Aviva (AV.)

[absolutezero]

(The conversation might have gone.... )

"We've got 4bn pounds ...what can we do with it?"

" err..dunno, we've been flogging stuff off ....it'd look daft to buy something to expand the empire! "

" What's the shareprice.....about 4 quid"

" so...4bn quid at 4 quid a pop....about 1 billion shares....get the CFO to confirm that ! "

" but we can't do it all at once, that'd be 25% of the current pool ..so let's do it over 5 tranches"

" what would that do, if we were to have 5 tranches and bought back that quantity?"

" well, the sharecount would be back at what it was in 2012"

" we'd save ~£200 per annum in dividends and a likely increase in shareprice, the shareprice would probably react favourably to a lot less shares and we could justify a pay increase."

" did you say, pay increase..?"

" oh well, in the absence of any other plan...."

I suspect this is the conversation that happens at any meeting where financial engineering of this type is discussed.

[Dod101]

From a company's point of view, the point about buybacks is to reduce the number of shares in issue. In the case of Aviva where the spare cash arises from the sale of assets, one aim will be to maintain the NAV per share; otherwise the almost inevitable drop in overall earnings and the very inevitable drop in NAV will result in the price per share dropping. But more than that, the fewer shares in issue, the fewer mouths to feed to pay the dividend and each individual shareholder, if they retain their holding, ends up with a slightly higher economic interest.

I simply do not buy the cynicism of monabri in this instance. There are in any case, I think, safeguards against the directors benefiting in the way he describes.

It is simple. The company is smaller and therefore can be supported with fewer shares in issue. The effect is just the opposite of what I complain about with many of the renewables companies when they issue new shares and dilute existing shareholders.

Dod

[scrumpyjack]

From a company's point of view, the point about buybacks is to reduce the number of shares in issue. In the case of Aviva where the spare cash arises from the sale of assets, one aim will be to maintain the NAV per share; otherwise the almost inevitable drop in overall earnings and the very inevitable drop in NAV will result in the price per share dropping. But more than that, the fewer shares in issue, the fewer mouths to feed to pay the dividend and each individual shareholder, if they retain their holding, ends up with a slightly higher economic interest.

I simply do not buy the cynicism of monabri in this instance. There are in any case, I think, safeguards against the directors benefiting in the way he describes.

It is simple. The company is smaller and therefore can be supported with fewer shares in issue. The effect is just the opposite of what I complain about with many of the renewables companies when they issue new shares and dilute existing shareholders.

Dod

Quite so.
If they were buying another business they might issue more shares to fund the purchase. In this case it is the opposite. They have sold some businesses so are going to pay out the cash and reduce the number of shares in issue. Entirely logical and fair. If they can do it in a way that does not force a tax event on continuing shareholders so much the better. A share buyback does that.

[monabri]

https://www.proactiveinvestors.co.uk/co ... 58632.html

Above the 5% level where it can request a shareholder meeting and put forward resolutions .

"When it announced its stake in June, Cevian said that in addition to a £5bn return of capital, it wanted to see £500mln of cost savings (against a company target of £300mln), a doubling of the dividend to 45p and a share price of £8 within three years"

Mmmmm!

[Padders72]

https://www.proactiveinvestors.co.uk/companies/news/958632/aviva-activist-ups-stake-to-over-5-958632.html

Above the 5% level where it can request a shareholder meeting and put forward resolutions .

"When it announced its stake in June, Cevian said that in addition to a £5bn return of capital, it wanted to see £500mln of cost savings (against a company target of £300mln), a doubling of the dividend to 45p and a share price of £8 within three years"

Mmmmm!

Well Cevian can perhaps influence the first 3 items, but how it thinks it can insist on the fourth, namely the doubling of the share price, I would be very interested to hear.

[scrumpyjack]

https://www.proactiveinvestors.co.uk/companies/news/958632/aviva-activist-ups-stake-to-over-5-958632.html

Above the 5% level where it can request a shareholder meeting and put forward resolutions .

"When it announced its stake in June, Cevian said that in addition to a £5bn return of capital, it wanted to see £500mln of cost savings (against a company target of £300mln), a doubling of the dividend to 45p and a share price of £8 within three years"

Mmmmm!

Well Cevian can perhaps influence the first 3 items, but how it thinks it can insist on the fourth, namely the doubling of the share price, I would be very interested to hear.

Perhaps keep buying Aviva shares to force the price up (though they would have to stop at 30% I think unless they made a bid)

[idpickering]

Aviva completes sale of Aviva France for £ 2.8 billion

Aviva plc ("Aviva") today announces the completion of the sale of its French business to Aéma Groupe and has received £2.8- billion2 (€3.2 billion) in cash consideration. The transaction was announced on 23 February 2021.

Amanda Blanc, Group Chief Executive Officer, said:

"This is a very significant step forward for Aviva. It greatly simplifies the company as we focus on our core businesses in the UK, Ireland and Canada.

"I am confident that Aéma, with its strong insurance heritage and reputation, will be an excellent owner of Aviva France. I wish the business and all its people every success for the future."

https://www.investegate.co.uk/aviva-plc ... 08355757N/

[monabri]

Good...excellent news on THIS particular sale!

[idpickering]

Aviva completes sale of Aviva Italia for £2 84m

Aviva plc ("Aviva") today announces the completion of the sale of its Italian General Insurance business to Allianz and has received £284- million1 (€330 million) in cash consideration. The transaction was announced on 4 March 2021.

https://www.investegate.co.uk/aviva-plc ... 00076964N/

[daveh]

3rd Qtr update:
https://www.investegate.co.uk/aviva-plc ... 00030202S/

"Aviva has delivered strong performance in the first nine months. Record inflows in Savings & Retirement and excellent growth in General Insurance support our confidence in Aviva's growth potential. Savings & Retirement net flows were up 21% year-to-date, continuing the strong first half performance. Bulk annuity volumes accelerated sharply in the third quarter. General Insurance premiums1 grew 5% year-to-date reflecting solid customer retention and new business wins, particularly in commercial lines.

"We continue to make excellent and rapid strategic progress, right across Aviva. The completion of disposals in France and Italy GI since the half year are significant milestones as we deliver a radically simplified and refocused Aviva. We are delivering our commitment to return at least £4bn of capital to shareholders, with c.£450m of the £750m share buyback already successfully completed.

"Aviva is targeting Net Zero by 2040 and we welcome the Government's plan, mandating financial institutions to publish transition plans. This will help to ensure that every firm making a Net Zero commitment - whether an insurer, a bank or an asset manager - is doing so in a robust and consistent way.

"We look forward with confidence. We expect the good trading momentum to continue in the fourth quarter, and we remain on track to meet or exceed our cash and cost saving targets."

Strong growth in Life sales2 and GI premiums

• UK&I life sales of £25.3bn (9M20: £21.8bn) with strong growth in Savings & Retirement. Improved annuity volumes versus the first half with £2.4bn BPAs written in Q321, bringing 9M21 volumes to £4.0bn (9M20: £5.0bn).

• General Insurance gross written premiums (GWP)1 up 5% to £6.5bn at 9M21 (9M20: £6.2bn) and COR1 92.4% (9M20: 98.1%).

Continued focus on cost efficiency

• Controllable costs1,3 down 2% (excluding cost reduction implementation and IFRS 17 costs) to £2,045m at 9M21 (9M20: 2,080m) despite the headwinds of inflation and targeted investments in growth.

• On track to achieve savings target of £300m in 2022 relative to our 2018 baseline and net of inflation. Focus over the longer term remains to deliver top-quartile cost efficiency.

Positive outlook for cash remittances

• Expecting strong growth in cash remittances for the year from the £1.4bn achieved last year (9M21 continuing cash remittances: £1.1bn) and we remain on track to achieve our target of over £5bn in cumulative business unit cash remittances1 in 2021 to 2023.

Solvency and liquidity remain strong

• Solvency II shareholder cover ratio of 215% at Q321 (HY21: 203%).

• Pro forma prospective cover ratio at Q321 of c.197%, adjusted for remaining disposals, illustrative capital return, further debt reduction, and also for the estimated impact of interest rate reduction between 30 September and 5 November 2021 (HY21: 195%) - please refer to page 5 for further details.

• Centre liquidity (Oct 21) of £4.5bn (Jul 21: £2.8bn), with the increase since July mainly reflecting divestment proceeds received.

• Solvency II debt leverage ratio of 28% at Q321 (HY21: 26%).

Focus the portfolio nears completion. Capital return underway

• Recently completed disposals of France for £2.8bn and Italy GI for £284m. The remaining completions in Poland, Italy (Life) and Vietnam are expected by the end of the year, bringing to a conclusion the £7.5bn divestment programme.

• £750m share buyback commenced with c.£450m completed. We expect at least £4bn to be returned by HY22 with further details to be provided at FY21 results in March 2022 (subject to regulatory and shareholder approvals, remaining completions and market conditions).

[daveh]

Aviva completes exit from Italy (and Poland).

https://www.investegate.co.uk/aviva-plc ... 00091705U/

Aviva plc ("Aviva") today announces the completion of the sale of its Italian Life Insurance businesses1 to CNP Assurances and has received £462 million2 (€543 million) in cash consideration. This concludes Aviva's exit from the Italian market.

[idpickering]

Aviva Plc to Increase and Extend Share Buy Back

Aviva plc ("Aviva") announces today it will increase and extend its ordinary share buyback programme announced on 12 August 2021 (the "Programme") from £750 million to a maximum aggregate consideration of £1 billion1. The total maximum number of shares to be acquired under the Programme is increased to 392 million1. The Programme commenced on 13 August 2021 and will now complete no later than 31 March 2022.

https://www.investegate.co.uk/aviva-plc ... 00058101V/

[daveh]

and they say:

"We are increasing our share buyback to £1 billion1 as part of our commitment to return at least £4 billion to ordinary shareholders. We will update further on our capital return and dividend plans at our full year results in March 2022."

So we may be in line for a special dividend (and share consolidation?) next year.

[monabri]

The shareholders have not had much from Aviva. An erratic dividend history and a shareprice 20% down on Christmas 2016. The annual dividend costs <£900m so a special could surely be contemplated?

[csearle]

Moderator Message:
The part of the discussion addressing the issue of how a company best gives cash to its shareholders is now here.

[daveh]

CFO resigns:
https://www.investegate.co.uk/aviva-plc ... 00062781Y/

To take up CFO position with Persimmon.

https://www.investegate.co.uk/persimmon ... 04202776Y/

[Bouleversee]

CFO resigns:
https://www.investegate.co.uk/aviva-plc ... 00062781Y/

To take up CFO position with Persimmon.

https://www.investegate.co.uk/persimmon ... 04202776Y/

Is that good news or bad news for a) Aviva, (b) PSN? I have a much larger holding in the latter than the former.

[monabri]

According to my Source (Simply Wall Street) - Mr Windsor has a current annual compensation of £1.48m at Aviva. The RNS indicates a significantly lower base pay at PSN.

The RNS says

"As Chief Financial Officer, Jason will receive an annual base salary of £675,000, which is the same as his salary at Aviva,"

and

"Jason will also receive awards to compensate for remuneration he is forfeiting on leaving his previous employer."

Mayber the awards are "significant" ...of the order of more than 100% of base salary?

Sounds a strange move to make.....annoyed he didn't get the top job at Aviva?

[Dod101]

According to my Source (Simply Wall Street) - Mr Windsor has a current annual compensation of £1.48m at Aviva. The RNS indicates a significantly lower base pay at PSN.

The RNS says

"As Chief Financial Officer, Jason will receive an annual base salary of £675,000, which is the same as his salary at Aviva,"

and

"Jason will also receive awards to compensate for remuneration he is forfeiting on leaving his previous employer."

Mayber the awards are "significant" ...of the order of more than 100% of base salary?

Sounds a strange move to make.....annoyed he didn't get the top job at Aviva?

As Jason Windsor says. Avila has great potential. It a.ways has great potential. The question is when is that great potential going to realised?

Dod

[BT63]

As Jason Windsor says. Avila has great potential. It a.ways has great potential. The question is when is that great potential going to realised?
Dod

Financials appear to be responding positively to the prospect of normalisation of interest rates. Also UK companies (FTSE100) show promising signs of catching up with other markets which they have lagged for many years. Maybe the 'outing' of value is underway.

I don't have a holding in Aviva but have watched with interest since pyad bet the farm on them in the TMF days. I wasn't interested back then but Aviva look much more interesting now so I would be happy enough if they were in my portfolio.

I should clarify that I don't plan to add Aviva (other than as part of UK tracker funds) but I did suggest them as one of about a dozen shares I would buy for a quickly knocked together high-yield portfolio a few weeks ago.