Aviva adds South Korea, Sri Lanka to Asia exit list
British insurer Aviva plc is putting its South Korean and Sri Lankan
businesses on the auction block, sources said, adding to its list of
Asia divisions it is selling to help raise money to protect against its
euro zone exposure.
Britains second-biggest insurer laid out plans last week to sell
under-performing businesses around the world, a move meant to address
the company's greater exposure to the troubled euro zone compared with
rivals, and to boost a share price that is down more than 36 percent in
the past year. Aviva has come under fire for its euro zone exposure and
plummeting share price. Irate shareholders forced Chief Executive Andrew
Moss to quit on May 8 after determining his pay was out of line with the
company's flagging performance.
Aviva did not specify the countries it would exit in its announcement
Avivas South Korean investment in 2008 and the value of its stake in
the Sri Lankan company has a combined value of about $66 million and
some estimate the deal would fetch about $150 million.
The sources were not authorised to speak to the media. Aviva was not
immediately available for comment.
The London-listed insurer needs to shore up its capital base in the
light of its exposure to the troubled euro zone.
Aviva, which generated 40 percent of its operating profit in mainland
Europe last year, has been hit harder than its main British rivals by
the euro zones woes.
Aviva has operations in 10 Asian countries, mostly joint ventures.
Its Asia-Pacific operations accounted for 2 percent of its 2011 group
Aviva entered the South Korean market in 2008, when it formed a
consortium with Woori Financial Holdings Co to buy LIG Insurance Co Ltd
for 73 million pounds ($115 million). Aviva holds a nearly 41 percent
stake in the joint venture.
Aviva has held informal talks with Woori to sell its stake in the
venture to the South Korean partner and Woori is still reviewing the
proposal, one of the sources said.
Woori declined comment. In Sri Lanka, Aviva NDB Insurance generated
12.8 billion Sri Lanka rupees ($99 million) in revenue last year and
earned a post tax profit of 691.6 million Sri Lankan rupees.
The company had a market value of $36 million based on Wednesdays
close, which would give Avivas 51 percent stake a valuation of $18
million. Aviva is also in the process of exiting its Malaysian joint
venture with CIMB.