Aviva shares up on £300m buy-back

Aviva PLC posted upbeat full-year results as activist investor Cevian took a back seat at the company. The activist investor had cut its shareholding in the insurer to less than 5% prior to the company announcing it would return more cash to investors. Cevian had pushed for Aviva to return more capital to investors.

The insurer unveiled a share buyback scheme of £300 million alongside its results. Aviva has returned £5 billion to shareholders since 2021. Shares in the company rose 3% to 463.5p on Thursday.

Operating profits for the full-year 2022 rose by 35% to £2.2 billion, while general insurance gross premiums increased by 8% to £9.7 billion. The Solvency II cover ratio, which rates the insurer’s financial health and ability to meet liabilities, came in at a healthy 212%, albeit down from 244% in the same period last year. UK and Ireland value of new business increased by 15% to £767 million.

Aviva – strong trading momentum

"We are making excellent progress at Aviva,” chief executive Amanda Blanc told investors. “Operating profits and dividends are growing and we have strong trading momentum despite significant market volatility.

“Our core businesses in the UK, Ireland and Canada grew in 2022, and contributed to a very strong, all round performance. Life insurance value of new business is up 15%, general insurance sales are up 8% and overall operating profit is up 35%.”

Blanc says that cash remittances are “up strongly” – they rose 11% to £1.8 billion during the period – and that the insurer’s capital position is “robust,” while customer numbers have increased to 15.5 million.

The company saw net inflows of £9.1 billion in its wealth division during the year, boosted by a strong performance in Workplace, which added 374 additional schemes.

However, annuities and equity release sales fell by 21% to £6.2 billion. UK and Ireland general insurance gross written premiums rose by 7% to £5.7 billion.

Aviva – bullish on outlook

Despite the difficult macroeconomic environment, the insurer says it expects to see continuing strength in its commercial line of general insurance and higher bulk purchase annuities in UK and Ireland life insurance as pension companies de-risk.

The company is also focusing on efficiencies and is on track to make £750 million in cost cuts so far this year.

Meanwhile, Aviva is looking to increase its dividend pay-out policy to the low to mid-single digit levels, with a pay-out of £915 million due for 2023.

Analysts at UBS set a price target of 505p on the shares, while those at Barclays think the shares could reach 560p.

Shares in the insurer are up 12% over the past 12 months to 450p. However, with a 9% dividend yield and solid growth prospects, they are a buy.

Take your position on 17,000+ shares with the UK’s No.1 platform.* Learn more about trading or investing in shares with us, or open an account to get started today.
* Best trading platform as awarded at the ADVFN International Financial Awards 2022