Aviva buys US insurer Amerus

Norwich Union owner Aviva today said it is buying US life insurer AmerUs for $2.9bn (€2.3bn) in a deal that will boost the UK firm’s presence in the US.

Aviva said it is to raise £900m (€1.3bn) from a share placing which will account for about 45% of the total price.

The UK’s largest insurer said it will pay $69 (€54) a share for AmerUs – a 10% premium to its closing price on July 6 – valuing it at about £1.6bn (€2.3bn) and it will also take on around $700m (€550m) of AmerUs debt.

Aviva also announced a strong trading performance for the half year to June 30 - with operating profits expected to be no less that £1.65bn (€2.4bn) compared with £1.32bn (€1.9bn) for the same period last year.

Under the deal AmerUs will merge with Aviva USA under the leadership of Tom Godlasky, chief executive of AmerUs.

Aviva chief executive Richard Harvey said: “This acquisition establishes a leadership position within a key segment of the world’s largest long-term savings market.”

Mr Godlasky said: “With the support and financial strength of Aviva, we will be able to further enhance the growth opportunities of our combined operations and take the business to the next level.”

Iowa-based AmerUs dates back more than 100 years and is a leading player in the life insurance and annuities markets. It joined the stock market in 1997 after policyholders backed a demutualisation.

AmerUs is a specialist in indexed annuities – a retirement savings product with options for paying out those savings – where the returns are linked to an underlying index, usually equities.

Aviva is the world’s sixth largest insurance group and is one of the leading providers of life and pensions products in Europe. It had assets under management worth £317bn (€458bn) at the end of last year.

The group was created by the merger of CGU and Norwich Union in May 2000, and has been known as Aviva since July 2002. CGU came from the merger of Commercial Union and General Accident in 1998.

Prior to today’s deal Aviva claimed a “strategic foothold” in the US, where it already had £2.6bn (€3.7bn) of assets under management and employed 390 people - at Aviva Life Insurance Company and the Aviva Life Insurance Company of New York.