Aviva has bought AIG Life for £460m as it looks to further expand its footprint in the UK protection market.
As a result of this deal Aviva will acquire 1.4m group protection members and 1.3m individual members. This will see Aviva bolster its position in the SME group risk market and the high net worth market – where AIG Life had built up a particularly strong presence.
Aviva said this acquisition was part of its strategy to grow ‘capital-light’ businesses and will broaden its distribution in the UK protection market, where it has enjoyed strong organic growth in recent years.
According to Corporate Adviser’s Workplace Protection and Wellbeing report, Aviva was already the biggest group income protection insurer, in terms of the number of employees covered, with a 11 per cent growth in this sector in 2022. It also saw the number of employees covered via group life and group critical illness policies grow during the year.
Aviva group chief executive officer Amanda Blanc says: “The acquisition brings significant strategic and financial benefits to Aviva. It strengthens our prospects in the highly attractive UK protection market and continues out process in repositioning the group towards capital-light growth. We look forward to welcoming our new customers and colleagues to Aviva.
The deal is subjected to regulatory approval and is expected to close int he first half of 2024.
Aviva says the transaction – which is being funded through internal resources – delivers the expected low teens IRR, including integrations and restructuring costs. As part of the transaction Aviva will also re-capture the economics of the business that AIG Life UK reinsures internally to the wider AIG Group.