UK insurance group Aviva puts its US business on the block

The Aviva Tower in London

UK insurance major Aviva Plc (LON:AV) is gearing for a sale of its US business after receiving several unsolicited approaches from trade buyers and private equity groups, the Sunday Telegraph reported without specifying its sources.

According to the UK newspaper, Aviva’s finance chief Pat Regan has spent quite a while in Des Moines, Iowa – the city where Aviva USA’s headquarters are located – to make preparations for the sale and launch the process. An investment bank is yet to be formally appointed but Aviva’s executives are believed to have settled on Goldman Sachs Group Inc (NYSE:GS) as manager of the sale.

Aviva agreed to pay GBP1.8bn (USD2.8bn/EUR2.3bn) in mid-2006 for what was then called AmerUs, combining it with its existing US business to create Aviva USA. The sale of the business is expected to leave the UK company with a loss of GBP800m on its initial investment since the division is now estimated to be worth GBP1bn, the Sunday Telegraph said.

Following shareholder pressure, Andrew Moss stepped down as chief executive of Aviva in May, leaving newly appointed executive chairman John McFarlane to fill the gap on a temporary basis.

Earlier in July, McFarlane presented his plan for a strategic overhaul of the company, saying that 16 out of 58 businesses have been designated non-core and will either be sold or shut down. However, Aviva could not be drawn into commenting at the time on whether its US division was one of those businesses.

The company has already pulled out of Hungary, Romania, the Czech Republic and Australia and is set to exit Taiwan as well, selling its 49% stake in its local joint venture.

The Sunday Telegraph was unable to extract a comment from an Aviva spokesman with regard to the US divestment.

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