Aviva mulling sale of Asia business

| 05 Aug 2019

UK insurance giant Aviva is working with a financial adviser on a possible sale of its Asia unit, with a formal process likely to begin in the fourth quarter, reported Reuters, citing two sources familiar with the matter.

Media reports have put the value at more than US$2 billion, with Bloomberg quoting as high as $4 billion.

Aviva is reportedly exploring options, so a sale is not guaranteed. Discussions are at an early stage and no final decisions have been made.  It would depend on the outcome of a review of the business unit in Asia to be completed by the end of this quarter.

Several rival insurers have indicated interest in the business, although potential bidders may want to acquire only parts of the operations.

Aviva has six businesses in Asia: China, Hong Kong, India, Indonesia, Singapore and Vietnam. Singapore and Vietnam are the only wholly-owned businesses and Singapore contributes nearly half of the operating profit in the region.

CEO Maurice Tulloch, who took over in March, has said he’s going to cut expenses by GBP300m ($363m) a year and cut 1,800 jobs by 2022. It is an attempt to re-inject growth in the company and lower debt.

Rivals have done better by concentrating on life and pensions rather than general insurance. Likewise, for Aviva, its last annual report showed that operating profit in Asia rose to GBP284 million in 2018 from GBP227 million a year earlier, with life insurance products responsible for the increase, while the loss on general and health insurance widened.

Aviva is scheduled to report its half-year financial results on Thursday (8 Aug). More information could be made available then.

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