If British insurer Aviva is successful in clinching AmerUs, a US life assurer with a market capitalisation of $2.5 billion (€1.95 billion), it will dramatically expand its presence in the world's biggest long-term savings market.
Aviva, Britain's biggest insurer and the parent company of Hibernian, yesterday confirmed it was in talks to acquire AmerUs.
Last year, Aviva generated just £527 million of life and pension sales in the US, out of total group life and pension sales of £22.3 billion, under a new measure comprising all new single premiums and the present value of new annual premiums. US sales accounted for 4 per cent of Aviva's worldwide long-term savings sales outside Britain.
Acquiring AmerUs would provide Aviva with a leading position in the market for indexed long-term savings products. This includes indexed annuities, where the returns are linked to an underlying index, typically equities.
In the US, annuities generally refer to retirement savings products with options for paying out those savings. It also offers indexed life assurance.
According to analysts at Citigroup, AmerUs sold $2.39 billion of equity-indexed annuities in 2005, ranking it in fourth place in the market. AmerUs is also the market leader in indexed life assurance, with $94.1 million of sales in 2005.
Aviva has made no secret of its desire to expand in the US, where it has said it is underweight relative to the size of the group.
With AmerUs, it would be gaining a strong position in a niche area, rather than having small positions across a range of different market segments. However, this position could be a stepping stone to other parts of the US long-term savings market.
