Asia:Insurance giants in race for Aviva's Singapore and Vietnam operations

German insurer Allianz, Nippon Life and MS&AD Insurance are vying with rivals to buy the Singapore and Vietnam businesses of Britain's Aviva in a deal likely to be worth up to $2.5bn, reported Reuters.

Canada's Sun Life Financial and Manulife Financial Corp are also among roughly half a dozen suitors for the businesses, said the people with knowledge of the matter, who declined to be named as the talks are confidential. The combined deal value for the businesses is estimated to be between $2bn and $2.5bn, they said, adding that talks were at an early stage and terms could change.

Aviva operates wholly owned businesses in Singapore and Vietnam, with Singapore contributing nearly half of Aviva's Asian business operating profits. One source said that since Aviva was not combining its other smaller Asian businesses in the sale process, interest in Singapore and Vietnam was strong and strategic buyers could end up paying more than $2.5bn.

Sources said last week was the deadline for the first round of formal bids in a transaction Aviva aims to finalise by year-end. Aviva, Allianz, Nippon Life, MS&AD and Sun Life declined to comment on the deal process. Manulife did not immediately respond to a request for comment. The names of the potential buyers and the specifics of Aviva's planned divestment in Asia have not been previously reported.

Asia's fast growing economies and its relatively low number of insured people make the region a promising market for global insurers. The regional market, worth $1.7tn in premiums, is expected to account for 42% of global premiums by 2029 from about a third currently, a Swiss Re Institute report showed.

Aviva in Asia

Last month, in his first interim results since being appointed Aviva CEO in March, Mr Maurice Tulloch announced a review of the group's Asian operations.

Aviva runs businesses in China, Hong Kong, India, Indonesia, Singapore and Vietnam. The Asian operations posted a 25% rise in operating profit to GBP284m ($352.67m) in 2018, according to Aviva's annual report.

Singapore has a very competitive and fragmented market, with demand for life insurance mainly driven by the affluent segment. Unlike larger insurers who have distribution tie-ups with banks, Aviva mainly relies on hundreds of agents to sell its products. The latest move comes after Aviva unveiled hundreds of job cuts globally in June and overhauled its UK business.

Source: Asia Insurance Review