LONDON - BRITISH insurance giant Aviva on Monday said it has agreed to sell its Australian life and pensions business to National Australia Bank (NAB) for 452 million pounds (S$1.08 billion).

'The decision to sell ... is based on the belief that it would be challenging to reach a leading position in Australia in the foreseeable future in an increasingly consolidated market,' Aviva said in a statement.

Aviva said it expected to complete the sale of Aviva Australia Holdings - which also includes a wealth management arm - in the third quarter of 2009 after passing regulatory hurdles.

Mr Simon Machell, head of Aviva's Asia Pacific region, said the sale would allow the British group to 'focus on the significant long-term growth markets of Asia, in particular, China and India.'

'It was clear that growth to a leading market position from the small base we had in Australia would be challenging due to the competitive nature of the market,' he said.

Mr Machell said Australia was 'a good market in which to dispose of assets' because it had suffered less than other developed economies during the global downturn.

NAB said the purchase would increase its presence in the life insurance market, broadening its services for high net worth clients.

'This acquisition will enhance our offering in key wealth management segments including insurance and investment platforms, adding scale, efficiency and new capabilities to our operations,' NAB chief executive Cameron Clyne said.

The deal is worth A$925 million (S$1.07 billion) on completion. Aviva Australia will initially pay Aviva a dividend of A$40 million.

Aviva will then receive a further A$825 million in cash once the sale is sealed. Finally, Aviva will be paid an additional A$60 million, representing a net asset adjustment. -- AFP