Financial Times

Aviva, UK’s biggest insurer takes Eagle stake
Global insurance giant, Aviva Plc last week took a controlling stake in Eagle Insurance, confirming a report in The Sunday Times FT that it had been bidding along with the JKH-Carsons combine for this stake.

In its January 22 issue, the paper reported exclusively that UK-based Aviva and the JKH-Carsons combine were competing in a takeover bid at Eagle Insurance.

The issue came to the fore after John Keells Holdings Ltd and Carson Cumberbatch (Carsons) announced in a statement the previous week that they had made a joint offer to acquire the entire 87.27% stake in Eagle owned by NDB Finance Lanka (Private) Ltd (NFL) and merge Eagle with it with Union Assurance (UAL).

The paper quoted brokers as saying Aviva had also made an offer and are carrying out the due diligence at present.

Last week NDB said in a statement that Aviva has entered the Sri Lanka insurance market by acquiring a controlling stake in Eagle Insurance Limited. With this acquisition Aviva and NDB will be the major share holders of Eagle controlling a total of 78.42% with effective control of 51% and 27.42% respectively.

Eagle was previously owned to the extent of 87.27% of its shares by NDB Finance Lanka (Pvt) Ltd (NFL). NFL in turn was wholly owned by Capital Development & Investment Co Ltd (CDIC), whose principal owner was NDB Bank Ltd (75.6%)

Under this deal, CDIC sold 58.44% of its shares in NFL to Aviva, thereby reducing its holding in NFL to 41.56%.

Aviva is the world’s oldest insurance group, with a history dating back to 1696. The Group has 60,000 employees serving 30 million customers in over 25 countries with more than Sterling Pounds 290 billion assets under management.

“Aviva has identified Asia as a high growth market. Accordingly, it entered India in 2002, and has rapidly grown into being one of the leading life insurers in the Indian market. This acquisition reconfirms Aviva’s strategic commitment to grow in Asia.” said, Philip G. Scott, Group Executive Director of Aviva Group.
Speaking on the occasion, Stuart Purdy, Managing Director, Aviva Life Insurance Company India Pvt. Ltd, said, “We are really excited about our entry into the Sri Lankan market. Aviva has grown rapidly in India by combining its global expertise with the local talent. We are now looking to replicate that in Sri Lanka. Eagle Insurance has high quality management and corporate governance and a core value system that is in line with Aviva’s philosophy. We are looking at synergies between our operations overseas and Sri Lanka. Eagle will benefit from Aviva’s expertise in Bancassurance, and Aviva’s modern products, while Aviva will benefit by leveraging Eagle’s world class direct distribution model.”

Explaining the rationale for bringing in Aviva to be the major share holder of Eagle, the NDB CEO Nihal Welikala said the bank had previously worked in partnership with Zurich Insurance Co Ltd which was the majority owner of Eagle Insurance until December 1999.

The NDB Group bought their shares when they divested as part of their global geographic rationalisation in July 2003. “We have since then been looking for an international partner to replace them in this specialist field. Aviva also has formidable expertise in the areas of bancassurance and asset management, which will be of enormous value to the business,” he said.

Deepal Sooriyaarachchi, Managing Director of Eagle Insurance added that this certainly is a new beginning for “us at Eagle.” “With Aviva we will be introducing novel concepts in products, services and distribution, adding value to all our stake holders. Eagle is particularly looking at enhancing its capability in the area of bancassurance with the help of Aviva,” he added.
Analysts said that Aviva is unlikely to make a mandatory offer for Eagle as the acquired company NFL is unlisted.

Both CDIC and NDB will benefit by way of significant capital gains from the transaction, estimated at Rs.1.7 billion and Rs1.3 billion for CDIC and NDB respectively, they added.

They said Aviva has effectively paid approximately Rs 177 per share, thus topping the recent unsolicited Rs130 per share bid by conglomerates John Keells Holdings and Carson Cumberbatch.

JKH and Carsons had proposed merging their own insurer Union Assurance with Eagle in the event their bid was successful.

Back to Business