Aviva Boosts Shareholder Returns, Buys Succession Wealth

(Bloomberg) -- Aviva Plc said it will return 4.75 billion pounds ($6.3 billion) to shareholders, and will invest half a billion pounds in growth and efficiency efforts in the coming year as it enters the next stage of its overhaul.

The U.K.-based insurer and asset manager also said it had acquired financial advice firm Succession Wealth for 385 million pounds as it reported full-year results Wednesday. The results showed group adjusted operating profit of 2.27 billion pounds, slightly below a Bloomberg-compiled analyst consensus of 2.33 billion pounds.

Aviva previously said that it was planning to return at least 4 billion pounds to investors from the sale of some of its non-core assets.

The results are a milestone for the revamp launched by Chief Executive Office Amanda Blanc after she took the reins in July 2020. Blanc refocused the firm on the U.K., Ireland and Canada and sold off eight units in other markets.

The shares rose 1.1% at 8:14 a.m. in London.

“Our financial position is strengthened and Aviva is now a much simpler, leaner business, focused on our core markets in the UK, Ireland and Canada,” Blanc said, noting each of Aviva's 22,000 employees would each receive 1,000 pounds of shares.

Dividend Policy

The firm also updated its dividend policy, estimating it would pay a dividend of about 870 million pounds in 2022, up around 40% from 2021. That would rise to 915 million pounds in 2023 with “low-to-mid single digit growth” thereafter, the company said.

The insurer is also moving to a new London headquarters as it downsizes its property footprint as the firm embraces flexible working, Blanc said on a call with journalists. Aviva is in the process of exiting the small amount of Russian investments it holds.

“We have a very, very minimal exposure to Russia via our Aviva Investors business and we will be divesting of that exposure as soon as we practically can,” Blanc said.

The firm said it would also pay investors a total dividend of 22.05 pence per share in 2021, up 5% from the previous year. It will investment 200 million pounds between 2022 and 2023 in cost reduction, and 300 million pounds for growth over 2022 and 2024.

Sweden-based Cevian Capital AB, which revealed in June it owned an around 5% stake in the company, said that it wanted Aviva to return 5 billion pounds by the end of the year.

Other Highlights:

Solvency II shareholder cover ratio of 244%
Assets-under-management at its U.K. workplace pensions plan growth hit 96 billion pounds, up from 81 billion pounds in 2020, with members up 6% to over 4 million
Cost savings target of 750 million pounds between 2018 and 2024