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Aviva vows to launch another share buyback scheme in bid to appease activist investors

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The sale continues Aviva's attempts to streamline its global operations to focus on its core markets of the UK, Ireland and Canada.
The sale continues Aviva's attempts to streamline its global operations to focus on its core markets of the UK, Ireland and Canada.

Aviva has vowed to continue returning “surplus capital” to shareholders, through the launch of another share buyback scheme.

The British insurer set out plans to start buying back more of its shares from investors, without saying the value of shares it plans to repurchase, as it faces continued pressure from activist shareholders to boost investors’ payouts.

Aviva chief Amanda Blanc vowed to return surplus capital to the firm’s investors “regularly and sustainably,” as it seeks to pacify Swedish investment fund Cevian Capital, which holds a six per cent stake in the UK’s largest insurance firm.

Cevian have repeatedly called on Aviva to pay more money back to shareholders, in calling on the firm to hand over £5bn to investors by the end of 2022.

Aviva has so far returned £4.75bn to shareholders after raising £7.5bn through a series of asset sales made following Blanc’s succession as chief executive of the UK firm.

The insurer said its Solvency II position “remains very strong” as the firm claimed it had shown “very strong resilience” in the face of the “high levels of market volatility” the UK experienced following the announcement of Liz Truss’ “mini-budget” in September.

Aviva’s pledge to launch another share buyback scheme comes after the insurer posted a 10 per cent increase in general insurance gross written premiums, which saw the line of its business generate £7.2bn in the first nine months of 2022.

The value of new business in Aviva’s UK & Ireland life insurance division also increased 46 per cent to £466m driven by an uptick that saw the value of new business from its annuities and equity release business jump to £143m, from £16m in the first nine months of last year.  

Net flows Aviva’s the workplace segment also increased 11 per cent to £4.1bn. However, net flows in the insurer’s wealth unit stood at £7bn, down 4 per cent compared with last year.

Baseline costs were down 2 per cent year-on-year to £2bn, in a sign Aviva is on track to deliver its £750m savings target by the end of 2024.

“Aviva’s capital and liquidity position is strong and our high quality asset portfolio has performed well during the recent period of extreme market volatility,” Blanc said.