Investors applauded Amanda Blanc as Aviva pledged to return more money to shareholders after announcing stellar half-year earnings.
As a boost for its half-million individual shareholders, the insurance and savings company pledged to conduct another share buyback.
It comes only months after Aviva paid £4.8bn to its shareholders and is likely to calm activist investor Cevian, which has been exerting pressure on Blanc since acquiring a 5% position in June of last year.
Aviva’s chief executive officer, Blanc, declined to comment on how much investors may expect to get in the six-month repurchase, but analysts at Jefferies predicted that it could be between £250m and £300m.
This would push Aviva’s shareholder returns above the £5bn barrier required by Cevian, a Swedish hedge fund managed by Christer Gardell and referred to by some as “the Butcher.”
Aviva’s share price rose 12.2 percent, or 50.6 pence, to 464.9 pence following the announcement and a 14 percent increase in profit to £829 million. Aviva also announced a 40% increase in its interim dividend payout to 10.3 pence per share.
Blanc stated, “Returning value to our shareholders is key to our strategy.”
Blanc has been praised in the City for turning around Aviva, a company that has previously struggled to find its bearings under past chief executives. For years, stockholders were dissatisfied with the lack of growth and poor profits.
Blanc, an enthusiastic rugby fan, joined in July 2020 and spent little time selling non-core operations and restructuring the insurance behemoth, selling eight firms in Singapore, Italy, France, Poland, and Turkey, among others.
Neil Wilson, an analyst at Markets, stated, “Aviva had floundered for more than a decade, but under Blanc, the company has been revitalized; she has been a breath of fresh air.”
However, she remained wary due to the rising expense of living.
The group, like the rest of the insurance business, is struggling with the rising cost of claims as a result of inflation. Blanc also noted that shoppers were choosing cheaper products.
They are interested in value-oriented products, especially in general insurance, where they want to save money.
This week, Blanc echoed Legal & General’s chief executive Nigel Wilson’s plea for a change of the Solvency II pension fund regulations.
The sector desires to make it simpler for pension money to be invested in long-term assets such as renewable energy, real estate, and venture capital funds. Blanc stated, “What we are requesting is a climate in which we can invest in UK infrastructure assets.
Aviva’s fortunes dramatically varied from those of Prudential. The historic insurer has sold all of its British, European, and American operations to concentrate on Asia.
It revealed its findings from Hong Kong for the first time in its history, with interim CEO Mark FitzPatrick stating, “We have not just physically but emotionally shifted to Asia.”
Covid lockdowns have harmed Prudential, which anticipates gaining business from the region’s expanding middle class in the long run.
Comparing the first half of this year to the same period in 2022, profits on new business declined 5%.
In normal years, a significant portion of the company’s revenue is generated by selling policies to Chinese nationals who cross the border into Hong Kong.
As a result of Hong Kong’s higher life expectancy and the perception that service levels are superior, a significant number of them purchase insurance outside of China.
This year, though, profits from new Chinese clients in Hong Kong were negligible.
