Aviva Plc (AV/), the U.K.’s second-biggest insurance company by market value, sold its 19.4 percent stake in Dutch insurer Delta Lloyd NV (DL) for 433.8 million euros ($568 million) as it retreats from less profitable markets.
Aviva sold 34.3 million shares of the Amsterdam-based insurer in a stock offering for 12.65 euros each, a 1.6 percent discount to yesterday’s closing price, the London-based firm said in a statement. Aviva dropped as much as 2.6 percent in London today and Delta Lloyd rose as much as 9.5 percent.
The sale “supports our strategy to narrow focus and make Aviva a more nimble and athletic organization,” Chief Executive Officer Mark Wilson said in a statement today announcing the sale. “It will further increase Aviva’s cash and capital position and is consistent with our focus on businesses where we can earn higher returns.”
Aviva is selling or winding down almost a third of its 58 businesses and seeking to increase its capital reserves, which were hurt by the European sovereign debt crisis. It held an initial public offering in 2009 for Delta Lloyd, which sells life insurance in Belgium, the Netherlands and Luxembourg. Commercial Union, one of Aviva’s predecessor companies, bought Delta Lloyd in 1973, according to the Dutch company’s website.
The sale increases Aviva’s economic capital surplus coverage ratio, or its capital reserves, by about 4 percentage points to 169 percent, the insurer said in the statement. The proceeds “will increase central group liquidity and will be used for general corporate purposes,” it said.
Aviva fell 2.2 percent to 373.6 pence at 8:19 a.m. in London while Delta Lloyd climbed 6.9 percent to 13.75 euros in Amsterdam.
Morgan Stanley coordinated the so-called accelerated bookbuilding of Delta Lloyd stock, and was joint book runner along with Goldman Sachs Group Inc. (GS:US) and Barclays Plc.
Wilson, formerly the CEO of Asian insurer AIA Group Ltd. (1299), took the top job at Aviva on Jan. 1.
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