Aviva to boost presence with £460m acquisition of AIG Life UK

Aviva plc, a leading insurance provider, has announced its strategic acquisition of AIG Life Limited, commonly known as AIG Life UK, from Corebridge Financial, Inc., a subsidiary of American International Group, Inc. (AIG). The deal, valued at £460 million, signifies Aviva‘s commitment to fortifying its presence in the protection market, where it has already demonstrated robust organic growth and garnered acclaim for its customer-centric approach. This move positions existing AIG Life UK customers to leverage Aviva’s expertise and financial stability.

AIG Life UK offers a comprehensive suite of individual and group protection products, serving 1.3 million individual protection customers and 1.4 million group protection members. The acquisition aligns with Aviva’s focus on providing high-quality customer propositions and continually enhancing the customer and intermediary experience.

Amanda Blanc, Group Chief Executive Officer of Aviva, emphasized the strategic and financial advantages of the acquisition, stating, “This acquisition brings significant strategic and financial benefits to Aviva. It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the Group towards capital-light growth. We look forward to welcoming our new customers and colleagues to Aviva.”

AIG Life UK’s strengths in innovative solutions and partnership distribution complement Aviva’s approach. The merger of their protection businesses will capitalize on AIG Life UK’s successful SME and high-net-worth propositions, expanding customer reach through regional and corporate Independent Financial Advisors (IFAs) and other key partners. The consolidation is expected to create a more efficient platform to serve both existing and new customers.

The transaction, financed through internal resources, promises strong financial returns, boasting an anticipated low-teens Internal Rate of Return (IRR), inclusive of integration and restructuring costs. Aviva will also regain control of the economics of the business that AIG Life UK reinsures internally within the broader AIG Group.

The transaction consideration represents 0.9x AIG Life UK’s Solvency II Own Funds, factoring in expected capital synergies. While the estimated impact on the Group’s Solvency II shareholder cover ratio would have been a reduction of approximately 5 percentage points as of June 30, 2023, the acquisition aligns seamlessly with Aviva’s capital management framework, which remains unchanged. The company anticipates consistent, sustainable capital returns in the future.

The transaction remains subject to customary closing conditions, including regulatory approvals, and is slated for completion in the first half of 2024.