750m sale

Aviva readies IoM’s FPI for proposed US$750m sale
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Aviva PLC is looking to sell Friends Provident International (FPI) in a deal that could be worth up to US$750m, according to reports. 

The proposed sale of Friends Provident International comes less than two years after Aviva bought the business in April 2015, as part of a £5.6bn (US$8.8bn) deal to acquire Friends Life Group, which at the time created the UK’s largest insurance, savings and asset management company.

The Wall Street Journal said that “people familiar with the situation” at the UK-based insurer confirmed that the proposed sale of Isle of Man-based FPI was being readied.

From its Isle of Man headquarters, FPI provides life assurance and investment products to global expats and domestic high net worth individuals in Hong Kong, Singapore, United Arab Emirates and other selected markets.

Aviva said in its full-year 2016 financial report that FPI is “under strategic review”. Aviva’s gross operating profit in Asia, one of FPI’s main markets, dropped 4% year over year in 2016, compared with a 12% increase in gross operating profit globally.

A few months after it was sold to Aviva,  FPI closed its UK offshore bond market operation to new business, including Jersey and Guernsey and followed this by restricting its global operations to Hong Kong, Singapore, Dubai, South Africa and Qatar.

Pre-emptive offers

Aviva is understood to have already received a number of pre-emptive offers for the unit, although a formal bidding process hasn’t started, with Chinese conglomerates Fosun Group and HNA Group among those evaluating the unit, according to two of the people that spoke to WSJ. Goldman Sachs Group is overseeing the sale, according to “people familiar with the situation”.

All of the companies mentioned in the WSJ article declined to comment on the matter.

Overseas insurance companies are currently attractive to Chinese buyers as they can then reinvest the premiums collected without going through China’s foreign-exchange approval process, an advantage at a time during a period where China is restricting the outflow of capital.

Acquisitions 

Life Company Consolidation Group (LCCG), the owners of the former Axa Isle of Man business sold by the Axa Group and rebranded Utmost Wealth Solutions, have, as reported, previously been active in the acquisitions space admitting further deals as being likely. A spokesperson for Utmost Wealth Solutions refused to comment on suggestions that it might be interested in a bid for FPI, when asked dismissing the suggestions as “market speculation”.

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