General Insurance Article - Aviva announce sale of Spanish joint venture holding

 Aviva has announced the sale of its holding in its joint venture CxG Aviva to Novacaixagalicia Banco(NCG Banco) for E287m(£226m) in cash. The transaction results from a decision by the Arbitration Tribunal in Madrid which concludes legal proceedings between Aviva and NCG Banco.

 The Tribunal has determined a breach by NCG Banco of its shareholder agreement with Aviva following the merger of Caixa Galicia and Caixa Nova into Novacaixagalicia in December 2010, and the bank's subsequent restructuring in 20112.

 The consideration represents a multiple of 25 times CxG Aviva's 2013 operating earnings. Cash proceeds will increase Aviva's group liquidity by £226m, and will be used for general corporate purposes. The transaction will increase Aviva's IFRS net asset value by approximately 4 pence per share and economic capital surplus by approximately £0.2bn as at HY 2014. In 2013 CxG Aviva contributed IFRS operating profit of £27m.

 David McMillan, ceo Aviva Europe, comments “This is a good outcome for Aviva which reflects the strong agreements we have in place. We remain focused on maximising returns from our Spanish business in a recovering economy, where we have strong partnerships with leading regional banks, as well as agency and broker distribution.”

 The transaction is expected to complete by the end of 2014 and is subject to regulatory approvals in Spain. Aviva's joint ventures with Banco Mare Nostrum, Banco CEIIS, Unicaja and Pelayo Seguros, and agency distribution unit Aviva Vida y Pensiones are unaffected by this ruling.