Aviva rises as Italian exit promises bumper returns
AMANDA Blanc’s transformation of Aviva continued at pace today after the new boss sold more businesses and raised the possibility of bumper shareholder returns.
The insurer’s exit from Italy in deals worth about £800 million takes the proceeds from various disposals since August to £5 billion as Blanc implements her strategy of focusing on core businesses in the UK, Ireland and Canada.
The money raised is being used to pay down debt, and should eventually lead to a progressive dividend policy and return of excess capital to shareholders.
Blanc’s plans have been welcomed in the City, with shares up 8.8p to 392p after today’s annual results and by almost 40% since she took the helm in July.
Aviva has seemingly been in a state of turnaround for years but AJ Bell’s investment director Russ Mould is encouraged by progress under the new leadership team. He added: “If Blanc can match the progress of the first part of her tenure during the rest of her time at the helm then she might well succeed where her predecessors failed.”
Aviva’s performance was one of the highlights of a dour post-Budget session, with the FTSE 100 index down by 62.26 points at 6,613.27 as attention switched back to the global inflation worries driving bond yields higher.
Growth stocks from the tech sector were under pressure as a result, while miners BHP and Rio Tinto were down more than 5% as they began trading without the right to their latest dividend payment.
The fallers also included discount chain B&M European Value Retail as shares continued their retreat from the record high of 600p seen last month.
The slide of 2% or 13.4p to 530.8p came despite the discount chain boosting earnings forecasts for the year to the end of March by £50 million to between £590 million and £620 million.
Analysts at Liberum see a return to record share price levels after increasing their price target to 650p today.
The FTSE 250 index hit a one-year high yesterday but was today off 84.37 points at 21,352.05, with fallers including precision engineering business Renishaw after its promotion to the FTSE 100 index was confirmed last night. Shares fell 320p to 5,960p.