Broker snap: Citi rates Aviva as 'buy' after NY regulator approves US deal

15th Aug 2013 10:49

Citigroup has reiterated its 'buy' rating and 432p target price for insurance group Aviva after the New York regulator approved the deal for Apollo Global Management to take over its US life and annuity business.The deal, first announced in December 2012 for $1.8bn, was on Wednesday approved by the NY regulator as long as Apollo puts in place a set of heightened policyholder protections. Aviva is now awaiting the approval of authorities in Iowa - where the majority of its businesses are regulated - expected by August 17th at the latest."In spite of the confident comments made by Aviva at its 1H13 results presentation last week, we think that the market will react positively to this NY regulatory hurdle being cleared," said Citi analyst Paul Bradley in a report dated August 14th."Today's announcement reinforces our view that the sale will complete in 2013, as planned. This marks another step in Aviva's restructuring journey and the consequent re-rating of the stock," he said.The broker said that Aviva remains one of its top picks in the European insurance sector, trading at 9.0 times 2014 earnings. This is a discount to the European sector-average price-to-earnings multiple of over 10 and the UK insurer-average multiple of over 12.Aviva was trading 0.35% higher at 406.3p on Thursday morning, extending gains made the day before.BC