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Aviva plans share buyback programme for end of financial year

Aviva raises dividend and plans another share buyback program as boss lauds ‘excellent’ half-year

  • The financial services group has announced an interim dividend of 10.3 p
  • It also plans to launch a share repurchase program by the end of the year
  • Aviva shares are up 5% Wednesday morning after stalling in recent months

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Aviva raises its dividend by 40 percent and plans a new share buyback program by the end of the year.

The life insurer and pension provider has seen its share price come to a halt in recent months, shortly after its £385 million acquisition of Succession Wealth, which is set to close later this year.

But investors reacted positively to the strong performance in the first half on Wednesday, with Aviva Shares 5.9 percent higher at 438.75p in early morning trading.

Aviva plans to launch a share buyback program by the end of the fiscal year

Aviva plans to launch a share buyback program by the end of the fiscal year

Chief executive Amanda Blanc said: “Sales are up, operating income is up, our financial position is stronger. This was an excellent half year for Aviva.’

Aviva increased its operating income in the first half of the year by 14 per cent to £829 million, supported by strong annuity and equity release performance, and a 2 per cent cut in core costs.

New business sales in the life insurance segment rose 3 per cent to £17.4 billion, while gross written premiums from the non-life insurance business rose 6 per cent to £4.7 billion.

The Solvency II Coverage Ratio, a measure of the company’s capital strength, rose from 186 percent to 213 percent and helped boost the interim dividend to 10.3 pence.

But Aviva’s after-tax loss rose from £198 million to £633 million, due to ‘adverse market movements’.

The company said it expects “continued growth” in its life insurance segment and will use “appropriate pricing to contain inflation” on its insurance products.

Keith Bowman, investment analyst at Interactive Investor said: “In terms of stock price, a 23 percent year-to-date loss in these latest results is comparable to a 15 percent pullback for the FTSE All World Index.

Overall, geographic diversity has declined in recent years due to past business sales, with insurance profits hampered by factors such as rising claims and less favorable weather.

Non-life operating profit fell 11 per cent to £375 million. On the positive side, a more focused business has been achieved.’

Aviva also said it expects to repurchase shares by the end of the fiscal year, subject to market conditions and regulatory approval.

In May, Aviva released £4.75 billion to shareholders through a B-share program.

“Assuming a new buy-back is agreed, its size will be determined by the Board at the end of the year and will take into account the financial position at that time, as well as both the drivers of the capital surplus (including the impact of market movements) and our preference to return excess capital regularly and sustainably,” the company said.

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