Aviva expects windfall from Delta float

       British insurer Aviva expects to pocket 1.2 billion ($1.79 billion) for future growth and possible acquisitions when it floats Dutch unit Delta Lloyd in Europe's largest IPO this year.
       Aviva said yesterday that Delta Lloyd shares would be offered on Euronext's Amsterdam exchange at between 15.5 and 19 each, valuing the business at 2.6 billion to 3.1 billion.About 42% of Delta's shares will be sold, leaving Aviva as the group's biggest investor with 57%. The balance is held by Dutch charitable trust Fonds NutsOhra.
       "This step, which will be the largest IPO in western Europe this year, will free up capital for us to use elsewhere and give us the option of exploring further growth opportunities," Aviva chief executive Andrew Moss said in a statement.
       "There are no surprises there, the timing and details were as people were expecting," said MF Global analyst Peter Eliot."From Aviva's point of view, it is probably less than they would have like to have received for it, at less than embedded value, but at the same time it is a loss-making business."
       At the upper end of the price range,the shares represent a 24% discount to Delta Lloyd's market-consistent embedded value (MCEV), a measure of insurance companies' worth which includes the present value of future earnings from life policies.
       Delta Lloyd calculated its own MCEV at 4.1 billion at the end of June.Reuters reported on Sunday that the IPO would be offered at a discount to MCEV to stimulate investor interest amid a raft of competing share sales.
       But under Aviva's more conservative approach, Delta Lloyd had an MCEV of
       2.7 billion at the half-year, putting the IPO at a slight premium at the midpoint of the price range.
       Aviva said in August that it would consider using the proceeds of the Delta IPO to acquire rivals weakened by the financial crisis.
       The company yesterday reiterated that Delta Lloyd's stock market listing could also help it make acquisitions as the Benelux insurance market undergoes a period of consolidation.
       Aviva would have to give its approval to any merger or takeover involving Delta Lloyd that took the British insurer's stake below 50%.
       Delta Lloyd said yesterday that it made a net loss of ฃ88 million ($143.4 million)in the nine months to Sept 30, while life new business sales for the period fell 12% to ฃ2.8 billion.
       Trading in Delta Lloyd shares is expected to begin in Amsterdam on Nov 3, Aviva said.