Aviva PLC, the U.K.’s largest insurer, plans to buy AmerUs Group Co. in a deal that would significantly boost its presence in the U.S. life and annuity markets.
Under the agreement, valued at about $2.9 billion, Aviva would acquire AmerUs, Des Moines, for $69 a share in cash and assume about $700 million in AmerUs debt.
AmerUs reported having $24.7 billion of total assets at the end of March, while at year-end 2005, Aviva reported worldwide assets of $583 billion.
Both companies’ boards of directors have approved the acquisition, according to an announcement on July 13 by AmerUs.
The agreement would merge AmerUs with Aviva USA, Boston. The combined company would be headquartered in Des Moines under Thomas Godlasky, CEO of AmerUs.
Aviva USA distributes a variety of life and annuity products through 5,500 independent agents and brokers as well as through several U.S. banks.
Aviva says the acquisition would increase its U.S. sales by 400% by establishing it in high-growth segments of the U.S. retirement and savings markets.
It would make Aviva a leading player in the U.S. equity-indexed annuity market, where AmerUs is ranked third, with a market share of about 9% in 2005. AmerUs also claims a 50% market share for equity-indexed life insurance policies.
Just before the announcement, AmerUs reported second quarter fixed annuity sales of $625.7 million, down from about $713 million a year earlier. Its sales of life insurance totaled $33.3 million, up from about $31 million a year earlier.
AmerUs Group consists of AmerUs Life Insurance Company, American Investors Life Insurance Company, Indianapolis Life Insurance Company and Bankers Life Insurance Company of New York.
London-based analysts of Standard & Poor’s Ratings Services affirmed Aviva’s A+ rating following news of the acquisition and revised its outlook on AmerUs to positive from stable.
AmerUs Group has “strong stand-alone fundamentals and healthy growth prospects,” the analysts stated.