Aviva PLC (LSE:AV.) has picked up AIG's UK protection business for £460 million, a deal it said would deliver “significant capital and expense synergies”.
The FTSE 100-listed insurer said the deal supports its strategy to grow capital-light businesses and adds 1.3 million individual protection customers and 1.4 million group protection members.
Aviva said the purchase, which is being funded through internal resources, will deliver strong financial returns with an expected low-teens internal rate of return.
Amanda Blanc, chief executive said: “This acquisition brings significant strategic and financial benefits to Aviva.”
“It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth.”
Aviva estimated the impact on the group's solvency II shareholder cover ratio would have been a reduction of c.5 percentage points as at 30 June 2023.
It said it continues to anticipate further regular and sustainable capital returns in the future.
The deal should close in the first half of 2024.