Sale of Aviva USA at higher price a credit positive

Now able to refocus their efforts on businesses and markets where they have  lead positions — the strategic basis for the sale of Aviva USA — Aviva has improved liquidity and now has more capital than expected, a position, according to Moody’s, that could lead to attractive financial returns. Completing the sale for more than expected also counteracts execution risk.

The completion of the sale leaves Aviva a leaner, more limber entity, which will reduce its economic capital volatility to credit spread movements. Moody’s maintains that the expected improvements will offset a large accounting loss Aviva previously incurred, although it will continue to be significant drag even with the higher returns.

Although the sale of Aviva USA results in nimbler company, the sale diminished the geographic diversification of Aviva’s revenues and profits.