AIA Group to acquire Sri Lankan insurer Aviva NDB for $109 million
27 Sep 2012
Pan Asian insurer AIA Group Ltd today said that it struck a deal to acquire a controlling 92.3 per cent stake in Sri Lankan insurer Aviva NDB Insurance from British insurer Aviva and Sri Lanka's National Development Bank (NDB), for $109 million.
Hong Kong-based AIA, a former unit of US insurer AIG, said it has also entered into an exclusive 20-year bancassurance agreement with NDB, one of Sri Lanka's largest financial conglomerates with a nationwide bank branch network.
Aviva Wealth Management Limited, which is also part of the proposed transaction, will be sold back to NDB.
The remaining 7.7 per cent of Aviva NDB are publicly held and traded on the Colombo Stock Exchange (CSE). As required by local laws, Aviva NDB's listing on the CSE will be retained and AIA said it would not make an offer for the remaining shares.
Mark Tucker, AIA's group CEO and president, said, ''We are delighted to be entering Sri Lanka, a country with a compelling combination of strong economic growth prospects and low existing levels of insurance penetration.''
''This acquisition will immediately establish AIA as the second largest life insurance company in Sri Lanka,'' he added.
Sri Lanka will be AIA's 16th market in Asia Pacific and further strengthens the group's position as the leading Pan-Asian insurer.
With a composite insurance licence, Aviva NDB is Sri Lanka's second largest life insurer with more than 780 employees and 3,000 agents. In the year ended 31 December 2011, Aviva NDB recorded gross written premiums of $81 million with life premiums accounting for approximately 75 per cent and non-life premiums and 25 per cent of the total premiums.
AIA said it would fund the transaction through its existing cash resources.