UK-based insurer Aviva has agreed to sell its US life and annuities business and associated asset management operations Aviva US to Bermuda-based Athene for $1.8bn.
The deal, however, will not include Aviva Investors’ North American asset management businesses, which are focused on third parties, and other Aviva assets outside of the US.
Apart from reducing its credit risk exposure by nearly 25%, the deal will boost its pro forma economic capital surplus coverage ratio by 17% points to 165%.
Aviva chairman John McFarlane said the sale is a part of group’s strategy to strengthen its financial position, increase liquidity, boost economic capital surplus and reduce volatility.
Following the repayment of external debt, the insurer will have $1.55bn in cash, of which $250m is likely to be received in the form of an interest-bearing vendor loan that is repayable in cash within 12 months of completion.
The company said the proceeds from the sale will increase central group liquidity, and will be used for general corporate purposes.
The transaction is expected to complete in 2013 following regulatory approvals.
Goldman, Sachs & Co and Morgan Stanley and Co International served as financial advisers to Aviva on the deal.
Athene, which operates as a life insurance holding company, is focused on the retirement market and offers fixed and equity indexed annuities through its subsidiaries.
Serving 43 million customers, Aviva delivers life insurance, general insurance and asset management businesses, savings and investment products.