From the Wires
Aviva Reaches Settlement with Bankia
Dec. 19, 2012 06:20 AM
LONDON -- (Marketwire) -- 12/19/12 --
18 December 2012
AVIVA REACHES SETTLEMENT WITH BANKIA FOR EUR608 MILLION
* Aviva and Bankia agree settlement regarding their Spanish joint
* Agreement to terminate legal proceedings between Aviva and Bankia
* As a result, Aviva will transfer its entire holding in Aseval to
* Transaction will increase Aviva's economic capital surplus by
approximately GBP0.5 billion
Aviva plc ("Aviva") announces that it has reached a settlement with
Bankia S.A ("Bankia") by which Aviva will transfer its entire holding
in Spanish joint venture Aseval to Bankia for EUR608 million (GBP494
million) in cash, which will be held in escrow. The transfer of Aseval
shares to Bankia is subject to customary regulatory approvals and
release of the cash proceeds to Aviva is expected no later than 30
As a result of the settlement, Aviva and Bankia have applied to the
Arbitration Court in Madrid, Spain, to terminate the legal
proceedings between the parties and issue an award which reflects the
Cash proceeds will increase Aviva's central group liquidity by EUR608
million (GBP494 million) and be used for general corporate purposes. The
transaction will increase Aviva's economic capital surplus by #
approximately GBP0.5 billion, IGD capital surplus by approximately GBP0.
4billion and IFRS net assets by approximately GBP0.2 billion. The
consideration represents approximately 1.8 times Aseval's IFRS net
asset value. In 2011, Aseval contributed IFRS life operating profit
of GBP88m, of which Aviva's share was 50%.
John McFarlane, chairman of Aviva, said:"This settlement is in line with
our strategy to increase Aviva's
financial strength and we have realised significant value from our
joint venture with Bankia. We remain focused on providing excellent
service to our customers in Spain, through our other bank partners and
Aviva's other operations in Spain are unaffected by the settlement.
Aviva will continue to serve over 1.2 million customers in Spain
through bancassurance partnerships with NCG Banco, BMN, Caja Espana
Duero and Unicaja, as well as agency distribution units Aviva Vida y
Pensiones and Pelayo Vida.
Aviva Spain generated sales of GBP1,926 million and an IFRS life
operating profit of GBP216 million in 2011, of which Aseval contributed
sales of GBP393 million and an IFRS life operating profit of GBP88 milli
on. Aseval contributed GBP267 million to group IFRS net assets
(including goodwill of GBP194 million) and GBP2,618 million to group
IFRS total assets as at 30 June 2012.
Nigel Prideaux +44 (0)20 7662 0215
Andrew Reid +44 (0)20 7662 3131
Charles Barrows +44 (0)20 7662 8115
Notes to editors:
* Total cash proceeds converted to sterling at an exchange rate of
* Reported income and expense figures are converted at average
exchange rates of EUR1/GBP0.87 for year-end 2011 and EUR1/GBP0.82 for
the 6 months to 30 June 2012. Assets and liabilities are converted at
closing rates of EUR1/GBP0.84 for year-end 2011 and EUR1/GBP0.81 at
30 June 2012.
* The settlement will result in Aseval being deconsolidated from
Aviva's IFRS accounts. Had the transfer of Aviva's holding in Aseval
to Bankia occurred at 30 June 2012, Aviva's IFRS net assets would
have increased by GBP0.2 billion, equivalent to 8p per share, and
MCEV net assets including goodwill would have increased by GBP0.1
billion, equivalent to 5p per share.
* Had the transfer of Aviva's holding in Aseval to Bankia occurred
at 30 June 2012, the accounting gain in the income statement on sale
would have been GBP265 million.
* In 2000, Aviva acquired a 50% stake in Aseval from Bancaja which
became a joint venture under Aviva's management control. Aseval
established an exclusive agreement with Bancaja to distribute life
insurance and pension products.
* In March 2011, Bancaja agreed to consolidate its banking
business with Caja Madrid and five other Spanish savings banks,
which resulted in the formation of Bankia in May 2011. The arbitration
was initiated by Aviva in June 2011 on the basis that Bancaja had
breached the terms of its shareholder agreement with Aviva.
* Aviva is the fifth-largest life and pensions provider in Spain.
* Aviva has been advised on the arbitration process by the Madrid
office of the international law firm Ashurst.
* Aviva provides 43 million customers with insurance, savings and
* We are the UK's largest insurer and one of Europe's leading
providers of life and general insurance.
* We combine strong life insurance, general insurance and asset
management businesses under one powerful brand.
* We are committed to serving our customers well in order to build
a stronger, sustainable business, which makes a positive contribution
to society, and for which our people are proud to work.
* The Aviva media centre at www.aviva.com/media includes images,
company and product information and a news release archive.
* For broadcast-standard video, please visit http://www.aviva.com/
* Follow us on twitter: www.twitter.com/avivaplc
The economic capital surplus represents an estimated position as at
30 September 2012, based on Aviva's own internal assessments and
capital management policies. The term "economic capital" does not
imply capital as required by regulators or other third parties
Aseval Aseguradora Valenciana, Sociedad Anonima de Seguros y
Corte de Arbitraje de la Camara Oficial de Comercio e Industria de
As at 30 June 2012
On a PVNBP basis including non controlling interests
IFRS life operating profit is before tax and includes non
Caja de Ahorros y Monte de Piedad de Madrid
This information is provided by RNS
The company news service from the London Stock Exchange