Aviva sells Friends Provident International for GBP340m

Aviva has agreed to sell Friends Provident International (FPIL), a unit focused on high-net-worth clients in Asia and the Middle East, for £340m to RL360, a subsidiary of International Financial Group.

The sale, which subject to regulatory approvals is expected to complete in early 2018, is expected to create a one-off loss on disposal of approximately £130m but as FPIL did not contribute any cash to Aviva in its last financial year the disposal is expected to be positive to Aviva's cash dividend paying capacity.

Reports earlier in the year suggested Aviva could expect to attain a sale price for FPIL nearer $750m (£575m).

Having acquired FPIL in April 2015, as part of the £5.6bn acquisition of Friends Life Group, Aviva decided to sell the Asia- and Middle East-focused arm after concluding it was "not central to the group's strategy to focus on a small number of markets where it has scale and profitability or a distinct competitive advantage", and said the sale will allow it to reallocate capital "to businesses that can achieve leading market positions and deliver superior returns".

The sale price represents a multiple of 3.2 times FPIL's 2016 net asset value and will result in an increase of approximately £100m in the group's capital surplus as part of the Solvency II regulations.

In 2016, FPIL made a post-tax loss of £2m.

Chris Wei, executive chairman of Aviva Asia & FPIL, said: "The sale of Friends Provident International Limited is a good outcome for Aviva. It allows us to focus on the significant opportunities we have to grow Aviva's business across Asia through digital and disrupting the traditional insurance industry."

Headquartered in the Isle of Man, RL360 was created in 2009 following the merger of Scottish Provident International and Scottish Life International and in 2015 acquired CMI Insurance from Lloyds.