Insurance giant AIA enters SL

To acquire 92.3 % stake of Aviva NDB:

AIA Group Limited (AIA or the Group) has agreed to acquire a 92.3 % stake in Sri Lankan insurer, Aviva NDB Insurance, through Aviva NDB Holdings Lanka (Pvt.) Limited from British insurer Aviva and Sri Lanka’s National Development Bank (NDB).

In addition, Aviva NDB will enter into a 20 year bancassurance agreement with NDB, one of Sri Lanka’s largest financial conglomerates with a nationwide bank branch network. AIA has also agreed to sell to NDB the 83.9 percent stake in NDB Aviva Wealth Management Limited (NAWM) which will be acquired by NDB Group as part of the proposed transaction.

The remaining 7.7 percent of Aviva NDB Insurance not acquired represents the shares publicly held and traded on the Colombo Stock Exchange of Sri Lanka (CSE) and no offer will be made for the remaining shares. Total net consideration payable by AIA with respect to the transaction, including the exclusive bancassurance agreement with NDB and the sale of the NAWM stake is US $ 109 million

The acquisition reflects the quality of the Sri Lanka business, operations and management and its position of strength in the Sri Lankan market. Customers will benefit from the strength, security and certainty associated from being part of the AIA Group, which is the fifth largest insurance company in the world by market capitalization. The conclusion of the transaction and the subsequent re-branding and renaming of AVIVA NDB as AIA is subject to necessary legal, statutory and regulatory approvals.

Mark Tucker, AIA’s Group Chief Executive and President, said, “We are delighted to be entering Sri Lanka, a country with a compelling combination of strong economic growth prospects and low existing levels of insurance penetration.

“This acquisition will immediately establish AIA as the second largest life insurance company in Sri Lanka. Aviva NDB Insurance, with its experienced management team, high quality employees and agents and an attractive long-term bancassurance relationship, represents an excellent platform from which to participate and grow in the highly attractive Sri Lankan market.”

“We look forward to playing a leading role in the development of Sri Lanka’s insurance sector as we meet the long-term savings and protection needs of increasing numbers of Sri Lankan individuals and families.”

Shah Rouf, Managing Director of AVIVA NDB Insurance said, “Our Company has progressively been getting stronger, to the point where we are now the second largest life insurer in Sri Lanka. Becoming part of AIA is a fulfillment of our own vision to be the premier insurance company in Sri Lanka.”

Simon Machell, Chief Executive of Higher Growth Markets, Aviva Group commented, “The sale price reflects the relative success and growth of the AVIVA NDB business. We take great pride in having developed a robust market leading insurer that will continue to play an important role in the emerging Sri Lankan economy.”

CEO of NDB Group, Russell de Mel stated, “We are very pleased to have been part of the growth of AVIVA NDB Insurance and the entry of the insurance giant AIA will further strengthen the company. Insurance, the third pillar of the NDB Group, will continue to exist through an even stronger alliance in bancassurance that we will have with AIA. This transaction also gives an opportunity for the NDB Group to further strengthen its strategic alliances within the financial services sector whilst enhancing and releasing core capital; a prerequisite to boost organic and inorganic growth of the NDB Group. It is a timely opportunity to become a significant national and regional player in the financial sector and contribute further to the growth of Sri Lanka.”

Established in 1987, Aviva NDB Insurance has a composite insurance license and is Sri Lanka’s second largest life insurer with 800 employees and a high-quality tied agency force of 3,100 agents. In the year ended 31 December 2011, Aviva NDB Insurance recorded gross written premiums of US$ 81 million with life premiums accounting for approximately 75 per cent and non-life premiums 25 per cent of the total premiums.

AIA Group Limited and its subsidiaries (collectively “AIA” or “the Group”) comprise the largest independent publicly listed pan-Asian life insurance group. It has wholly-owned main operating subsidiaries or branches in 14 markets in Asia Pacific – Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau and Brunei and a 26 per cent joint venture shareholding in India.