Aviva announced the proposed acquisition of AmerUs on 13 July 2006 in a transaction recommended by the board of AmerUs for a price of $69 for each ordinary share, valuing the company at approximately $3.1 billion (£1.7 billion).¹ The acquisition was financed by a £900 million equity placing, internal resources and external debt. AmerUs shareholders approved the transaction on 19 October 2006.

The acquisition of AmerUs transforms Aviva’s US business, making it the fourth-largest long-term savings business in the Aviva group and establishing a leading position for Aviva in a high-growth segment of the world’s largest savings market. AmerUs is a leader in the US indexed market, ranking number one in sales of indexed life insurance and third in sales of indexed annuities.

Aviva anticipates annual pre-tax cost savings of approximately $45 million before tax by 2008. Significant revenue benefits will also be realised from the broader combined distribution platform and the superior financial strength ratings of Aviva. It is expected that the transaction will be accretive to Group IFRS and EEV operating earnings per share by 2007 and 2008 respectively and to have an annual post-tax return on investment of over 10% by 2009.

Thomas Godlasky, former CEO, AmerUs, becomes CEO of the combined business with immediate effect. Philip Easter, currently finance director of Aviva’s UK general insurance business, will become chief financial officer with effect from 1 January 2007, subject to US regulatory approval. Philip Easter will replace Melinda Urion who will leave the business on 15 December 2006. The combined business will be called Aviva.

Philip Scott, executive director, Aviva International, said: "Our acquisition of AmerUs gives us a leading position within an important segment of the world’s largest long-term savings market. In a single step this provides a platform for significant profitable growth in the US while becoming the fourth-largest life business in the Aviva group. Integration planning of our existing US business into AmerUs is well-advanced and integration will begin immediately."