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Aviva Completes AmerUs Acquisition

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A British insurance giant has closed on a $3.1 billion acquisition of a major player in the U.S. equity-indexed annuity and equity-indexed life insurance markets.

Aviva P.L.C., London, says it already has started integrating the operations of the deal’s target, AmerUs Group Company, Des Moines, Iowa, with its own U.S. operations.

Aviva generates the equivalent of about $63 billion in sales per year. It is the largest insurer in the United Kingdom and the 5th largest in the world.

AmerUs reported $191 million in net income in 2005 on $1.6 billion in revenue.

Although Aviva is much larger than AmerUs worldwide, completing the AmerUs deal will give Aviva a strong position in the U.S. savings market, Aviva says.

Aviva is locating the headquarters of the combined U.S. operations in Des Moines under the direction of Thomas Godlasky, who has been the CEO of AmerUs.

Godlasky will keep the CEO title, but Philip Easter, finance director of Aviva’s U.K. general insurance business, is taking over from Melinda Urion, the current AmerUs chief financial officer, as CFO.

Urion is leaving Aviva, Aviva says.

Standard & Poor’s Ratings Services, New York, has responded to the completion of the deal by increasing the counterparty credit rating on AmerUs to A, from BBB plus. S&P has affirmed the A plus counterparty and financial strength ratings it has assigned AmerUs units such as AmerUs Life Insurance Company, Bankers Life Insurance Company of New York and Indianapolis Life Insurance Company.

S&P increased the parent company’s rating partly because of the completion of the Aviva deal, according to Robert Bowen, an S&P credit analyst.

“We consider AmerUs Group to be strategically important to the Aviva group, one of the largest insurance groups in the world,” Bowen says in a statement.

S&P analysts view AmerUs’s strength in the equity-indexed products arena as a mixed blessing.

In 2005, sales of equity-indexed products accounted for about 80% of AmerUs’s life sales and more than 90% of its annuity sales.

AmerUs’s focus on equity-indexed products has helped the company keep costs low and profits and capital levels high, but S&P has some concerns about the fact that AmerUs gets such a high percentage of its business from one class of products, the rating agency says.


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