Sumitomo Life to acquire Aviva’s stake in Singlife for £800m

Aviva plc has agreed to sell its 25.9% stake in Singapore Life Holdings Pte Ltd (Singlife) to Sumitomo Life Insurance Company for a total cash consideration of £0.8 billion (SGD 1.4 billion). The deal includes Aviva’s equity stake priced at £0.5 billion (SGD 0.9 billion) and two debt instruments valued at £0.3 billion (SGD 0.5 billion). Sumitomo Life, which already owns a 23.2% stake in Singlife, views this acquisition as a significant part of its Southeast Asia strategy.

Aviva’s Ongoing Simplification and Financial Impact

Amanda Blanc, Group Chief Executive Officer of Aviva, commented, “This is a good outcome for Aviva. The transaction further simplifies the business and we are in a very strong position to build on our trading momentum in the UK, Ireland, and Canada.” The sale comes as part of Aviva’s broader effort to streamline its operations, which began with the international disposal program completed in 2021.

Singlife’s Financial Contribution to Aviva

In 2022, Singlife contributed £17 million to Aviva’s operating profit. The carrying value of the equity stake and debt instruments was £729 million, as of June 30, 2023. The transaction is projected to increase Aviva’s Solvency II shareholder surplus by £0.4 billion and its Solvency II shareholder ratio by approximately 8 percentage points. The deal would also boost Aviva’s centre liquidity by £0.8 billion.

Capital Management and Future Plans

The disposal proceeds will be managed under Aviva’s existing capital management framework, allowing for potential reinvestment in the business, bolt-on M&A, or additional returns to shareholders. Aviva had previously sold its majority stake in Aviva Singapore to a consortium led by Singlife in 2020.

Regulatory Approvals and Expected Closure

The transaction, subject to regulatory approvals and customary closing conditions, is expected to be finalized in Q4 2023. This deal aligns with Aviva’s ongoing ambition to focus on its capital-light business units and is expected to bring material financial benefits to the company.