Aviva is evacuating the Taiwanese market after agreeing to dispose of its stake in a joint venture with First Financial Holding.
Aviva will sell its 49 percent stake in First-Aviva Life Insurance for a token consideration of USD$1, the company said.
Following the disposal, Aviva will not inject any funds into the joint venture in future rights issue projects and will completely withdraw from the Taiwan market, First Financial said.
The decision was made based on the UK firm's global development strategies, according to First Financial. Aviva has been reducing its presence in the Asian market in recent years by withdrawing from South Korea, Malaysia and Sri Lanka, while in Europe, it has pulled out of Ireland and Russia, First Financial said.
Established in 2008, First-Aviva Life Insurance was to become the first joint life insurance company in Taiwan. It currently has about 60,000 customers, with 90 percent of them being clients of First Commercial Bank, the flagship entity of the group.
First Financial said that despite the shareholding change in First-Aviva Life Insurance, the interests of all of its customers will be fully protected and its long-term commitment to the life insurance unit remains strong.
According to statistics compiled by the Financial Supervisory Commission's Insurance Bureau, First-Aviva Life Insurance posted a loss of NT$57.72mn (US$1.91mn) in the first half of 2017, and total premium revenue stood at NT$5.6bn. The insurer had a risk-based capital ratio of 260 percent as of the end of June, higher than the minimal requirement of 200 percent, the data showed.
In a statement, Aviva said that following a strategic review of Aviva Taiwan, Aviva concluded that the business is not central to the group’s strategy to focus on markets where it can achieve scale and profitability or have a distinct competitive advantage.
The transaction which is expected to finalise in 2018 has a negligible impact on Aviva’s IFRS net assets, Solvency II capital position and IFRS operating profit. The transaction is subject to customary closing conditions including regulatory approval.
Executive Chairman of Aviva Asia and Global Chairman of Aviva Digital, Chris Wei said: “We have refocused Aviva’s Asian business on core markets where we have excellent opportunities to grow. With our strong partners and our digital focus, we are intent on disrupting the traditional insurance market.”