Extending a process that
began in 2009, UK insurer Aviva is to further reduce its stake in
Dutch composite insurer Delta Lloyd.
Subject to shareholder
approval, Aviva will execute a private placement of 25m Delta Lloyd
ordinary shares at €17.25 ($24) per share, a move that will reduce
its stake in Delta Lloyd from 58.2% to 43.1% and generate gross
cash of £381m ($610m).
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Aviva’s share of voting
rights in the Dutch insurer will fall from 53.9% to 40%.
In a statement, Aviva said
sale of the shares in Delta Lloyd is consistent with its strategy
of prioritising investment in 12 markets, which does not include
the Benelux region.
Delta Lloyd, which has as its
target markets the Netherlands and Belgium, operates primarily
under the brand names of Delta Lloyd, OHRA and ABN AMRO Insurance
in the Netherlands, and under the Delta Lloyd name in
Belgium.
The first move by Aviva to
reduce its stake in Delta Lloyd came in November 2009 when it
completed the initial public offer (IPO) of the Dutch insurer on
the NYSE Euronext Amsterdam market. The IPO at an offer price of
€16.00 per ordinary share reduced Aviva’s stake in Delta Lloyd from
100% to 58.2% and realised gross cash proceeds for the UK insurer
of £1bn.
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By GlobalDataOn successful completion of
the latest share offering, Aviva will deconsolidate Delta Lloyd.
Providing detail on the impact this will have, Aviva noted that in
2010, Delta Lloyd contributed £536m to Aviva’s operating profit
under International Financial Reporting Standards
(IFRS).
According to Aviva, had the
current offering been completed at the beginning of 2010, the
group’s operating profit before tax in 2010 would have been reduced
by 12.8% to £2.224bn, reflecting the deconsolidation of Delta
Lloyd’s IFRS operating profit and the inclusion of Aviva’s retained
interest in Delta Lloyd shown as income from an
associate.
This retained interest will
be separately disclosed in the group’s IFRS operating
profit.
In terms of assets, Aviva stated that had the offering and
subsequent deconsolidation of Delta Lloyd occurred on 31 December
2010, it would have reduced the group’s consolidated IFRS total
assets by £57.8bn, from £370.1bn to £312.3bn.
