Aviva has agreed to sell its entire stake in its Italian joint venture (JV) Avipop Assicurazioni, which includes its subsidiary Avipop Vita, to Banco BPM for €265m.
The transaction involves the disposal of a controlling shareholding (50% plus one additional share) in the JV.
Banco BPM was formed following the merger of Banco Popolare and Banca Popolare di Milano and started to operate on 1 January 2017.
This agreement follows a notification received by Aviva of Banco BPM’s intention to not renew its distribution agreement with Aviva and Aviva’s subsequent decision, announced on 25 August 2017, to exercise its put option.
In 2007, Aviva entered into a bancassurance partnership with Banco Popolare to secure general insurance.
As is customary in bancassurance arrangements, the original agreement between Aviva and Banco Popolare included an option for Aviva to sell its entire shareholding to the bank in the event of a termination of the distribution agreement.
The consideration represents 27.1 times Aviva’s share of 2016 earnings after tax4 and approximately 1.1 times Aviva’s share of the IFRS net asset value5 of the business. The transaction increases Solvency II capital by approximately £0.2bn.
The transaction is subject to regulatory approval and is expected to complete in 2018. Aviva’s other Italian operations are unaffected by this transaction.
At full year 2016 Aviva Italy ranked as the 7th largest insurance group in Italy benefiting from well-diversified distribution including partnerships with UBI Banca, Unicredit, Banca Popolare di Bari, a strong and growing franchise with IFAs and a distribution network of over 500 multi tied agents.