Aviva leaves door open to return more capital

AVIVA may be able to give more cash back to shareholders, its chief executive said on Wednesday, as the British insurer reported a 5 per cent increase in general insurance sales in the first quarter and said its capital position was strong.

Aviva’s Solvency II ratio, a key measure of capital strength, came in at 198 per cent. A level of 100 per cent is considered by regulators the absolute minimum which insurers should hold.

“We’ve said that we will keep a clear commitment that any excess capital above the 180 per cent solvency ratio that we don’t reinvest in the business to generate more value will be returned to shareholders over time,” CEO Amanda Blanc told Reuters.

“We won’t retain excess capital where we can’t put it to good use in the business.”

Aviva’s shares were up 0.64 per cent at 0734 GMT, outperforming the FTSE 100.

Aviva is under pressure from activist investor Cevian Capital, which holds 6 per cent of the insurer’s shares, to return more money to shareholders.

The home, motor and life insurer has already given £4.75 billion (S$8.15 billion) back to investors after raising £7.5 billion following a string of disposals around the globe since Blanc was appointed chief executive in July 2020.

Aviva, which has major businesses in Britain, Canada and Ireland, also said in March it would boost its dividend this year and next, although Cevian said the insurer could do more.

Aviva said on Wednesday it was on track to meet financial targets which it raised in March, including cost savings of £750 million gross of inflation across 2018-24.

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Aviva targets on track as Q1 general insurance sales rise 5%

General insurance gross written premiums rose to a record 2.1 billion pounds in the first quarter, while sales in the insurer’s life business rose 1 per cent to £8.7 billion.

Fund management unit Aviva Investors saw external net outflows of £200 million, however, which it said reflected volatile market conditions. Assets under management totalled £253 billion at the end of March, a 5 per cent drop on the quarter.

Jefferies analysts said the results showed there was “promising growth in pockets of the business”, reiterating their “hold” rating on the stock. REUTERS