Aviva warns on dividend amid UK push

Michael O'Dwyer
·2 min read
aviva
aviva

Aviva could launch a wave of corporate sell-offs in a back to basics drive as its new boss focuses her attention on UK insurance. 

Chief executive Amanda Blanc vowed to concentrate on growing the FTSE 100 firm's strongest businesses in Britain, Ireland and Canada - even if that means cutting back operations elsewhere in the world.

Speaking a month into the top job after predecessor Maurice Tulloch was ousted amid demands for a faster turnaround, she also warned the dividend could be cut following a review later this year. 

The shake-up will raise questions over the future of Aviva’s operations in Europe and Asia, which serve millions of customers.

Ms Blanc said there may be “better owners for these businesses than Aviva in the longer term” but would not be drawn on specific sale plans. 

She said: “Where we cannot meet our strategic objectives, we will take decisive action and we will withdraw capital.

Markets Hub - Aviva
Markets Hub - Aviva

Any deals would be a U-turn on the stance taken by Mr Tulloch, who decided against major sales in Asia last year as he felt the prices being offered did not reflect the value of Aviva’s business there. 

Aviva runs a pensions and investment business as well as selling both life insurance and general cover for risks including motor, home and travel. 

Its sprawling geographic reach and vast number of products have put it at odds with an industry where many of the leading players increasingly focus on a single geography or product class. 

Prudential has chosen to concentrate on Asia, spinning off UK and European business M&G, last year in a £5.7bn stock market float. 

Fellow FTSE 100 rival Legal & General is heavily focused on pensions and life insurance and investing in infrastructure. 

Ms Blanc said she wanted to take advantage of Aviva's status as the leading general and life insurer in the UK, and its position as a top three player in Ireland and Canada.

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She said: “We are going to focus on those businesses where we have the necessary size, capability and brilliant customer service to generate superior shareholder returns. This is where we will invest and grow. 

“From this moment on, we must deliver. Nothing else will do. My focus is making sure it happens and at pace.”

The firm will pay a second interim dividend of 6p per share after cancelling its full-year payout for 2019 earlier in the pandemic due to pressure from regulators. 

Ms Blanc said the dividend must be resilient and sustainable, and will be reviewed in light of Aviva’s new strategic priorities and plans to cut its £10.2bn debt mountain. She promised to give further details later this year. 

Pre-tax profit in the first half of the year fell £400m to £1.1bn. Shares rose 4pc to 295p in morning trading.