(Alliance News) - UK insurer Aviva on Friday said it sold its Aviva Poland unit for EUR2.5 billion in cash to German peer Allianz, shedding the last of its non-core operations.
Aviva said it will now focus on its "strongest businesses" in the UK, Ireland and Canada where it has "leading market positions" and strong growth potential.
The deal values Aviva Poland at EUR2.7 billion in total. The business comprises Aviva's interests in life insurance business in Poland and Lithuania and its Polish general insurance, asset management and pensions businesses. It also includes Aviva's 51% shareholding in life and general insurance joint ventures with Spain's Banco Santander. These are Santander Aviva TUnZ and Santander Aviva TU, respectively.
Aviva Poland generated GBP130 million in IFRS profit after tax in 2020. They had an IFRS net asset value of GBP400 million on December 31, meaning a GBP1.8 billion uplift in value from the sale price, the company said.
Aviva said the proceeds of the sale will raise its Solvency II cover ratio by 13 percentage points.
The sale of Aviva Poland is the eighth divestment Aviva has announced in the past eight months under the streamlining strategy of Chief Executive Officer Amanda Blanc, and Aviva said the deal successfully concludes the planned refocus of the company's portfolio.
Blanc became CEO in July, having joined the Aviva board in January 2020. She is the former CEO of EMEA & Global Banking Partnerships at Zurich Insurance Group.
Blanc said on Friday: "The sale of our Polish business is an excellent conclusion to the refocusing of our portfolio announced just eight months ago. The sale of our eight non-core businesses will generate total cash proceeds of GBP7.5 billion. We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential."
Aviva shares were up 1.6% early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.8% at 6,730.49
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Hang Seng: up 1.6% at 28,336.43
Nikkei 225: closed up 1.6% at 29,176.70
DJIA: closed up 199.42 points, or 0.6%, at 32,619.48
S&P 500: closed up 0.5% at 3,909.52
Nasdaq Composite: closed up 0.1% at 12,977.68
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EUR: firm at USD1.1785 (USD1.1778)
GBP: up at USD1.3765 (USD1.3727)
USD: up at JPY109.25 (JPY109.15)
Gold: down at USD1,728.05 per ounce (USD1,732.44)
Oil (Brent): up at USD63.07 a barrel (USD61.61)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
EU summit concludes
1000 CET Germany Ifo business climate index
0830 EDT US advance economic indicators report
0830 EDT US personal income & outlays
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UK retail sales rebounded on a monthly basis in February ahead of the easing of coronavirus restrictions, according to the Office for National Statistics. On an annual basis, UK retail sales fell 3.7% in February slowing from a decline of 5.9% in January. The latest figure missed the market forecast, cited by FXStreet, for a 3.5% drop. On a monthly basis, retail sales grew 2.1% in February, rebounding from a fall of 8.2% in January. The month-on-month print was in-line with market consensus. In addition, the ONS said the share of shopping done online was a record high of 36% in February.
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Tugboats and a specialised suction dredger are working to dislodge a giant container ship that has been stuck sideways in Egypt's Suez Canal for the past three days, blocking a crucial waterway for global shipping. The Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe, ran aground in the narrow canal that runs between Africa and the Sinai Peninsula. The vessel got stuck in a single-lane stretch of the canal, about 3.7 miles north of the southern entrance, near the city of Suez. The ship, owned by the Japanese firm Shoei Kisen, has blocked traffic in the canal, causing headaches for global trade. Around 10% of world trade flows through the canal, which is particularly crucial for the transport of oil. The closure also could affect oil and gas shipments to Europe from the Middle East. At least 150 ships were waiting for the Ever Given to be cleared, including vessels near Port Said on the Mediterranean Sea, Port Suez on the Red Sea, and those already stuck in the canal system on Egypt's Great Bitter Lake, according to Leth Agencies, which provides services for the canal.
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BROKER RATING CHANGES
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UBS CUTS POLYMETAL TO 'NEUTRAL' ('BUY') - TARGET 1,450 (1,900) PENCE
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JEFFERIES RAISES BAT TO 'BUY' (HOLD) - PRICE TARGET 3,606 (2,792) PENCE
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BERENBERG CUTS OCADO TO 'HOLD' ('BUY') - TARGET 2,390 (2,925) PENCE
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RBC RAISES NEXT PLC TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 8,800 (8,100) PENCE
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COMPANIES - FTSE 100
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Engineering firm Smiths Group said it delivered a robust performance in the first half, despite market disruptions caused by the coronavirus pandemic. For the half year to January 31, revenue was down 7.3% to GBP1.24 billion from GBP1.15 billion the year before, but pretax profit jumped to GBP84 million from GBP46 million. Smiths Group raised its interim dividend 6.4% to 11.7 pence from 11.0p prior. Looking ahead, Smiths said there were signs of improving trends in the second half, and it is confident of meeting market expectations for the full year. The company is undertaking a strategic restructuring programme with a goal to deliver operating margins of 18% to 20%. "This is a robust set of results relative to our end markets, with a resilient top line, good profit conversion and excellent cash generation," said Chief Executive Officer Andy Reynolds Smith, adding: "We continue to enhance the positioning of the group for outperformance through targeted investment in innovation and disciplined transactions - including the planned separation of Smiths Medical by the end of 2021, which will focus and simplify the group and maximise value for all stakeholders."
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COMPANIES - FTSE 250
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Nova Resources, the investment vehicle of Kaz Minerals Chair Oleg Novachuk, raised its takeover offer for the miner to 850 pence per share, plus a 27 US cents special dividend. Nova Resources said the total value of the increased and final offer is 869p in cash. As of Thursday, Nova was either interested in or had acceptances for its offer totalling 59.3% of Kaz Minerals shares. The new offer deadline is April 9.
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COMPANIES - GLOBAL
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Banco Santander laid out plans to buy the remaining stake in Santander Mexico it does not own for about EUR550 million. Santander hopes to snap up the remaining 8.3% stake in its Mexican subsidiary it does not already own and delist Santander Mexico in both Mexico and the US. "The bank will offer Santander Mexico's minority shareholders the opportunity to sell their shares at a premium, increasing the bank’s exposure to a core market with strong long term fundamentals," the Madrid-headquartered lender said. The price, MXN24.00 per share, about USD1.16, represents a 24% premium to Thursday's closing price. On top of the Mexico plans, Santander said its business has "remained strong" in the first quarter, with revenues in line with the fourth quarter of 2020.
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Friday's Shareholder Meetings
Beazley PLC - AGM
Jupiter UK Growth Investment Trust PLC - GM re liquidation
Kape Technologies PLC - GM re consideration shares issue
PCF Group PLC - AGM
Sigma Capital Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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