British insurer Aviva sells US unit for £1.1 bn

British insurer Aviva has agreed to the sale of its American life insurance arm for £1.1 billion to US and Bermuda-based insurer Athene Holding.

The sale of the British insurer's US arm, which it bought for £1.8 billion in 2006, comes as the restructuring of the company gets underway following departure of chief executive Andrew Moss in May.

"The sale of Aviva USA is an important step forward in the delivery of our strategic plan. It considerably strengthens Aviva's financial position, increases group liquidity and improves our economic capital surplus whilst also reducing its volatility," said Aviva chairman John McFarlane in a statement today.

''The disposal of the US business, combined with the recent settlement with Bankia (in which it netted almost £500 million for its 50-per cent stake), represents a successful end to the year and sets us up well for 2013.''

Athene Holding is primarily issues or reinsures fixed and equity indexed annuities.
The deal would be mostly cash based, after the repayment of external debt.

The sale price is far less than the £1.8 billion that Aviva paid for the US business in 2006, but according to the insurer the deal would make it financially stronger cutting capital requirements and paring its exposure to volatile credit investments.