* Sale price is below $2.9 bln Aviva paid in 2006
* Boosts economic capital surplus by $1.8 bln
* Shares down 0.5 pct
LONDON, Dec 21 Aviva, Britain's No. 2
insurer, has agreed to sell its U.S. business for $1.8 billion,
far less than it paid for it and the biggest disposal so far in
a reorganisation aimed at boosting its underperforming share
Aviva USA Corporation, a provider of life insurance and
annuities, is being bought by Athene Holding, a specialist life
insurer majority-owned by U.S. private equity company Apollo
, Aviva said on Friday.
The sale price is below the $2.9 billion that Aviva paid for
the U.S. business in 2006, but the insurer said the deal would
make it financially stronger by reducing capital requirements
and cutting its exposure to volatile credit investments.
Aviva's economic capital surplus - the amount by which its
capital reserves exceed its requirements - will rise by 1.1
billion pounds ($1.79 billion), the company said.
"The disposal of the U.S. business represents a successful
end to the year and sets us up well for 2013," Aviva chairman
John McFarlane said in a statement.
Aviva shares were down 0.5 percent by 1055 GMT, against a
0.8 percent fall in the STOXX 600 European insurance share index
. The stock has risen 27 percent since the start of the
year, lagging a 33 percent gain for the sector.
The U.S. sale forms part of a plan launched by Aviva in July
to sell or close 16 businesses that tie up over a third of the
insurer's capital while contributing just 18 percent of
Aviva has so far also jettisoned part of its stake in Dutch
insurer Delta Lloyd as well as its entire share of
Aseval, a Spanish joint venture with Bankia.
The reorganisation, drawn up by McFarlane, came after
investors forced out chief executive Andrew Moss, who had
overseen a 60 percent fall in Aviva's share price during his
Mark Wilson, formerly chief executive of Asian life insurer
AIA, takes over the top job at Aviva on Jan. 1, the insurer said
Aviva USA accounted for about 9 percent of Aviva's total
operating profit last year. Proceeds from the sale will be $1.55
billion once debt is repaid, Aviva said.