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Aviva weighing options for Asian unit including sale: sources

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Aviva plc is considering options for its Asian business including a possible divestment of the unit as its new chief executive officer seeks to overhaul the British insurer, people familiar with the matter said.

[HONG KONG] Aviva plc is considering options for its Asian business including a possible divestment of the unit as its new chief executive officer seeks to overhaul the British insurer, people familiar with the matter said.

The Asian assets could be valued at about US$3 billion to US$4 billion and a formal process could kick off later this year, the people said, asking not to be identified because the deliberations are private. While Aviva is exploring options with potential advisers, the discussions are at an early stage and no final decisions have been made, they said.

Several rival insurers have signalled interest in the business, though some potential bidders would only want to acquire parts of the division, the people said. A representative for Aviva declined to comment.

Aviva's shares closed 0.9 per cent higher at 409.60 pence in London on Thursday after earlier jumping as much as 3.7 per cent, the biggest intraday gain in more than eight weeks. The company is scheduled to report its half-year financial results on Aug 8.

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Chief executive officer Maurice Tulloch, who took over in March, has said he's going to cut expenses by £300 million (S$500.1 million) a year and cut 1,800 jobs by 2022. It's an attempt to re-inject growth in the company and lower debt. Rivals have done better by concentrating on life and pensions rather than general insurance.

Mr Tulloch, 50, said in June that he's "determined to crack Aviva's complexity, an issue which has held back our performance for too long". He's said he'll unveil the rest of his strategy in November.

"It seems likely that Aviva would need to invest significantly in Asia to grow its business," said Kevin Ryan, an analyst for Bloomberg Intelligence. "It would not be a surprise if the Asian business was sold, especially if Aviva had received an approach for it."

UK-based Aviva has about 52 per cent of its customers outside of its home market. The company has 885,000 clients in Singapore as well as strategic investments working with local partners in China, Hong Kong, Indonesia, Vietnam and India, according to its website.

Operating profit in Asia rose to £284 million in 2018 from £227 million a year earlier, Aviva said in its last annual report. Life insurance products were responsible for the increase, while the loss on general and health insurance widened.

A sale of Aviva's Asian operations would add to the US$8 billion announced insurance deals in Asia-Pacific this year, according to data compiled by Bloomberg. Those include FWD Group Ltd's $3 billion purchase of the life insurance operations of Thailand's Siam Commercial Bank Pcl.

BLOOMBERG