The Courier & Advertiser (Perth and Perthshire Edition)
Insurance giant Aviva sets bold new targets
FTSE 100 group upgrades its financial objectives following restructure
Shares in insurer Aviva climbed in early trading yesterday after the group moved to upgrade its growth targets.
The FTSE 100 group – which in October announced it was adding 150 new customer adviser and claims handlings roles to its major Perth facility, taking its total workforce at the Pitheavlis site to 1,100 – told the City that its financial and strategic position had been “transformed” over the past four years.
It said its capital surplus had tripled, its operations had been streamlined and it was now focused on markets where it held high-quality franchises and was gaining market share.
As a result, Aviva said it was upgrading its financial objectives by raising its growth, cash and dividend targets.
On growth, Aviva is now targeting higher than mid-single digit percentage growth in annual operating earnings per share (EPS) from mid-2019.
It has also uprated its remittance cash target by £1 billion to £8bn, stating it will use £3bn in 2018-19 to repay £900 million of debt next year and fund bolt-on acquisitions and additional returns to investors.
The group has also moved to increase its dividend pay-out ratio target to between 55% to 60% of operating EPS by 2020.
It said it would achieve that target through a combination of “improved earnings quality and cash flows from Aviva’s businesses which are becoming less capital intensive”.
Group chief executive Mark Wilson said the company – which provides a range of insurance and asset management services to more than 33 million customers across the globe – is poised to capitalise on the changes it had made to its operations.
“We are upgrading our cash flow and growth targets,” Mr Wilson said.
“After a few years of restructuring, our businesses are now high quality and we expect good, sustainable growth from each of them.
“We have improved the consistency and quality of our profits and so we are raising our expectations for earnings growth to more than 5% annually from 2019 onwards.”
Two weeks ago the group moved to position itself as one of the largest composite insurers in Ireland with the £116m takeover of Friends First Life and, earlier this week, the company unveiled a landmark new policy offering up to 26 weeks paid parental leave to all staff on the birth of a new child.
Shares in Aviva closed the trading session 2p up at 511p last night.