British insurance major Aviva plc has sold its Polish operations to Germany’s Allianz for 2.5 billion euros ($2.94 billion) in a cash deal, completing a programme to sell European and Asian assets begun last year.
Aviva said it would now focus on its strongest businesses in the UK, Ireland and Canada where it has leading market positions and strong growth potential. The divestment of Aviva Poland is the eighth transaction Aviva has announced in the past eight months, and this successfully concludes the planned refocus of the group’s portfolio.
Aviva said the transaction that values the company at a cash consideration of 16.9 times its after-tax profit, 5.7 times its net asset value and 2.3 tmes its Solvency II Own Funds, would help realise significant value for shareholders
“The sale of our eight non-core businesses will generate total cash proceeds of £7.5 billion. We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential.” Amanda Blanc, chief executive officer of Aviva, said.
“This transaction delivers excellent value for Aviva shareholders. It is also a very positive outcome for our customers, employees and distribution partners and we are confident that Aviva Poland will continue to prosper under Allianz's ownership.”
There will be no impact on customers’ policies as a result of this announcement. Customers and distribution partners of Aviva Poland will continue to receive the same high-quality service from the business. The management and employees of Aviva Poland will transfer with the business.
Aviva expects to use the increased capital and cash to support its previously communicated capital framework of debt reduction, investment for long-term growth and return of excess capital to shareholders. The transaction is subject to customary closing conditions, including regulatory and anti-trust approvals, and is expected to complete within 12 months.
In 2020, Aviva Poland’s IFRS profit after tax was £130 million. The IFRS gross assets and net assets value of Aviva Poland were £3.9 billion and £0.4 billion, respectively. as of 31 December 2020. Aviva Investors Poland, which manages funds of Aviva Poland, will be part of the transaction. The assets under management of Aviva Investors Poland was £3.7 billion on 31 December 2020 and IFRS profit after tax in 2020 was £4 million.
Aviva Poland comprises Aviva’s interests in life insurance business in Poland and Lithuania, and its Polish general insurance, asset management and pensions businesses, including a portfolio of financial advice, digital distribution and price comparison businesses. The Aviva Poland business to be sold also includes Aviva’s 51 per cent shareholding in life and general insurance joint ventures with Santander (Santander Aviva TUnZ and Santander Aviva TU, respectively).
Allianz, which first entered the Polish market in 1997, is Europe’s biggest insurer.
“We are delighted to further strengthen visibility of the Allianz brand in Central Eastern Europe and pursue our successful growth strategy in the region,” Allianz CEO Oliver Baete said in a separate statement.
Allianz said the deal would make it the number two in central and eastern Europe in terms of operating profit. It has several other businesses in the region, including Russia and Ukraine.
In Poland, the deal will elevate Allianz to number five in gross written premium, Allianz added.