Aviva has announced the sale of its 50% shareholdings in life insurance and pension joint ventures Unicorp Vida and Caja España Vida, as well as its retail life insurance business Aviva Vida y Pensiones, to Santalucía. Total consideration of the transaction is €475m (£403m).
The transaction is in line with Aviva’s strategy of allocating capital to markets where it can deliver higher returns and is part of a strategic review of its Spanish operations.
The consideration represents approximately 1.5 times Aviva’s share of the 2016 IFRS net asset value and 12 times Aviva’s share of 2016 earnings after tax of these businesses. The transaction will result in a gain of approximately £120m in Aviva’s IFRS net asset value and an increase of approximately £130m in Aviva’s Solvency II capital surplus.
The transaction is subject to regulatory and anti-trust approvals and is expected to complete in the fourth quarter of 2017.
In Spain, Aviva will continue to hold shareholdings in life insurance joint ventures with Caja Granada and Cajamurcia, both part of Banco Mare Nostrum, and Pelayo Group.
Following the restructuring of the Spanish banking system, which started in 2010, and the subsequent consolidation among Aviva’s banking partners, Aviva has taken steps to protect the value of its distribution agreements in Spain. As a result, Aviva sold its shareholdings in its joint ventures with Bankia in 2012 and Novacaixagalicia Grupo in 2014 for a combined £720m.
Aviva Chief Executive Mark Wilson said: “This is a strong outcome for Aviva. The consideration of €475m is an attractive valuation and the sale further simplifies the group. It highlights our absolute focus on allocating capital effectively across the group and further strengthens our capital and liquidity position.”