Aviva to buy AIG’s UK protection business for £460m
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
Aviva has agreed to acquire AIG Life Ltd, the UK protection business of AIG’s subsidiary Corebridge Financial, for £460m in cash.
Aviva’s group chief executive Amanda Blanc said the acquisition brings “significant strategic and financial benefits” to the insurer: “It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth.”
Aviva said the asset complements its protection businesses, and that the combined business “will create a more efficient platform from which to serve existing and new customers”.
It is not clear whether the transaction will result in job cuts. Aviva’s Blanc said: “We look forward to welcoming our new customers and colleagues to Aviva.”
The transaction, which is being funded through Aviva’s internal resources, is expected to yield “low-teens” of internal rate of return to the insurer, including integration and restructuring costs. Aviva holds a Solvency II shareholder cover ratio of 202% as at 30 June but anticipates a reduction of around 5 percentage points with the transaction.
Peter Zaffino, chairman and CEO of AIG and chairman of the board of directors of Corebridge, said the transaction helps the company streamline its portfolio to focus on the life and retirement products and solutions.
“We are confident that Aviva will continue to provide individuals and employers with the innovative service and solutions they need to protect themselves and their employees,” he said.
Established in 2014, AIG Life is the life insurance arm of Corebridge Financial in the UK, Channel Islands, Isle of Man and Gibraltar. The business provides individual and group protection products, with 1.3m individual protection customers and 1.4m group protection members. In 2022, AIG Life reported £158m of new business sales.
The deal is expected to close in the first half of 2024, subject to customary closing conditions including regulatory approvals.
JP Morgan Securities acted as financial adviser and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to Corebridge.
How will the protection business perform in the UK in the near term?
