Aviva to Hand Investors $5.5 Billion Following Asset Sales
(Bloomberg) -- Aviva Plc plans to return at least 4 billion pounds ($5.5 billion) to investors using proceeds from the recent sale of non-core businesses.
The U.K.-based insurer and asset manager will start with an immediate 750 million pound share buyback, and the balance will be returned to investors by the end of the first half of 2022, Aviva said in an earnings statement Thursday.
Aviva’s shares closed 3.5% higher in London trading.
“We are delivering on our commitment to make a substantial capital return to our shareholders,” Chief Executive Officer Amanda Blanc said in the statement. The company will provide further details about the payout in March next year, she said.
Since joining Aviva just over a year ago, Blanc has focused the firm on its U.K., Ireland and Canada businesses while selling off eight units in other markets. The firm has retained operations in China, India and Singapore.
While Aviva had previously flagged the proposed return to shareholders, the company has recently been targeted by an activist investor seeking higher payouts. Sweden-based Cevian Capital AB revealed in June that it owned a stake of around 5% and said it would push for bigger cost cuts and investor returns.
The “excess capital return by June 2022 is a good start,” Niko Pakalen, partner at Cevian, said in an emailed statement. “But 4 billion pounds would not be enough to address the overcapitalization and we expect the company to return 5 billion pounds by the end of next year.”
The payout marks Blanc’s commitment to move at pace to overhaul the insurer after years of lackluster returns. Shares have risen about 50% since she took the reins in July 2020 as the firm steadily raised some 7.5 billion pounds from its divestment program. Aviva will also use those proceeds to pay down debt.
The proposed return exceeded expectations, wrote Shore Capital Group analyst Abid Hussain, who had estimated around 3 billion pounds. Morgan Stanley analyst Louise Miles said the payout was happening sooner than forecast.
Aviva posted a drop in first-half operating profit to 1.1 billion pounds versus 1.2 billion pounds a year earlier. Operating profit from continuing operations rose 17% to 725 million pounds.
The firm’s investment unit saw net inflows of 829 million pounds, taking total assets under management to around 260 billion pounds.
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