Aviva weighing potential sale of Asian unit: Sources

HONG KONG • Aviva is considering options for its Asian business, including a possible divestment of the unit, as its new chief executive seeks to overhaul the British insurer, sources familiar with the matter said.

The Asian assets could be valued at about US$3 billion (S$4.1 billion) to US$4 billion and a formal process could kick off later this year, said the sources, who asked not to be identified.

They added that Aviva is exploring options with potential advisers, but that the discussions are still at an early stage and no final decisions have been made.

Several rival insurers have signalled interest in the business, though some potential bidders may want to acquire only parts of the division, the sources said.

An Aviva representative declined to comment.

Aviva's shares closed 0.9 per cent higher at 409.60 pence in London on Thursday after jumping as much as 3.7 per cent earlier, in the biggest intraday gain in more than eight weeks.

The company is scheduled to report its half-year financial results next Thursday.

Chief executive Maurice Tulloch, who took over in March, said he will reduce expenses by £300 million (S$413 million) a year and cut 1,800 jobs by 2022, in an attempt to re-inject growth into the company and lower debt.

Its rivals have done better by concentrating on life and pensions, rather than general insurance.

Mr Tulloch, 50, said in June that he is "determined to crack Aviva's complexity, an issue which has held back our performance for too long".

He said he will unveil the rest of his strategy in November.

"It seems likely that Aviva would need to invest significantly in Asia to grow its business," said Bloomberg Intelligence analyst Kevin Ryan. "It would not be a surprise if the Asian business was sold, especially if Aviva had received an approach for it."

United Kingdom-based Aviva has about 52 per cent of its customers outside of its home market.

The company has 885,000 clients in Singapore, as well as strategic investments with local partners in China, Hong Kong, Indonesia, Vietnam and India, according to its website.

Operating profit in Asia rose to £284 million last year from £227 million in 2017, Aviva said in its last annual report.

Life insurance products were responsible for the increase, while the loss in general and health insurance widened.

A sale of Aviva's Asian operations would add to the US$8 billion in announced insurance deals in the Asia-Pacific this year, according to data compiled by Bloomberg.

Those include FWD Group's US$3 billion purchase of the life insurance operations of Thailand's Siam Commercial Bank.

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A version of this article appeared in the print edition of The Straits Times on August 03, 2019, with the headline 'Aviva weighing potential sale of Asian unit: Sources'. Print Edition | Subscribe