British insurer Aviva PLC (GB:AV) announced a deal today with U.S.-based American International Group Inc. (NYSE:AIG) to acquire its UK protection business for £460 million. This strategic move strengthens Aviva’s presence in the UK’s insurance market, further solidifying its position as a leading provider of insurance and financial services. As part of this deal, Aviva will acquire AIG Life Limited from Corebridge Financial, which operates as a subsidiary of AIG.
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Aviva’s shares were trading down by 1.10% today at the time of writing.
Aviva is a prominent insurance company with a customer base exceeding 18 million. The company provides a variety of financial products and services, encompassing insurance, wealth management, and retirement solutions.
The Deal’s Rationale
The acquisition will bring 1.3 million individual protection customers and 1.4 million members to the group protection segment. The company stated that the deal further enhanced its outlook on the highly promising UK protection sector and the company’s focus toward “capital light growth.” The firm added that the merged protection business will capitalize on AIG Life UK’s successful offerings for small and medium-sized enterprises (SMEs) and high-net-worth clients.
Aviva is financing the transaction using its internal resources and anticipates strong financial returns, with an expected internal rate of return (IRR) in the low teens, taking into account integration and restructuring costs.
Aviva’s Group CEO, Amanda Blanc, highlighted the advantages of the deal and commented, “This acquisition brings significant strategic and financial benefits to Aviva.”
The deal is expected to close in the first half of 2024, subject to regulatory approvals.
Aviva Share Price Forecast
Overall, analysts have a highly bullish outlook on AV stock, which has received a Strong Buy rating on TipRanks. This is based on six Buy and two Hold recommendations. The Aviva share price forecast is 477.75p, which offers growth of around 21% from the current trading levels.
