OREANDA-NEWS. December 19, 2012. 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 Aseval2 to Bankia for Ђ608 million (Ј494 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 April 2013.

As a result of the settlement, Aviva and Bankia have applied to the Arbitration Court in Madrid3, Spain, to terminate the legal proceedings between the parties and issue an award which reflects the settlement agreed.

Cash proceeds will increase Avivaґs central group liquidity by Ђ608 million (Ј494 million) and be used for general corporate purposes. The transaction will increase Aviva’s economic capital surplus by approximately Ј0.5 billion, IGD capital surplus by approximately Ј0.4 billion and IFRS net assets by approximately Ј0.2 billion. The consideration represents approximately 1.8 times Aseval’s IFRS net asset value4. In 2011, Aseval contributed IFRS life operating profit of Ј88m, 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 distribution agencies.”

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 Espaсa Duero and Unicaja, as well as agency distribution units Aviva Vida y Pensiones and Pelayo Vida.

Aviva Spain generated sales of Ј1,926 million5 and an IFRS life operating profit of Ј216 million in 2011, of which Aseval contributed sales of Ј393 million and an IFRS life operating profit of Ј88 million6. Aseval contributed Ј267 million to group IFRS net assets (including goodwill of Ј194 million) and Ј2,618 million to group IFRS total assets as at 30 June 2012.

1. 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
2. Aseval Aseguradora Valenciana, Sociedad Anуnima de Seguros y Reaseguros
3. Corte de Arbitraje de la Cбmara Oficial de Comercio e Industria de Madrid
4. As at 30 June 2012
5. On a PVNBP basis including non controlling interests
6. IFRS life operating profit is before tax and includes non controlling interests