Aviva to return £4bn to shareholders from disposals

Aviva said it would return at least £4bn to shareholders over the next year as the insurer reported a 17% increase in adjusted interim profit.

Operating profit from continuing operations rose 17% tp £725m in the six months to the end of June from a year earlier as Aviva reported its best half-year sales in general insurance for a decade.

Aviva swung to a net loss of £198m from a profit of £874m a year earlier as results were affected by the expected loss on the sale of its French business and investment variances caused by higher interest rates.

The FTSE 100 group said it would return at least £4bn to shareholders by the end of June 2022 including a £750m share buyback starting immediately. Aviva increased its interim dividend by 5% to 7.35p a share.

Aviva Chief Executive Amanda Blanc has been on a disposal spree, agreeing sale of businesses in Italy, France and other markets to raise £7.5bn. The £4bn capital return from the proceeds is less than the £5bn demanded by Cevian, the activist investor that took a 5% stake in June.

General insurance gross written premiums rose 6% to £4.4bn in the first half and life insurance new premiums rose 13% to £16.9bn.

Blanc said: "We have made good progress on all fronts in the 12 months since we launched our strategy. We are delivering on our commitment to make a substantial capital return to our shareholders. We intend to return at least £4bn to investors by the end of the first half of 20221, starting with a share buyback of up to £750m."

Aviva shares rose 3.2% to 419.7p at 10:04 BST and were the best performers in the FTSE 100 index.

Danni Hewson, an analyst at AJ Bell, said: "The hard work starts here for Amanda Blanc. The latest in a series of chief executives to attempt to turn around the insurance firm – she has impressed so far by very rapidly jettisoning Aviva’s non-core operations.

“However, this was low hanging fruit. “The presence of Cevian means there is little chance of Blanc resting on her laurels and they are likely to keep her feet to the fire as they look for progress on driving down costs.”