Aviva's strategic transformation to focus on its strongest businesses in the UK, Ireland and Canada has taken a major step forward with the sale1 of Aviva France to Aéma Groupe for €3.2bn in cash.

Aviva said the deal "significantly strengthens" Aviva's capital and liquidity with an increase in excess capital3 of £2.1bn and centre cash of £2.8bn

Amanda Blanc, CEO of Aviva, said: "The sale of Aviva France is a very significant milestone in the delivery of our strategy."

"It is an excellent outcome for shareholders, customers, employees and distributors. The transaction will increase Aviva's financial strength, remove significant volatility and bring real focus to the Group."

"Aéma Groupe has a strong heritage in the French insurance industry and this transaction will propel it to a top five position in the French market. I am confident Aéma Groupe will be an excellent owner of Aviva France."

The sale follows Aviva's sale of its shareholding in an Italian joint venture in November last year, as the company looks to refocus on its core markets.

The transaction covers the French life, general insurance, and asset management businesses and the (75%) shareholding in Aviva France.

Aviva says it expects to use the increased capital and cash to support its previously communicated capital framework of debt reduction, investment for long-term growth and return of excess capital to shareholders. Part of the cash proceeds (up to £0.5bn) will be used to accelerate repayment of some of the Group's internal loan with Aviva Insurance.

Aviva France is the largest part of the Group's manage-for-value portfolio and has not remitted any dividends to Aviva plc in 2020. Aviva France's core business is capital intensive and this transaction will reduce the volatility in the Group's solvency ratio by removing exposure to interest rate risk from the Eurofonds guaranteed life insurance product.

As part of the transaction with Aéma Groupe, Aviva has agreed to customary warranties and indemnities.

Aéma Groupe is a leading French mutual insurer, with 8m customers, revenues of over €8bn and €7.4bn of equity, created in January 2021 as the result of the combination of Aésio and Macif.

In 2019, Aviva France's IFRS profit after tax was £293m. The gross assets and IFRS net asset value of Aviva France were £91.2bn and £2.4bn respectively as at 30 June 2020. The French asset management operations of Aviva Investors will form part of the transaction. As at 30 June 2020, these asset management operations had assets under management of £105bn7 and generated IFRS profit after tax of £33m6 in 2019.

Aviva said it would issue a further update on 4 March.