Aviva share price falls 3% after CEO warns of ‘muted’ 2019

Aviva made steady progress in 2018, with the insurer seeing decent profits growth, which allowed the company to increase its full-year dividend.

But despite recording a strong set of full-year results, the company’s share price edged 3% lower on Thursday morning, after its new CEO Maurice Tulloch warned that of a ‘muted’ outlook for 2019.

‘Given current uncertainties, including the unknown future impacts of Brexit on the economies of the UK and Europe, our near-term outlook entering 2019 is more muted than our outlook a year ago,’ Tulloch said.

‘While we achieved 7% operating EPS growth in each of the past two years, it will be difficult to sustain this momentum in 2019.’

Aviva results: key figures

The insurer recorded a 2% increase in operating profit to £3.1 billion, with cash remittances up 31% to £3.1 billion.

Aviva’s Solvency II capital surplus fell slightly to £12 billion from £12.2 billion a year prior, with the insurers Solvency II cover ratio at 204%, up from 198% in 2017.

‘Looking forward, our capital management plan will prioritise debt reduction for the foreseeable future,’ Chairman Adrian Montague said. ‘We plan to reduce debt by at least £1.5 billion by the end of 2022, saving approximately £90 million per year in interest expenses.’

‘This builds on the £1.4 billion of debt repaid over the past two years and will further enhance our financial flexibility,’ he added.

Aviva increases dividend after strong 2018

The insurer’s performance over the course of 2018 helped it to increase its full-year dividend, with the company offering a final pay-out of 20.75p a share, bringing its total 2018 dividend to 30p per share.

‘The security and sustainability of our dividend remains paramount,’ Montague said.

‘We are moving to a progressive dividend policy, which will see the dividend maintained or grown over time depending on business performance and growth prospects.’