ISH insurer Aviva yesterday agreed to sell its stake in a Sri Lankan joint venture for £31m, the latest step in a bold plan to streamline the firm.
Hong Kong’s AIA Group, formerly part of American insurance giant AIG, paid cash for the 58 per cent stake in the business, which was run in co-operation with local financial group NDB Bank.
John McFarlane, who took over as Aviva’s executive chairman on a temporary basis in May, intends to sell 16 underperforming units in an attempt to release capital and shore up the firm’s share price.
Yesterday he said the sale “is an example of further progress towards narrowing the group’s focus” which will allow the firm to focus on businesses “where we can produce attractive returns with a high probability of success”.
Meanwhile AIA’s chief executive, Mark Tucker, called Sri Lanka “compelling” because of its strong growth prospects and low existing levels of insurance penetration.
Aviva was advised by Morgan Stanley and the deal is expected to complete this year, subject to regulatory approval.
This week it was reported that Aviva has set a 29 October date for bids for its Malaysian business, while its US and South Korean units are also on the block. Earlier this year the firm sold half of its stake in Dutch insurer Delta Lloyd for £318m.