A.M. Best Puts Ratings of Aviva plc and Its Subsidiaries Under Review with Developing Implications

A.M. Best has put the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of the insurance subsidiaries of Aviva plc (Aviva) (United Kingdom) under review with developing implications. Additionally, A.M. Best has put the ICR of “a-” and the debt ratings of Aviva under review with developing implications. (Please see link below for a detailed listing of the companies and ratings.)

The rating actions follow Aviva’s announcement on 21 November 2014 that it is in negotiations to acquire Friends Life Group Limited (Friends Life) through an all-share offer and that agreement on key financial terms has been reached. Under the terms of the possible offer, each Friends Life ordinary share would be exchanged for 0.74 Aviva ordinary shares. The ratings have been placed under review because A.M. Best needs to evaluate the impact of the transaction on the group’s consolidated risk adjusted capitalisation and financial leverage, as well as the execution risk inherent in a transaction of this size.

A.M. Best expects to resolve the under review status of the ratings upon completion of the transaction.

Should risk-adjusted capitalisation or financial leverage deteriorate as a result of the transaction, there may be negative pressure on the ratings. In contrast, if these two metrics improve post-completion, there could be positive pressure on Aviva and its subsidiaries’ ratings.

For a complete listing of Aviva plc and its subsidiaries’ FSRs, ICRs and debt ratings, please visit Aviva plc.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

• Analyzing Insurance Holding Company Liquidity

• Equity Credit for Hybrid Securities

• Insurance Holding Company and Debt Ratings

• Rating Members of Insurance Groups

• Risk Management and the Rating Process for Insurance Companies

• Understanding BCAR for Canadian Property/Casualty Insurers

• Understanding Universal BCAR

• Catastrophe Analysis in A.M. Best Ratings

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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