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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Britain’s Aviva may exit Sri Lanka, South Korea: report

Britain’s Aviva may exit Sri Lanka, South Korea: report

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CSE.SAS

CSE.SAS
Global Moderator
May 24, 2012 (LBO) – British insurer Aviva plc, plans to sell-off its Sri Lankan and South Korean businesses, as part of a broader retreat from sub-scale Asian markets, a report said Thursday, valuing the deal at around 150 million dollars.

Aviva, Britain's second-biggest insurer, announced plans last week to sell underperforming businesses globally, a strategy aimed in part at raising money to protect against its euro zone exposure, which is bigger than that of its rivals, Reuters news wire reported.

Aviva did not specify the countries it would exit in its announcement last week.

The report said Aviva's South Korean investment in 2008 and its stake in the Sri Lankan company give it a combined value of about 66 million dollars, and some estimate the deal would be worth about 150 million dollars.

The company’s Sri Lankan unit, Aviva NDB Insurance, is under pressure from local regulators to spin-off its life and non-life business, the report said citing sources.

Citing sources, Reuters said that AIA Group Limited, Prudential plc and Manulife Financial Corp would be the most likely bidders for Aviva's stake in the Sri Lankan joint venture.

Aviva NDB Insurance generated 12.8 billion rupees (99 million dollars) in revenue last year and earned a post-tax profit of 691.6 million rupees.

The company had a market value of 36 million dollars based on Wednesday's close, which would give Aviva's 51 percent stake a valuation of 18 million dollars.

Aviva’s move also illustrates a trend among struggling European financial institutions to exit non-core operations and focus on their home markets.

Aviva has come under fire for its euro zone exposure and a share price that has plunged 38 percent in the past year. Irate shareholders forced Chief Executive Andrew Moss to quit earlier this month after determining his pay was out of line with the company's flagging performance.

The London-listed insurer needs to shore up its capital base in light of its exposure to the troubled euro zone. Aviva, which generated 40 percent of its operating profit in mainland Europe last year, has been hit harder than its main British rivals by the euro zone's woes.

Asian Pie

Aviva has operations in 10 Asian countries, mostly joint ventures. Its Asia-Pacific operations accounted for two-percent of its 2011 group operating profit.

The company entered the South Korean market in 2008, when it formed a consortium with Woori Financial Holdings Co to buy LIG Insurance Co Ltd for 73 million pounds (115.3 million dollars). Aviva holds a nearly 41 percent stake in the joint venture.

Aviva has held informal talks with Woori to sell its stake in the venture to the South Korean partner and Woori is still reviewing the proposal, one of the sources said.

Aviva is also in the process of exiting its Malaysian joint venture with CIMB and has hired Morgan Stanley to run the sale process, sources previously told Reuters.

That sale process is expected to kick off soon and CIMB has drawn up a list of six insurers it would like to partner with, one of the sources said.

Aviva, which has also long been exploring the sale of its loss-making Taiwan business, has identified China and Indian among its core markets in Asia. It is also exploring the sale of its American operations, estimated to the worth 1 billion pounds (1.6 billion dollars).

Aviva's retreat from Asia is part of a broader move by struggling European financial institutions that are pulling out of the region to focus more on their businesses at home.

Earlier this year, British lender Royal Bank of Scotland plc sold part of its investment banking operations to CIMB, while ING is in the process of selling its Asian life insurance and asset management business.

While weaker insurers are exiting the region, those with stronger positions such as AIA and Prudential are aiming to consolidate their positions in various Asian markets.
http://lbo.lk/fullstory.php?nid=1831962078

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Interesting.. and we have some old threads.. and once Aviva NDB denied this rumor.
http://forum.srilankaequity.com/t4371-aviva-denies-exit-rumors?highlight=aviva+ndb
http://forum.srilankaequity.com/t3574-aviva-ndb-insurance-ctce-for-sale?highlight=ndb+aviva
http://forum.srilankaequity.com/t4197-cdic-rally-amidst-aviva-exit-talks?highlight=ndb+aviva

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