Aviva has announced that it has reached agreements with UBI Banca S.c.p.a. and UniCredit S.p.A. to restructure its life joint ventures in Italy.
Aviva’s current structure in Italy is complex. Aviva has two joint ventures with UBI Banca: one owned 50% by Aviva, and one owned 50% by Aviva S.p.A., itself a joint venture between UniCredit and Aviva. In addition, Aviva S.p.A. owns minority equity investments in three of UBI Banca’s subsidiary banks.
The transaction is a significant simplification of Aviva’s life business in Italy. As part of the restructuring, Aviva will increase its holding to 80% of the joint ventures that offer products to UBI Banca customers, with UBI Banca owning 20%. Aviva’s distribution agreement with UBI Banca will be extended from 2015 to 2020, focused on savings and life protection products. Aviva S.p.A. will also sell the minority equity investments to UBI Banca. As a result, the indirect relationship between UniCredit and UBI Banca will be decoupled.
Aviva S.p.A., which will continue to be owned 51% by Aviva, will enter into a new five year distribution agreement with UniCredit offering selected products, and increased capital efficiency.
Aviva will make a balancing payment of approximately £25 million to fund the transaction. The transaction is expected to be broadly neutral to Aviva plc’s economic capital and IFRS NAV at completion. The transaction is subject to customary approvals.
David McMillan, CEO Aviva Europe, said: “This is an important step in the turnaround of our Italian business. Together with the sale of our stake in Eurovita, this transaction will simplify the structure of Aviva in Italy, increase value of new business and improve our capital efficiency.”
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