Aviva plc (LON:AV.) is offloading its loss-making Friends Provident International Ltd (FPIL) business to a subsidiary of International Finance Group Ltd for £340mln.
The UK insurance giant said the sale of FPIL, which provides life assurance and investment products in Asia and the Middle East, will allow it to focus on its more profitable core businesses.
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FPIL made a post-tax loss of £2mln last year. The business is being sold to RL360 Holding Company Limited, owned by International Finance Group.
“Following a strategic review of FPIL, Aviva has concluded that the business is not central to the group's strategy to focus on a small number of markets where it has scale and profitability or a distinct competitive advantage,” Aviva said in a statement.
“The sale of FPIL will allow Aviva to further reallocate capital to businesses that can achieve leading market positions and deliver superior returns.”
Aviva expects to book a £130mln loss on the disposal, reflecting the intangible assets held on its balance sheet related to its acquisition of FPIL in 2015. But the deal will boost Aviva’s capital surplus by about £100mln, which will support dividend payments.
The total consideration includes a £310mln payment on completion and a deferred £30mln worth of shares in International Financial Group.
The deal represents a multiple of 3.2 times FPIL’s 2016 net asset value.
Shares rose 0.07% to 527.50p in morning trading.
Aviva has been scaling back overseas, having sold stakes in bancassurance ventures in France and Spain earlier this year.
In February, French bank Credit du Nord, paid €500mln to buy out Aviva’s holding in Antarius, a bancassurance joint venture owned by the two companies.
In May the group sold interests in two bancassurance operations and a life business to Santalucia, raising €475mln.