Aviva cost saving on track as it looks to hand back £4bn to investors

·3-min read
Aviva cost saving on track as looks to hand back £4bn to investors
In a trading update Aviva revealed that third quarter sales for life insurance in the UK and Ireland rose 9% to £25.3bn during the period. Photo: Chris Radburn/PA Images via Getty

Insurer Aviva (AV.L) has announced it is on track to meet or exceed its cash remittance and cost saving targets.

It also said it is set to hand back at least £4bn ($5.4bn) to shareholders, with around £450m of its £750m share buyback completed.

In a trading update it revealed that third quarter sales for life insurance in the UK and Ireland rose 9% to £25.3bn during the period.

Net flows into Aviva's savings and retirement business climbed 21%, to record levels in the first nine months, while general insurance premiums were up 5%.

"Aviva has delivered strong performance in the first nine months,” chief executive Amanda Blanc said.

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“We continue to make excellent and rapid strategic progress, right across Aviva. The completion of disposals in France and Italy GI since the half year are significant milestones as we deliver a radically simplified and refocused Aviva.”

Blanc has been at the helm of the firm for just over a year, and during her tenure the insurer has sold eight businesses for £7.5bn.

Earlier this year it sold its Polish arm to rival Allianz, Europe’s largest insurer, for €2.5bn (£2.1bn, $2.95bn).

Aviva is now turning its focus on its strongest businesses in the UK, Ireland and Canada, where it has “leading market positions and strong growth potential”.

Aviva shares. Chart: Yahoo Finance UK
Aviva shares were up on Thursday. Chart: Yahoo Finance UK

Blanc said: “Aviva is targeting net zero by 2040 and we welcome the government's plan, mandating financial institutions to publish transition plans. This will help to ensure that every firm making a net zero commitment — whether an insurer, a bank or an asset manager — is doing so in a robust and consistent way.

"We look forward with confidence. We expect the good trading momentum to continue in the fourth quarter, and we remain on track to meet or exceed our cash and cost saving targets."

It comes as Cevian, one of Europe’s largest activist investors, has taken a 5% stake in Aviva and plans to shake-up the company. It believes that Aviva is undervalued and is looking for a £5bn return to investors by the end of 2022.

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In August Aviva said it would return £4bn to shareholders, but Cevian said this was insufficient. It believes there to be scope for further cost-cutting by the insurer, totalling at least £500m by 2023.

Analysts at Panmure Gordon said the results were "solid" but added that Aviva could return an additional £1bn to shareholders.

Shares were 0.4% higher on the day in London.

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