Aviva plc, the British insurance company, has announced its plans to sell its 25.9% stake in Singapore Life Holdings, also known as Singlife, along with two debt instruments, to Sumitomo Life Insurance Company. The deal is valued at £0.8 billion ($1 billion) and highlights the attractiveness of the Southeast Asian insurance market.
Sumitomo Life will acquire Aviva’s equity stake for £0.5 billion and the two debt instruments for £0.3 billion, solidifying its position in the Singaporean insurance landscape. This move comes as Sumitomo Life already holds a 23.2% stake in Singlife, demonstrating its commitment to the region.
Aviva’s Group CEO, Amanda Blanc, expressed optimism about the deal, stating that it further simplifies the business and allows them to focus on their trading momentum in the UK, Ireland, and Canada.
Singlife contributed £17 million to Aviva’s operating profit in 2022. The combined value of the equity stake and debt holdings added £729 million to Aviva’s net asset value as of June 30, 2023.
The transaction is expected to enhance Aviva’s Solvency II shareholder surplus by £0.4 billion and increase the Solvency II shareholder ratio by approximately 8 percentage points, while also boosting center liquidity by £0.8 billion.
Aviva’s decision to exit the Singlife joint venture aligns with its ongoing efforts to simplify its operations following its international disposal program in 2021. It is also consistent with the company’s strategy to prioritize capital-light business units. Aviva had previously divested its majority stake in Aviva Singapore to Singlife in 2020.
The proceeds from the sale will be considered within Aviva’s capital management framework and provide flexibility for reinvestments, potential mergers and acquisitions, and returning capital to shareholders as appropriate.
The transaction is subject to customary closing conditions and regulatory approvals, with completion expected in Q4 2023.
This move signifies a significant development in the insurance industry, as Sumitomo Life strengthens its presence in Singapore, while Aviva continues to reshape its global portfolio and focus on key strategic areas.
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