Aviva will lose $1.6 billion on American exit - report

LONDON, April 22 Sun Apr 22, 2012 6:53am EDT

LONDON, April 22 (Reuters) - Britain's second biggest insurer Aviva is expected to announce the sale of its American life assurance business Aviva USA next month, on which it will make a loss of one billion pounds ($1.6 billion), the Sunday Times reported.

Chief executive Andrew Moss will likely announce the sale at an investor day on May 24 as part of a wider strategic overhaul of the company. The business is likely to fetch about one billion pounds, about half what Aviva paid for it six years ago, the newspaper said.

Aviva declined to comment.

Moss recently told an investor conference the company was open to offers for its American unit, two sources with knowledge of the matter told Reuters this month.

Bankers said potential European buyers could be put off bidding because of new European insurance rules known as the so-called Solvency II capital directive.

Solvency II could force European companies to hold more capital against their American businesses if European regulators decide U.S. capital standards for insurers are less exacting than their own.