Aviva on track to hand back £4bn to investors

VIVA today set out a strong case for its defence against activist investor Cevian, saying it is on track to hand back at least £4 billion to shareholders.

Cevian, one of Europe’s biggest activist investors, has taken a 5% stake and plans to shake-up the insurer. It thinks Aviva is undervalued and wants to see £5 billion returned to investors.

Aviva might get there yet, depending on the completion of a deal to sell its Polish arm. It will give the City a clearer picture at full year results next March.

Under CEO Amanda Blanc, in place for just over a year, Aviva has sold eight businesses for £7.5 billion. It is now focussed on the UK, Ireland and Canada.

Today Aviva, born from messy mergers between Commercial Union, General Accident and Norwich Union, said it has completed £450 million of a £750 million share buyback programme.

It is on track to cut £300 million of costs – Cevian thinks there is scope for more. While so far it is supportive of management, Cevian has been clear it thinks the insurer could move more quickly.

Blanc said: “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.”

Life insurance third quarter sales in the UK and Ireland rose 9% to £25.3 billion.

Aviva shares rose 3p to 409p today – they are up from 310p a year ago.

The insurer manages assets of towards £500 billion, putting it at the front of drives to make businesses more climate friendly. It has told oil polluters to clean up their act – or see Aviva sell the stock.

Blanc added: “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.”