Sumitomo Life Insurance Company, a mutual life insurance company in Japan, has entered into an agreement to acquire Aviva Group Holdings’ entire 25.94% stake in Singapore Life Holdings (Singlife) for a consideration of $0.9 billion.
The Japanese insurance company currently owns a 23.22% stake in Singlife.
Sumitomo will also pay around $0.5 billion for the two debt instruments that Aviva holds, bringing the total sum to $1.4 billion.
Upon the completion of its acquisition, Sumitomo Life’s stake in Singlife will vary depending on the intent of other Singlife shareholders who may or may not exercise their rights under the existing shareholders’ deed relating to the latter.
The transaction is subject to the closing conditions, including regulatory approval. The acquisition is expected to be completed in the 4Q2023.
According to Sumitomo Life, Singapore is seen as a key market within its overall Southeast Asia strategy. The group has also been a supporter of Singlife in a bid to expand its footprint as a long-term strategic investor since Sumitomo’s initial investment in Singlife in 2019.
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The proposed acquisition is expected to “enhance the earnings foundation” of Sumitomo Life’s international business portfolio and the sustainability of the business of the group.
“Sumitomo Life aims to strengthen its partnership with Singlife through this transaction, improve customer convenience, and achieve greater management efficiency by sharing Singlife’s expertise in its digital enabled business model,” says the group.
In a separate statement, Aviva's group CEO Amanda Blanc, says "This is a good outcome for Aviva. The transaction further simplifies the business and we are in a very strong position to build on our trading momentum in the UK, Ireland and Canada.”
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SingLife contributed some GBP17 million ($28.9 million) to Aviva's operating profit in FY2022.
According to Aviva, the combined carrying value of the equity stake and debt holdings contributed GBP729 million to Aviva’s IFRS 17 net asset value as at June 30.
"The transaction would have increased Aviva’s Solvency II shareholder surplus as at June 30 by GBP0.4 billion and the Solvency II shareholder ratio by [around] 8 percentage points. It would have increased centre liquidity by GBP0.8 billion. The equity value represents a multiple of 2.2x Solvency II Unrestricted Tier 1 capital as at June 2023," says Aviva via its Sept 13 statement.
"Aviva’s exit from the Singlife joint venture represents a further step in the simplification of Aviva’s footprint following the international disposal programme completed in 2021. It is also consistent with the group’s ambition to focus on its capital-light business units. Aviva sold its majority stake in Aviva Singapore to a consortium led by Singlife in 2020," it adds.
Singlife was established in 2020. As at Dec 31, 2022, the group has about 1,200 employees and total assets of $14.37 billion. The group’s gross premiums as at the same period stood at $3.48 billion.
In its statement on Sept 13, Singlife says there will be no immediate change to its strategy, management, board or other governance arrangements as a result of this announcement.
