Aviva’s boss has intensified her efforts to turn around the insurer. She is implementing a plan that will boost cash returns to investors and increase annual profits by £2 billion within three years.
Amanda Blanc stated that the group is “moving faster than ever before”, as they posted an increase of 9 per cent in their annual operating profit last year, to £1.47 Billion. This was higher than the £1.43 Billion expected by City analysts.
Aviva will also return another £300 million in share buybacks to investors, on top of the final dividend of 22.33p per share declared by the group for 2023. The total amount of capital Aviva returned to investors in the last three years is now more than £9bn.
Aviva announced that it would increase its dividend guidance to a mid-single digit percentage growth of the cash cost, rather than its previous goal of low- to midsingle digit increases. Blanc’s growth ambitions were also demonstrated by her target to generate £2 billion operating profit by 2026.
Investors reacted by driving Aviva’s shares up 11p or 2.4% to 466p.
Blanc has received praise in the City after he became Aviva’s chief executive in July 2019.
The FTSE 100 insurer is Britain’s largest composite insurer. It offers both life and general insurance. It was formed in 2000 by the merger of Norwich Union with CGU. Aviva shareholders were frustrated by Aviva’s poor stock market performance when Blanc took over.
She quickly restructured the company, selling off a number of divisions in order to remove it from Italy, Vietnam France, Turkey, Poland, and Singapore. It was refocused on the UK, Republic of Ireland, and Canada. A large portion of the proceeds generated were returned to investors.
Amanda Blanc, the chief executive of Aviva, stated that Aviva has no intention to compete with Direct Line, a motor insurance company.
Blanc has also tried to boost Aviva’s growth through small acquisitions. This included a £385million deal to acquire Succession Wealth two years ago, which gave Aviva a presence in financial advice. A £460million takeover of AIG’s UK protection business in September last year and a £100million purchase of Optiom Canada in November.
This week, she continued her acquisition spree with a £242million deal for Probitas. The FTSE100 company returns to the Lloyd’s of London market after 24years away.
She stated that Aviva had “pretty much covered” itself and that it was not interested in Direct Line – the motor insurance company that Ageas, its Belgian competitor, is attempting to acquire for £3.1 billion. Blanc stated that “we don’t have a burning desire to say we’ve got an actual problem in this sector and we need fill the gap.” “But if we say that, then we’ll be opportunistic.”
Aviva shares are up sharply since Blanc was appointed chief executive, but little has changed from a year earlier amid a general malaise in London-listed financial service stocks. Aviva has become a target for takeover speculation, and Generali of Italy has been mentioned as a potential suitor. Blanc stated: “This is mostly market chatter.” We’re focusing on running a business that I believe is very, very profitable.