Bullish goals lift Aviva shares to three-month high

AVIVA expects to generate an extra £3 billion (R55bn) cash over the next two years and will make acquisitions as well as giving money back to shareholders, it said yesterday, sending its share price to three-month highs.

Insurers and reinsurers, among them Allianz and Swiss Re, have been returning cash to shareholders as strong competition cuts expansion opportunities.

Aviva has made a number of disposals in the past year, including in France, Spain, Italy and Taiwan, and says its Indian joint venture is under “strategic review”.

“The franchises we have left have a pretty decent track record,” chief executive Mark Wilson told investors in Warsaw.

“We are moving into a new phase and we have the capital to be able to do it.”

Aviva expects to deploy £2bn of cash in 2018 by spending £900 million on repaying expensive debt and using the remaining £1.1bn for “bolt-on” acquisitions and returning cash, it said in a statement.

Some analysts had expected Aviva would announce a share buyback of £1bn yesterday, but Wilson said the firm had an “appetite for mergers and acquisitions”.

Aviva has said it was looking only at small purchases after its £5.6bn takeover of Friends Life in 2015, and was interested in expanding in “insurtech” and artificial intelligence.

Aviva’s cash promise helped send its shares to a threemonth high. They were up 2.17 percent at 520 pence – the second-biggest gainer on the FTSE 100 index.

Morgan Stanley analyst Jon Hocking reiterated his overweight rating on the stock. “Taken as a package, we think this is a bullish set of goals from Aviva.” – Reuters