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Aviva buddies up with Friends First Life
Posted on Tuesday, 14 November 2017 12:48
Dutch company Achmea is selling Irish firm Friends First Life Assurance to insurance giant Aviva for an estimated EUR 220.00 million.
This consideration is made up of EUR 130.00 million in cash, dividend payments already collected and a variable amount, based on the target's net asset value on completion, expected in the first quarter of 2018.
Subject to customary conditions, including approvals from the relevant regulatory bodies, the purchase will increase Aviva's life policy market share in the country to 15.0 per cent, matching the firm’s existing market share in general insurance.
It will also make the buyer one of the biggest composite insurers in Ireland.
The group noted that it expected to meet its operating return on capital hurdle from the first year following completion and surpass it from then on.
For the six months ending 30th June 2017, London-headquartered Aviva reported profit after tax of GBP 716.00 million, rocketing from the GBP 201.00 million posted for the same period last year.
This improvement is partly due to returns made on divestments so far this year, which include a 60.0 per cent share of its life insurance subsidiary, a 20.0 per cent holding in Tencent Holdings and a 50.0 per cent stake in Avipop Assicurazioni.
Maurice Tulloch, chief executive of Aviva International Insurance, said: “The acquisition will enhance Aviva Ireland’s product offering and accelerate our international growth agenda.”
Achmea, the largest insurance group in the Netherlands, was established in 1811 and became the full owner of Friends First Life in 2002.
It anticipates the deal will cause a net loss of EUR 35.00 million on an International Financial Reporting Standards basis for 2017.
Chairman of the vendor’s executive board, Willem van Duin, said that the company now has a “strategic focus on non-life and health insurance,” so the target’s “activities no longer matched those of the core competencies of our group”.
Founded as Friends Provident in 1827, Dublin-based Friends First Life now has 320 employees and more than 250,000 customers.
It currently has a market share of 6.0 per cent and reported growth of 25.0 per cent in 2016.
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