Aviva mulls selling off part of UK annuity book to bolster capital base

AVIVA, the UK’s biggest insurer, is considering selling off part of its portfolio of UK annuities to strengthen its balance sheet after a fall in its regulatory capital surplus due to volatile stock and bond markets over recent months.

Aviva is the UK’s biggest provider of individual annuities with a 23 per cent market share, but may sell off part of the book for a cash payment to shore up its IGD regulatory capital, which fell to £2.7bn by the end of September from £4bn at the end of June, the Telegraph said.

The insurer has a huge presence in Europe and has had larger holdings of Eurozone sovereign bonds than many of its peers, causing its share price to be hammered over recent months on fears for the stability of the region.

A spokesperson for Aviva declined to comment on the possible sale, but said: “As with any insurer, we regularly look at various options to optimise our capital position such as re-insurance and securitisation”.

The sell-off is one of several strategies Aviva has under consideration, as it seeks to make its position stronger and safer.