Aviva is to sell its operations in Poland to Allianz for €2.5bn ($2.95bn) in cash, as the company reduces its focus on Europe and overhauls its overseas units under CEO Amanda Blanc.
The transaction values Aviva Poland at €2.7bn and comprises Aviva’s interests in life insurance business in Poland and Lithuania as well as its Polish general insurance, asset management and pensions businesses.
The Aviva Poland business to be sold also includes the insurer’s 51 percent shareholding in life and general insurance joint ventures with Santander.
London-listed Aviva expects the deal to bolster its financial strength, boosting excess capital by £1.5bn ($2.1bn) and its Solvency II cover ratio by 13 percentage points.
In 2020, Aviva Poland’s profit after tax was £130mn. The IFRS gross assets and net assets value of Aviva Poland were £3.9bn and £0.4bn respectively as at 31 December 2020.
The all-cash consideration represents 16.9x IFRS profit after tax, 5.7x IFRS net asset value and 2.3x Solvency II Own Funds.
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.
The divestment of Aviva Poland is the eighth transaction the firm has announced in the past eight months, and concludes the planned refocus of the group’s portfolio.
The transaction follows Aviva’s announcement last month that it is to sell its Turkish units to Ageas for £122mn and sell its operations in France to mutual insurer Aéma Groupe for €3.2bn.
Aviva will now focus on its strongest businesses in the UK, Ireland and Canada, where it sees strong growth potential.
Aviva CEO Blanc said: “The sale of our Polish business is an excellent conclusion to the refocusing of our portfolio announced just eight months ago. The sale of our eight non-core businesses will generate total cash proceeds of £7.5bn.
“We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential,” the executive continued.
Blanc – who took the helm in July 2020 – set out the need for “bold changes” shortly after joining the carrier and hinted her strategy could include exiting its sub-scale European and Asian markets as they will be “managed for long-term shareholder value”.
The well-respected UK insurance executive, who left Zurich in 2019 after disagreements with group CEO Mario Greco, has promised to make the “difficult choices necessary” to sharpen the group’s focus and improve its fortunes.