Aviva to sell Friends Provident International to RL360 Holding for £340m

INSURER Aviva plc on Wednesday said that it will sell Friends Provident International Limited (FPIL) to RL360 Holding Company, a subsidiary of International Financial Group, for a total of £340 million (S$606 million).

Following a review, Aviva said that FPIL "is not central to the group's strategy", adding that the sale will allow the insurer to further reallocate capital to businesses that can achieve leading market positions and deliver better returns.

The consideration represents a multiple of 3.2 times FPIL's 2016 net asset value.

The transaction will result in an increase of about £100 million in Aviva's Solvency II capital surplus.

It will also create an IFRS loss on disposal of about £130 million, which is primarily due to the intangible assets held on Aviva's balance sheet arising from the group's acquisition of FPIL in 2015.

In 2016, FPIL made a post-tax loss of £2 million and did not remit any cash to Aviva group.

As a result, a disposal of FPIL is expected to be positive to Aviva's cash dividend paying capacity.

The insurer added that FPIL will continue to serve customers, partners and intermediaries as usual, and there is no change to customers' policies as a result of this announcement.

The transaction is subject to customary regulatory approvals, and is expected to be completed in early 2018.