Aviva offloads Friends Provident International to wealth group
Insurer continues non-core disposals with sale of lossmaking unit to specialist RL360
Aviva has sold its lossmaking Friends Provident International unit for £340m to RL360, a specialist in offshore wealth management.
The UK insurer took control of the business, which advises clients in the Middle East and Asia, when it bought Friends Life for £5bn two years ago. But it had increasingly looked non-core, and Aviva said this year that FPI’s future was under review. FPI reported a £2m loss last year.
The bulk of Friends Life has already been integrated into Aviva.
The move is the latest in a string of disposals by Aviva as it looks to narrow its focus on a small number of core markets. It has already sold businesses in France and Spain this year, and has shaken up its Hong Kong operation by setting up a joint venture with Tencent and Hillhouse Capital.
Chris Wei, executive chairman of Aviva Asia, said the disposal was “a good outcome for Aviva”. He added: “It allows us to focus on the significant opportunities we have to grow Aviva’s business across Asia through digital and disrupting the traditional insurance industry.”
The disposal process could have further to run. Analysts at UBS pointed out on Wednesday that “other businesses remain under strategic review including India/Taiwan and Italy along with further shareholdings in Spain”.
RL360 started life six years ago as a management buyout from insurer Royal London. Following a series of acquisitions, it now has an embedded value, a measure of net assets, of about £1bn.
Aviva, which will book a £130m loss on the disposal, said the deal would add £100m to its capital surplus under Solvency II rules. It also said that the sale would improve its capacity to pay dividends.
The insurer has embarked on a £300m share buyback scheme that was announced in May, and is interested in bolt-on acquisitions. It has been an enthusiastic investor in technology companies that could be relevant to the insurance market. It recently led a £5m investment round in Neos, a home insurer which says it can detect and help prevent fire, theft and water leaks.
Barrie Cornes, analyst at Panmure Gordon, said: “FPI didn’t sit comfortably within Aviva and so it is no surprise that it is being sold . . . We view this disposal positively.”
Aviva is due to report its first-half results next month.
RL360 was advised by Fenchurch Advisory Partners. Aviva was advised by Goldman Sachs.