Aviva has agreed to sell its French operation to Aéma Groupe for €3.2bn (£2.76bn, $3.89bn).
The transaction covers the French life, general insurance, and asset management businesses and the 75% shareholding in French wealth manager L’Union Financière de France.
As part of the deal, Aviva agreed to customary warranties and indemnities.
This includes a specific indemnity agreement in respect of the ‘known price’ contracts, written by insurance firm Abeille Vie between 1989 and 1997, that would share the risk in the unlikely scenarios of certain costs in respect of these contracts rising above Aviva France’s already appropriate existing provisions.
Customers and agents of Aviva France will continue to receive the same service from the firms and there is no impact to customer policies as a result of the deal.
Employees of Aviva France will transfer with the business, which is planned to operate as a standalone entity within the Aéma Groupe.
The deal is expected to complete by the end of 2021.
Focus on strongest markets
Aviva said that it has sold the business as part of its “strategic transformation to focus on its strongest businesses in the UK, Ireland and Canada”.
The insurer said it expects to use the increased capital and cash to support its “previously communicated capital framework of debt reduction, investment for long-term growth and return of excess capital to shareholders”.
Part of the cash proceeds, up to £500m ($705m, €580m), will be used to “accelerate repayment of some of the group’s internal loan with Aviva Insurance Limited”.
Amanda Blanc, chief executive of Aviva, said: “The sale of Aviva France is a very significant milestone in the delivery of our strategy. It is an excellent outcome for shareholders, customers, employees and distributors.
“The transaction will increase Aviva’s financial strength, remove significant volatility and bring real focus to the group.
“Aéma Groupe has a strong heritage in the French insurance industry and this transaction will propel it to a top five position in the French market. I am confident Aéma Groupe will be an excellent owner of Aviva France.”
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