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Business News

Aviva joins US retreat with £1bn AmerUs sell-off

Aviva has offloaded its troublesome US business for £1.1bn in a deal that marks the latest UK retreat from the world's largest economy.

The company said it had agreed to sell the AmerUs unit to life insurer Athene Holding for almost half of the £2bn it paid for it in 2006.

John McFarlane, Aviva's chairman, said it was an "important step forward" in the company's plan to slim down its operations.

The sale comes less than a month after Tesco confirmed it was launching a strategic review of its Fresh & Easy chain in the US.

"This considerably strengthens Aviva's financial position, increases group liquidity and improves our economic capital surplus whilst also reducing its volatility," Mr McFarlane said. "The disposal of the US business, combined with the recent settlement with Bankia, represents a successful end to the year and sets us up well for 2013."

Athene Holding beat off rival approaches from other interested parties such as Harbinger Capital and Guggenheim Partners.

Aviva, which appointed Mark Wilson as its chief executive last month, is looking to sell underperforming businesses as it slims down its structure. Mr McFarlane has vowed to turn the company into a "leaner, more agile beast". He plans to cut staff, sell businesses and seek "significant improvement" in others to reverse the poor share performance.

The former Royal Bank of Scotland non-executive director took over the helm of the insurer in May after a shareholder revolt over pay that led to former chief executive Andrew Moss's resignation.

The shares closed up 1.3p at 382.7p as analysts welcomed the sale.

"Although there is still plenty to do, we believe that Aviva enters 2013 in far better shape than it entered 2012," said Barrie Cornes, an analyst at Panmure.