Aviva (AV.L) announced on Monday that it has reached an agreement to purchase the life insurance business of AIG (AIG.N) in the United Kingdom for 460 million pounds ($563 million). This will be the largest acquisition Aviva’s CEO, Amanda Blanc, has made to this point.
Aviva has announced that it will purchase the business unit from Corebridge Financial, Inc. (CRBG.N), a New York-listed firm majority-owned by AIG. The business unit in question is known as AIG Life UK.
Blanc has made it a priority to increase Aviva’s investor returns over the past three years. It has refocused the firm on its core markets by generating billions of dollars from the sale of business units worldwide.
RBC analysts said the transaction was a fair use of capital gained on a recent stake sale in Singapore Life. They added that their expectation for a 300 million pound share buyback at full-year results remained maintained despite announcing the deal.
In early trading, the price of Aviva shares fell by 0.4%.
Blanc stated that the transaction would assist in positioning the FTSE 100 firm for “capital-light growth” and boost the company’s position in an attractive market.
According to Aviva, the merger will add 1.3 million individual protection customers and 1.4 million group protection members, and the agreement’s closing is planned to take place in the first half of 2024, subject to the approval of the relevant regulatory agencies.
According to the business, the transaction would reduce about five percentage points to Aviva’s group solvency II cover ratio.
According to Peter Zaffino, chairman and chief executive officer of AIG and chairman of Corebridge, the transaction will assist in concentrating the company’s efforts on providing life and retirement products in the United States.
In 2021, when American International Group (AIG) broke out its life and retirement division and sold a section of the corporation to Blackstone for $2.2 billion, Corebridge was born out of this transaction.
In approximately September of the previous year, AIG made Corebridge public with an offering of shares that brought approximately $1.7 billion.
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