Aviva to buy the AIG Life UK : Faces Scrutiny by British Regulators

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Aviva to buy the AIG Life UK
FILE PHOTO: A pedestrians walks past the Aviva logo outside the company head office in the city of London, Britain March 7, 2019. REUTERS/Simon Dawson

Britain’s Competition and Markets Authority (CMA) has thrown the spotlight on the proposed acquisition deal between Aviva, a prominent British insurer, and the subsidiary AIG Life UK. Unveiled in September, this deal has stirred significant interest, prompting the CMA to solicit comments on potential antitrust implications.

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Aviva to buy the AIG Life UK : Assessment of Market Impact

The CMA has signaled concerns over the possibility of this merger leading to a substantial reduction in competition within various markets across the UK. In its endeavor to assess the situation comprehensively, the antitrust authority has extended an invitation for input from stakeholders. Interested parties have until February 22 to submit their perspectives. The CMA is mandated to reach a decision by April 8.

Aviva’s Response and Regulatory Landscape

Aviva, in response to the scrutiny, has underscored the routine nature of regulatory approvals in transactions of this nature. The company remains optimistic about the deal’s completion in the first half of 2024, contingent upon obtaining necessary regulatory clearances. Aviva has assured stakeholders that no shareholder approval is required for the acquisition.

Strategic Benefits and Financial Implications

Amanda Blanc, Aviva’s Group Chief Executive, has emphasized the strategic significance of the proposed acquisition, citing substantial strategic and financial benefits. The deal is expected to bolster Aviva’s presence in the lucrative UK protection market by integrating 1.3 million individual customers and 1.4 million group members, where employers are the clientele. Additionally, the acquisition is projected to enhance Aviva’s solvency ratio by reducing it by five percentage points, bolstering its resilience against financial shocks.

Aviva to buy the AIG Life UK : Legal Representation and Historical Context

Legal representation for AIG in this transaction is led by Skadden Arps Slate Meagher & Flom LLP, while Aviva’s counsel information is pending. Notably, AIG Life Ltd. had previously acquired Ellipse from Munich Re in 2018, further underlining its strategic moves in the UK market.

Market Response and Pending Comment

Despite the regulatory turbulence, Aviva’s shares on the FTSE 100 index of the London Stock Exchange held steady at 129.25 pence during early trading on Thursday afternoon. AIG has yet to respond to requests for comment, leaving stakeholders awaiting further developments.