Aviva has completed the sale of its 50% stake in the Spanish life insurance and pension joint ventures, Unicorp Vida and Caja España Vida, and the retail life insurance business, Aviva Vida y Pensiones, to Santalucía for a total consideration of €475m.
The transaction value is 1.5 times Aviva’s share of the 2016 IFRS net asset value and 12 times Aviva’s share of 2016 earnings after tax of these businesses.
The sale has resulted in an addition of £120m to the company’s IFRS net asset value, and increased Aviva’s Solvency II capital surplus by £130m.
Aviva announced the sale of its Spanish businesses on 10 May 2017, as part of its strategy to allocate capital to markets where it can deliver higher returns.
The sale is also part of the company’s strategic review of its Spanish operations. However, Aviva continues to hold stakes in the Spanish life insurance joint ventures with Caja Granada and Cajamurcia, both part of Banco Mare Nostrum, and Pelayo Group.
Aviva has taken a series of measures to protect the value of its distribution agreements in Spain after the restructuring of the Spanish banking system, which began in 2010, and the consolidation among the company’s banking partners.
Consequently, Aviva sold its sakes in joint ventures with Bankia in 2012 and Novacaixagalicia Grupo in 2014 for a total consideration of £720m.
Aviva Group chief executive officer Mark Wilson said: “This is a strong outcome for Aviva. The consideration of €475m is an attractive valuation and the sale further simplifies the group. It highlights our absolute focus on allocating capital effectively across the group and further strengthens our capital and liquidity position.”
Image: Aviva Spain head office. Photo: courtesy of Aviva plc.