Apollo Unit to Buy Aviva\'s U.S. Unit for $1.8 Billion

A unit of Apollo Global Management agreed on Friday to buy the American operations of Aviva, the British insurer, for about $1.8 billion in cash.

The deal is meant to improve Aviva's financial strength as the insurer rebuilds a balance sheet ravaged by the European debt crisis. The firm has embarked on a series of asset sales meant to raise cash.

Friday's deal will generate about $1.55 billion in proceeds for the insurer, after it pays off some debt.

“The sale of Aviva USA is an important step forward in the delivery of our strategic plan,” John McFarlane, Aviva's chairman, said in a statement. “It considerably strengthens Aviva's financial position, increases group liquidity and improves our economic capital surplus whilst also reducing its volatility.”

The Aviva unit's acquirer is Athene Holding , a four-year-old Bermuda-based insurance holding company that has grown through a series of acquisitions. The deal for the Aviva unit is its biggest to date, according to data from Standard & Poor's Capital IQ.

Athene plans to fold the acquisition into its existing American business, which will become one of the biggest providers of fixed-index annuities in the United States.

“With this acquisition, Athene is a leader in the fixed-annuity space,” James R. Belardi, Athene's chief executive, said in a statement. “The purchase of Aviva's U.S. annuity business will add significant scale to our retail sales and reinsurance operations and provides Athene with best in class operational capabilities.”

The insurer will also weigh a potential sale of the Aviva unit's life insurance operations.

Athene had already received about $621 million in additional capital to help bolster its financial health in advance of the transaction. On Friday, Apollo agreed to provide up to $100 million in additional support.

Athene was advised by Deutsche Bank, Lazard and the law firm Sidley Austin.

Aviva was advised by Goldman Sachs and Morgan Stanley.