Aviva PLC (AV.LN) Monday said it plans to float about 42% of its Dutch financial services unit Delta Lloyd NV with an offer that values the business at EUR2.6 billion-EUR3.1 billion and should raise gross proceeds of EUR1.2 billion for the U.K. insurance company.

Shares are expected to start trading in Amsterdam on the Euronext exchange Nov. 3.

Aviva said it's offering institutional and retail investors around 63.5 million ordinary shares at EUR15.50-EUR19 each, with an over-allotment option of up to 6.35 million more. The final offer price will be determined through a book-building process.

Aviva will keep 57% of Delta Lloyd ordinary share capital and 53% of the voting rights.

The company said the IPO will give it greater financial flexibility, including the option to explore balance sheet restructuring and further growth opportunities. It should also enhance the value and liquidity of Aviva's retained stake in Delta Lloyd, the company said.

Aviva has the right to nominate two Delta Lloyd supervisory board members and to approve any transaction which would result in Aviva's voting rights being diluted below 50%.

Aviva Chief Executive Andrew Moss said: "The IPO of Delta Lloyd is another important development in the delivery of the strategy we laid out in 2007. This step, which will be the largest IPO in Western Europe this year, will free up capital for us to use elsewhere and will give us the option of exploring further growth opportunities."

In a Delta Lloyd trading update included with the statement, Aviva said the company's life new business sales for the first nine months were GBP2.8 billion, down 12% from a year earlier. The decline was due mainly to lower corporate pension business in 2009 compared with 2008 and was partly offset by the inclusion of sales from Swiss Life Belgium acquired in June 2008.

General insurance premiums for the third quarter of 2009 were ahead of the same period in 2008, the company said.

Delta Lloyd made a net loss for the first nine months of GBP88 million (EUR100 million), Aviva said.

However, the solvency of Delta Lloyd's insurance and banking operations both increased in the three months to Sep. 30, it said.

Aviva shares closed Friday at 450 pence. They have risen 15% since the start of 2009 and are up almost 28% over the last year.

Company Web site: http://www.aviva.com

-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com