FTSE 100: Aviva reiterates share buyback plans after robust trading

An Aviva logo sits on the window of the company head office in the city of London, Britain March 7, 2019. REUTERS/Simon Dawson
Aviva . Photo: Simon Dawson/Reuters

Aviva (AV.L) announced plans for a further share buyback on Wednesday after it posted strong trading momentum over the last nine months.

Here's what the company announced on Wednesday:

General insurance premiums: Rose 10% in the first nine months of the year to £7.2bn.

Dividend: Confirmed at 31p per share for 2022 and 32.5p for 2023

Solvency ratio: This figure, a key measure of capital strength, came in at 223%, above the top end of its target range

The insurer said the size of the buyback was not yet confirmed but reiterated its dividend guidance of around 31p per share for 2022 and 32.5p for 2023.

It saw general insurance premium growth of 10% to £7.2bn over the period, with 7% growth in the UK to £3.9bn and 8% in Canada to £3.0bn.

The general insurance operating ratio remained strong at 94.3% against 92.4% last year, while the estimated solvency II shareholder cover ratio pro forma of 215% was 35 points above the top-end of the group’s target range.

Meanwhile, the value of new business in the UK and Ireland life division rose 46% to £466m, driven by strong growth in annuities and equity release of £143m compared to £16m the year before.

Continued good sales growth of 3% in its wealth division, and 4% in protection and health, were offset by lower bulk purchase annuity volume. Overall UK&I life sales of £24.9bn were down 1%.

Baseline costs fell 2% to £2bn, Aviva said, however it remains on track to deliver its savings target of £750m by the end of 2024.

It comes as the group also completed its acquisition of Succession Wealth in August. Succession Wealth advisers can now access Aviva's platform and are now benefiting from its offering and service. As a result, they can also access Aviva's multi-asset funds, the firm said.

Profitability remained robust across its life and general insurance sectors, while its capital and liquidity position was strong. Despite the recent period of extreme market volatility, the insurer said its high quality asset portfolio performed well.

Shares were 2% lower on the day in London as Barclays (BARC.L) analysts pointed to a drop in Aviva's sales of bulk annuities – insurance for corporate pension schemes.

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“Trading is positive and our performance is consistently strong. We have had a good nine months due to our market leading positions, our customer focus and the clear benefits of Aviva’s diversified business across insurance, wealth and retirement,” Amanda Blanc, group chief executive, said.

“Our customers have continued to save for their future and protect what is valuable to them. Flows in our Wealth business were encouraging and general insurance volumes continue to grow, especially in commercial lines.

She added: “We remain confident in the outlook for Aviva. We are on track to deliver our financial targets and trading momentum is building.

Analysts at Jefferies have previously said they expect Aviva to make recurring £250m pound pay-outs.

Aviva has already returned £4.75bn to investors after raising £7.5bn in a string of asset sales since Blanc took the helm in July 2020.

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