UK-based global insurance company Aviva has signed agreements with UBI Banca and UniCredit to restructure its life joint ventures (JVs) in Italy, as part of a strategy to simplify its operations in the country.
The life insurer said that currently it manages two JVs with UBI Banca: one owned 50% by Aviva, and one owned 50% by Aviva S.p.A., itself a JV between UniCredit and Aviva.
In addition to this, Aviva S.p.A. owns minority equity investments in three of UBI Banca’s subsidiary banks.
As per the restructuring strategy, Aviva will increase its holding to 80% of the joint ventures that offer products to UBI Banca customers, with UBI Banca owning 20%.
Furthermore, 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 divest the minority equity investments to UBI Banca, subsequently 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.
In order to fund the transaction, Aviva has agreed to provide a balancing payment of approximately £25m. The transaction is expected to be broadly neutral to Aviva plc’s economic capital and IFRS NAV at completion.
Commenting on the simplification strategy, Aviva Europe CEO David McMillan 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."
Image: St. Helen’s, Aviva’s world headquarters in London. Photo: courtesy of Colin.