By Charlie Conchie
Aviva shareholders are braced to see whether the insurance giant can regain some momentum this week after its share price has stalled in recent months to trade no higher than 30 years ago.
The FTSE-100 firm will update the City on its first half results on Wednesday, with investors eager for an update on its shift in focus towards core British, Irish and Canadian operations, as well as an update on the £385m acquisition of Succession Wealth, the UK wealth management and financial planning business.
Shares in the firm have stalled in recent months and are trading down over 25 per cent this year, causing analysts to pare back their expectation for the stock in the past month. Credit Suisse, Deutsche Bank and RBC are all among the teams to trim their target price for the firm in the past month.
Equity analysts at AJ Bell said that breathing life back into its flagging share price will be near the top of the agenda for boss Amanda Blanc as she updates shareholders.
“Chief executive Amanda Blanc is trying to fix that [share price], but she bore the brunt of shareholder frustration – and some unpleasant, neanderthal behaviour – at the company’s Annual General Meeting in May,” said Russ Mould, AJ Bell Investment Director.
“Nor is that the only pressure point, since activist investor Cevian Capital is still on the shareholder register. The Anglo-Swedish firm has been pushing Aviva for even deeper cost cuts and greater cash returns than those announced by the FTSE 100 firm.”
Investor and analyst eyes will therefore be trained on updates to Aviva’s plans to slash £400m off the cost base between 2018 and 2023. Cevian has pushed for the plans to go further with £500m trimmed off costs by 2023.
Aviva produced an operating profit of £1.1bn a year ago although analysts have factored in a dip in this year, which Mould said could be down to the Financial Conduct Authority’s new rules on pricing, inflation in claims costs and the impact of the business disposals.
Investors will be hoping for another boost in insurance sales and net asset value after the first quarter saw the reverse of a pandemic-induced slowdown.
In the first three months of the year, Aviva unveiled five per cent growth in gross written premiums to a new record high, two per cent growth in Life sales in the UK & Ireland and £2.7bn of net inflows at the wealth management operation.
The firm is also targeting a distribution of 31.5p a share for all of 2022, a 40 per cent uplift on last year, and 33p for 2023.
Aviva is currently trading at around 402p per share.
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