HONG KONG • German insurer Allianz, Nippon Life and MS&AD Insurance are vying with rivals to buy the Singapore and Vietnam businesses of Britain's Aviva in a deal likely to be worth up to US$2.5 billion (S$3.5 billion), sources said.

Canada's Sun Life Financial is also among roughly half a dozen suitors competing for the businesses, said the people with knowledge of the matter.

The combined deal value for the businesses is estimated to be between US$2 billion and US$2.5 billion, they said, adding that talks were at an early stage and terms could change.

Asia's fast-growing economies and its relatively low number of insured people make the region a promising market for global insurers, but some have struggled to scale up in the face of tough competition from larger regional players.

Aviva, Allianz, Nippon Life, MS&AD and Sun Life declined to comment.

Sources said last week was the deadline for the first round of formal bids in a transaction that Aviva aims to finalise by the year end.

The names of the potential buyers and the specifics of Aviva's planned divestment in Asia have not been previously reported.

In his first interim results since being appointed Aviva chief executive in March, Mr Maurice Tulloch announced last month a review of its Asian operations.

Aviva runs six Asian businesses - China, Hong Kong, India, Indonesia, Singapore and Vietnam. The company's Asian operations posted a 25 per cent rise in operating profit to £284 million (S$488 million) last year, according to its annual report.

In Singapore and Vietnam, Aviva runs wholly owned businesses, with Singapore contributing nearly half of the Asian businesses' operating profits.

One source said that since Aviva was not combining its other smaller Asian businesses in this sale process, interest in the two assets was strong and strategic buyers could end up paying more than US$2.5 billion.

The latest move comes after Aviva unveiled hundreds of job cuts globally in June and overhauled its United Kingdom business.

REUTERS