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After Aviva CEO Andrew Moss told an investors conference last week that the British insurance giant would investigate the possibility of selling off its North American operations, most of the speculation turned to how this would affect Aviva’s profitability and positioning in the marketplace. But just as critical a question is what would happen to those spun-off operations here in the U.S. Would Aviva be able to quickly find a buyer, and if so, who would it be?

See also: Slideshow: 6 Potential Buyers for Aviva USA

Whoever does snap up Aviva’s U.S. operations will be gaining a sizable piece of business. Although Aviva doesn’t break out American sales specifically, its North American unit reported more than $300 million in profits. Aviva USA, based in West Des Moines, Iowa, has been valued by Eamonn Flanagan, an analyst with Shore Capital in Chester, England, at around $1 billion. Just two years ago, Aviva opened a new 360,000-square-foot corporate headquarters building in Iowa, where it employs 1,300 people. 

But the business certainly hasn’t been performing up to Aviva’s standards. Last week, the India-based financial newspaper the Business Standard reported that in November 2010 Aviva set a series of targets for its businesses to hit, including a 12 percent return on equity. One of the businesses that fell far short was that in the U.S., where the ROE in 2011 was only 3.7 percent.

And it’s not a great time to be selling. UBS has estimated that American-based life-insurance businesses are now trading at only 0.9 times their book value. But one primary reason Aviva is looking to sell now is because of Solvency II, the new EU insurance regulations that will come into effect in 2014. European insurers will be required to hold much more in the way of reserves under Solvency II, which is especially difficult on indexed annuities, Aviva’s flagship product here in the U.S. Aviva paid $2 billion to acquire AmerUs of Des Moines back in 2006 when it was seeking to strengthen its foothold in the American market, so the current value of its American holdings is only around half that.

The good news is that Aviva’s American business is probably available at a bargain price right now. With interest rates so low, indexed annuities have been taking a beating in the marketplace, but rates are likely to turn back up at some point, greatly enhancing the value of the business. “A large variable annuity company might be interested,” says Judith Alexander, director of sales and marketing at the annuity-research firm Beacon Research. “It might enable them to offer their products through different channels.”

Who’s the likely buyer? There are several possibilities:

Newport Beach, Calif.-based Pacific Life recently entered the indexed-annuities space, which is the specialty of Aviva USA. And it’s been on a bit of a buying binge lately. It purchased Manulife’s Life Retrocession business last July and U.S. Pension Advisory Group last August. The question is whether Pacific Life still has the resources available for another major acquisition.

Richmond, Va.-based Genworth re-entered the fixed-annuity marketplace in the fourth quarter of 2011, and Aviva’s book of business would fit nicely with that. Genworth, too, might have a hard time making the purchase, though. Losses of more than half a billion dollars in the company’s home-loan guaranty business in 2011 have left Genworth stock trading at less than half what it used to, and the company with little financial maneuverability.

For Edina, Minn.-based Western National, Aviva’s presence in the independent producer channel would make a really nice fit. Western National recently re-entered the fixed-annuity space, primarily in the bank channel, so the Aviva business, which is primarily in the independent space, would expand their marketing channels. But Western may not be in any more position to make a sizable acquisition than Pacific or Genworth.

American National, based in Galveston, Texas, is another player with a small presence in the fixed-annuity business, and it might see Aviva’s book of business as a complementary piece to its strong position in the fixed-annuity market.

If none of those smaller companies have the financial wherewithal to absorb Aviva USA, larger players might want to step in. “MetLife and Prudential would be big enough, but it would have to be for the right price,” says Alexander. New York Life might also have the money to make a play, and would benefit from the opportunity to get into the indexed-annuities market.

For a real longshot, an insurer might take a look at Aviva as a way of gaining U.S market share. Tokio Marine spent $2.7 billion for Delphi Financial Group in a deal that was approved last month, and Meiji Yasuda Life Insurance has also said it will be looking to make overseas acquisitions.

Of course, it doesn’t have to be another insurance company that gobbles up Aviva USA. Alexander points out that investment banks have to be considered potential players here as well. “They certainly know how to raise capital,” she says, “and they also know how to buy and sell bonds for investment purposes.”

Investment banks that have moved into the insurance business include Goldman Sachs, which owns Commonwealth and its subsidiary, First Allmerica Financial; Columbia and its subsidiary, Charleston Capital, and, in its most recent purchase, Bermuda’s Ariel Re. In addition, Guggenheim bought EquiTrust and Security Benefit Life last year, and Harbinger bought F&G (formerly Old Mutual Financial Network). Any of those might be willing to make a play for Aviva.

It might be a long while before Aviva USA gets bought up by anyone. But with plenty of suitors potentially in playall of whom have strong reasons for buying, and equally valid ones for staying out of the wayit should make for an entertaining courtship.