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Aviva plans further capital return in boost to shares
Global Banking & Finance Review®
Company
By Carolyn Cohn
LONDON (Reuters) -Aviva plans to return more cash to shareholders, the British insurer said as it posted a better-than-expected 14% rise in first-half operating profit, sending its shares to the top of the FTSE 100 gainers on Wednesday.
Activist investor Cevian Capital, which holds 6% of Aviva’s shares and has called on it to boost payouts, declined comment after the insurer said it planned to launch a share buyback with its 2022 results and would decide on its size at year-end.
Aviva, which has major businesses in Britain, Canada and Ireland, has already given 4.75 billion pounds ($5.73 billion)back to shareholders after raising 7.5 billion pounds in a string of disposals since Amanda Blanc became CEO in July 2020.
Cevian has previously called on Aviva to return five billion pounds to shareholders by the end of 2022.
Capital returns would be sustainable and regular, Blanc told a media call, adding that Aviva also had scope for “bolt-on” acquisitions, following its purchase of Succession Wealth earlier this year for 385 million pounds.
Aviva’s shares rose 6% to two-month highs.
Analysts at Jefferies said they expected Aviva to offer recurring 250 million pound buybacks.
Aviva’s operating profit rose 14% to 829 million pounds versus 742 million pounds seen in a company-supplied consensus forecast, helped by strong performance in commercial lines.
However, Aviva Investors’ assets under management dropped by 13% in the first half to 232 billion pounds, hit like many other asset managers by falling markets.
Quilter on Wednesday reported a 12% drop in assets under management and administration.
Aviva said it would pay an interim dividend of 10.3 pence, in line with its full-year 2022 dividend guidance of around 31.0 pence. Cevian has said Aviva has room to make larger dividend payments in future.
($1 = 0.8285 pounds)
(Reporting by Carolyn Cohn; Editing by Sinead Cruise and Alexander Smith)
A dividend is a payment made by a corporation to its shareholders, typically from profits. It represents a portion of the company's earnings distributed to investors as a reward for their investment.
Capital return refers to the distribution of cash or assets to shareholders, often through dividends or share buybacks. It is a way for companies to return profits to their investors.
Operating profit is the profit a company makes from its core business operations, excluding deductions of interest and taxes. It reflects the efficiency of the company in managing its operations.
A share buyback occurs when a company purchases its own shares from the marketplace. This reduces the number of outstanding shares, potentially increasing the value of remaining shares.
Asset management is the process of managing investments on behalf of clients, including individuals and institutions. It involves making decisions about investment portfolios to achieve specific financial goals.
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