"The transaction represents a multiple of 8.4x Aviva Vita's 2019 IFRS profit after tax, 1.0x Solvency II Own Funds at 30 June 2020 and 1.2x net asset value at 30 June 20201. In addition, a subordinated loan of EUR 40 million provided by Aviva Italia Holding S.p.A. to Aviva Vita, will be repaid in full at completion.
The Transaction would increase Aviva's net asset value as at 30 June 2020 by GBP 0.12 billion, strengthen Aviva's Solvency II capital surplus by GBP 0.22 billion and increase its Solvency II coverage ratio on a shareholder basis by approximately 4 percentage points. In 2019, Aviva Vita's IFRS profit after tax was GBP 523 million and it did not pay a dividend. The gross assets of Aviva Vita were GBP 16.32 billion as at 30 June 2020.
The proceeds will be used to further strengthen Aviva's central liquidity and will be considered as part of Aviva's broader capital management and debt reduction objectives," Aviva explained.
Currently, Aviva has other three other operating insurance entities in Italy: Aviva SpA (51% owned life insurance joint venture, with UniCredit), Aviva Life SpA (a 100% owned life insurance entity) and Aviva Italia SpA (100% owned general insurance entity).
The transaction is subject to customary closing conditions, including regulatory approval, and is expected to complete in the first half of 2021.