Aviva plans further capital return in boost to shares

Aviva (AV.L) plans to return more cash to shareholders, the British insurer said as it posted a better-than-expected 14% rise in first-half operating profit, sending its shares to the top of the FTSE 100 gainers on Wednesday.

Activist investor Cevian Capital, which holds 6% of Aviva’s shares and has called on it to boost payouts, declined comment after the insurer said it planned to launch a share buyback with its 2022 results and would decide on its size at year-end.

Aviva, which has major businesses in Britain, Canada and Ireland, has already given 4.75 billion pounds ($5.73 billion)back to shareholders after raising 7.5 billion pounds in a string of disposals since Amanda Blanc became CEO in July 2020.

Cevian has previously called on Aviva to return five billion pounds to shareholders by the end of 2022.

Capital returns would be sustainable and regular, Blanc told a media call, adding that Aviva also had scope for “bolt-on” acquisitions, following its purchase of Succession Wealth earlier this year for 385 million pounds.

Aviva’s shares rose 6% to two-month highs.

Analysts at Jefferies said they expected Aviva to offer recurring 250 million pound buybacks.

Aviva’s operating profit rose 14% to 829 million pounds versus 742 million pounds seen in a company-supplied consensus forecast, helped by strong performance in commercial lines.

However, Aviva Investors’ assets under management dropped by 13% in the first half to 232 billion pounds, hit like many other asset managers by falling markets.

Quilter (QLT.L) on Wednesday reported a 12% drop in assets under management and administration.

Aviva said it would pay an interim dividend of 10.3 pence, in line with its full-year 2022 dividend guidance of around 31.0 pence. Cevian has said Aviva has room to make larger dividend payments in future.

($1 = 0.8285 pounds)