Aviva (AV.L) has agreed to sell its entire 80% shareholding in the Italian life insurance joint venture Aviva Vita to its partner UBI Banca for €400m (£355m, $476m).
The move comes as the insurer aims to refocus its portfolio and shore up its finances. The company said that the transaction would increase its net asset value by £0.1bn.
Customers of Aviva Vita will continue to deal with the company as usual and there is no impact to customer policies as a result of this announcement, Aviva said.
The Transaction is subject to customary closing conditions, including regulatory approval, and is expected to complete in the first half of 2021.
Amanda Blanc, chief executive officer of Aviva, said: “Our strategy is about focus and delivery.”
She added: “The sale of Aviva Vita is another important step forward as we reshape our portfolio and follows the recent announcement of the majority sale of our Singaporean business. We will continue to be decisive as we seek to transform Aviva for the benefit of our shareholders.”
Blanc, who took the helm of the FTSE 100 firm in July, pledged to speed up the sale of the company’s overseas divisions to boost its cash holding and focus on profitable units in the UK and Canada.
Aviva said the deal valued the unit at 8.4 times profit.
Aviva Vita's profit after tax was £523m in 2019, and it did not pay a dividend. The gross assets of Aviva Vita were £16.3bn as at 30 June 2020.
Analysts also speculated that the sale might help avert a widely expected slimming of Aviva’s high dividend.
Alan Devlin, at Shore Capital Markets, said that the market is expecting the dividend to be cut by about 30%, as early as Thursday when it is set to hold an investor day.
He said: “If the company can deploy the proceeds from the asset sales then the company can partially or indeed fully protect the dividend.”
Meanwhile Michael Hewson from CMC Markets said: "Today’s sale looks to be the first indication that its less-profitable businesses are likely to be sold off, with the remaining businesses in Italy as well as the France and Singapore businesses also likely to be in line.”
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