Aviva

[Tara]

Moderator Message:
Discussion moved from Company News because it isn't company news. - Chris

According to Google share charts the Aviva share price was over £16 in April 1998 and over £11 in February 2007.

Are these share prices for Aviva accurate?

And if they are accurate, how was the Aviva share price so high 25 years ago and more than 4x the price it is today?

[scrumpyjack]

According to Google share charts the Aviva share price was over £16 in April 1998 and over £11 in February 2007.

Are these share prices for Aviva accurate?

And if they are accurate, how was the Aviva share price so high 25 years ago and more than 4x the price it is today?

Yes, it was called Commercial Union then as I recall. It has been a serial disaster with frequent 'rebasing' of the dividend, but it may be that Ms Blanc has finally begun to sort it out

[Steveam]

From memory there has been a return of capital (was it via a “B” share which was then bought back?) and a consolidation. As Scrumpjack say it has been a serial disappointment but I’ve held for years and bought more at various points and am showing a profit and the dividends keep rolling in. As I don’t do any proper analysis I’ll leave comparisons to others … I think I recall that there was an analysis done earlier this year by a fellow Fool.

Best wishes,

Steve

[Tara]

From memory there has been a return of capital (was it via a “B” share which was then bought back?) and a consolidation. As Scrumpjack say it has been a serial disappointment but I’ve held for years and bought more at various points and am showing a profit and the dividends keep rolling in. As I don’t do any proper analysis I’ll leave comparisons to others … I think I recall that there was an analysis done earlier this year by a fellow Fool.

Best wishes,

Steve

You must be one of the very few long term shareholders who can show a profit here. Since 1990 the share price has only briefly been below £4 on a few occasions. One of which is now.

So it is difficult to see exactly what Amanda Blanc has done, except sell off various parts of the company. It has certainly done very little for the Aviva share price since she became CEO in 2020.

And how exactly has the Aviva share price gone from over £16 in 1998, to less than £4 today? Have the earnings collapsed since 1998? Or were Aviva shares just trading on an absurdly high PE in 1998?

[Steveam]

From memory there has been a return of capital (was it via a “B” share which was then bought back?) and a consolidation. As Scrumpjack say it has been a serial disappointment but I’ve held for years and bought more at various points and am showing a profit and the dividends keep rolling in. As I don’t do any proper analysis I’ll leave comparisons to others … I think I recall that there was an analysis done earlier this year by a fellow Fool.

Best wishes,

Steve

You must be one of the very few long term shareholders who can show a profit here. Since 1990 the share price has only briefly been below £4 on a few occasions. One of which is now.

So it is difficult to see exactly what Amanda Blanc has done, except sell off various parts of the company. It has certainly done very little for the Aviva share price since she became CEO in 2020.

And how exactly has the Aviva share price gone from over £16 in 1998, to less than £4 today? Have the earnings collapsed since 1998? Or were Aviva shares just trading on an absurdly high PE in 1998?

Hi Tara,

Thanks for your comments. There is a little historic complexity here. I used to write options and some of my Aviva shares were bought as assignments of sold Puts. I also wrote Calls against the shares. My measurements of Aviva (from my PoV) includes the options premiums. My capital situation with Aviva (including the option premiums) is that Aviva shares cost me about £3.65 per share.

Best wishes, Steve

[EthicsGradient]

The return of capital was about £1 per share, in May 2022 - you can see the corresponding £1 drop in the share price on the Google chart then. So anyone who bought at below £5 or so before then is in a capital profit - from Feb 2020 to March 2021. Aug 2011 to Aug 2013, and Nov 2008 to July 2009, roughly. I hold mine in a SIPP, so haven't kept a contract note, but it reckons I have a 5% gain on it - I think I bought in the 2008-9 period.

[daveh]

I don't recognize the £16 price. I've owned since the demutualisation of Norwich Union. My average price is in the £3s including some early dividend reinvestment. Looking at my overall performance my TR is a gain of 100% almost entirely from the dividends received, with the value of the shares about the same as what I paid for them, but dividends received being slightly more than the cost of the shares.

[monabri]

According to Google share charts the Aviva share price was over £16 in April 1998 and over £11 in February 2007.

Are these share prices for Aviva accurate?

And if they are accurate, how was the Aviva share price so high 25 years ago and more than 4x the price it is today?

On 16/05/2022 there was an Aviva share split (76 for 100). If we pencil that date in, prices after that date on the Google share chart are what you would have paid to buy/sell (give or take intra day price movements). However, if one looks at the reported shareprice before this date, the share prices seem to have been "back-calculated" and increased by a factor to reflect the split : 100/76 (factor of 1.31)

For example (bearing in mind that the sp moves in the day and I'm rounding to the close price and on my buy price)... I look at my "buy" records:-

16/08/2017 Paid 527p Google says 696p (1.32x)
05/12/2018 Paid 398p Google says 523p (1.31x)
08/04/2020 Paid 250p Google says 333p (1.33x)
07/01/2022 Paid 432p Google says 568p (1.31x)
------------------------------------------------------------
post share split
------------------------------------------------------------
18/08/2023 paid 382p Google says 382p (agrees)


The max price in April 1998 seems to have been mid-month and reached 1684p. I wonder if there are any holders out there who have buy prices at around this time to see if the 1.31 factor applies?

[scrumpyjack]

The return of capital was about £1 per share, in May 2022 - you can see the corresponding £1 drop in the share price on the Google chart then. So anyone who bought at below £5 or so before then is in a capital profit - from Feb 2020 to March 2021. Aug 2011 to Aug 2013, and Nov 2008 to July 2009, roughly. I hold mine in a SIPP, so haven't kept a contract note, but it reckons I have a 5% gain on it - I think I bought in the 2008-9 period.

No, I don't think that is correct. When the return of capital happened, there was then a share consolidation so that you had fewer shares, so your cost per share was effectively unchanged. Your remaining, smaller, shareholding will still have cost you 500p and you are showing a loss.

[monabri]

The return of capital was about £1 per share, in May 2022 - you can see the corresponding £1 drop in the share price on the Google chart then. So anyone who bought at below £5 or so before then is in a capital profit - from Feb 2020 to March 2021. Aug 2011 to Aug 2013, and Nov 2008 to July 2009, roughly. I hold mine in a SIPP, so haven't kept a contract note, but it reckons I have a 5% gain on it - I think I bought in the 2008-9 period.

No, I don't think that is correct. When the return of capital happened, there was then a share consolidation so that you had fewer shares, so your cost per share was effectively unchanged. Your remaining, smaller, shareholding will still have cost you 500p and you are showing a loss.

A calculation of XIRR would resolve - to include (i) Initial investment, (ii) the return of capital in May would be entered into the calculation along with (iii) division received. The current value being a reduced qty of shares x current shareprice.

[Tara]

I don't recognize the £16 price. I've owned since the demutualisation of Norwich Union. My average price is in the £3s including some early dividend reinvestment. Looking at my overall performance my TR is a gain of 100% almost entirely from the dividends received, with the value of the shares about the same as what I paid for them, but dividends received being slightly more than the cost of the shares.

That seems like the most likely explanation.

The £16 share price in 1998 is nonsense, and the Google share price chart is nonsense.

So are the shares that you received for the Norwich Union demutualisation in 1997 the exact equivalent of one Aviva share today?

The article below indicates that each Norwich Union share was worth £3.50 in 1997.

This seems like a more reasonable 1998 share price for Aviva than the £16 indicated by the Google share price chart.

https://www.theguardian.com/money/1999/ ... .business2

[EthicsGradient]

The return of capital was about £1 per share, in May 2022 - you can see the corresponding £1 drop in the share price on the Google chart then. So anyone who bought at below £5 or so before then is in a capital profit - from Feb 2020 to March 2021. Aug 2011 to Aug 2013, and Nov 2008 to July 2009, roughly. I hold mine in a SIPP, so haven't kept a contract note, but it reckons I have a 5% gain on it - I think I bought in the 2008-9 period.

No, I don't think that is correct. When the return of capital happened, there was then a share consolidation so that you had fewer shares, so your cost per share was effectively unchanged. Your remaining, smaller, shareholding will still have cost you 500p and you are showing a loss.

No, I think I got it right: in my 31 March 2022 statement, Aviva was listed as
ORD GBP0.25 Quantity 560 Price £4.5195 Value £2,531 Cost £2,003
and at 30 June 2022
ORD GBP0.328947368 Quantity 425 Price £4.0135 Value £1,706 Cost £1,603
and the return of capital (sent to me on 19 May, but affecting the share price between 13 and 16 May) was £569.46. My remaining shareholding may have cost me the same as before, but I got some of that cost back in the return of capital, so that has been allowed for (though I notice the numbers are not exact). The charts, which show the share price on 31st March closing at £5.9487 (rather than the £4.5195 it really was), have allowed for the consolidation, but not for the return of capital.

If you look at the LSE chart for the stock (selected the Max timespan, which will go back to Oct 2003), it doesn't have the sudden drop in May 2022 - it's all accounted for, and you can see the periods where the effective price was lower than now more clearly.

[EthicsGradient]

I don't recognize the £16 price. I've owned since the demutualisation of Norwich Union. My average price is in the £3s including some early dividend reinvestment. Looking at my overall performance my TR is a gain of 100% almost entirely from the dividends received, with the value of the shares about the same as what I paid for them, but dividends received being slightly more than the cost of the shares.

That seems like the most likely explanation.

The £16 share price in 1998 is nonsense, and the Google share price chart is nonsense.

So are the shares that you received for the Norwich Union demutualisation in 1997 the exact equivalent of one Aviva share today?

The article below indicates that each Norwich Union share was worth £3.50 in 1997.

This seems like a more reasonable 1998 share price for Aviva than the £16 indicated by the Google share price chart.

https://www.theguardian.com/money/1999/ ... .business2

But Norwich Union shares didn't have a 1:1 correspondence with CGNU (ie Aviva) shares - from July 2002:

But the merger with CGU in 2000 meant that for every 100 NU shares held, a shareholder received 48 CGNU shares.

Aviva's share price has withered alarmingly. On Monday it plummeted to what's thought to be a 13-year low of 375p before recovering to about 445p.

Someone with an initial £1,000 worth of shares will now find they are worth £694. Put back the dividends and the value is £848.

https://www.theguardian.com/money/2002/ ... nvestments

So £3.50/NU share in 1997 is equivalent to 3.5*100/48=£7.29/Aviva share. Factor in the approx 20% return of capital in 2022, and you are back at the nine pounds something share price that Shares Magazine gives in its history of the Aviva share price (it is, of course, possible that other are following the history of CGU before the 2000 merger, which will look different again).

[daveh]

This reply went missing yesterday. According to my records I paid 552.08 per share for NU on demutualisation, but that price is after the merger with Commercial union as the shares are shown as 108.48 shares paid for (at 552.08) and 143.52 free shares I received as a NU member on demutualisation. My spreadsheet was made after the merger so used the share numbers after the merger, but split the holding between the free shares I was given and the extra shares I bought as part of the demutualisation.

[AJC5001]

If you look at the LSE chart for the stock (selected the Max timespan, which will go back to Oct 2003), it doesn't have the sudden drop in May 2022 - it's all accounted for, and you can see the periods where the effective price was lower than now more clearly.

Yahoo Finance have a chart that goes back to 1988 at max.
https://uk.finance.yahoo.com/quote/AV.L/chart?p=AV.L
Adrian

[EthicsGradient]

If you look at the LSE chart for the stock (selected the Max timespan, which will go back to Oct 2003), it doesn't have the sudden drop in May 2022 - it's all accounted for, and you can see the periods where the effective price was lower than now more clearly.

Yahoo Finance have a chart that goes back to 1988 at max.
https://uk.finance.yahoo.com/quote/AV.L/chart?p=AV.L
Adrian

Which is presumably based on either Commercial Union or General Accident as a plc (they merged in 1998). But Yahoo too shows the drop at the return of capital, so you have to adjust if using that - the return of capital was 134p per new share (which is what Yahoo shows now), so about 531p is the level to look at.