Shares in Aviva (LON:AV) have spiked more than six percent in London this morning, after the blue-chip insurer unveiled plans to return capital to shareholders, having strengthened its balance sheet. The company further reported a forecast-beating rise in operating profits for last year.
As of 09:09 GMT, Aviva’s share price had climbed 6.16 percent to stand at 542.50p, outperforming the benchmark FTSE 100 index which has slipped into the red and is currently 0.38 percent worse off at 7,307.46 points. The group’s shares have gained more than 18 percent over the past year, and are up by just under 12 percent in the year-to-date.
Aviva announced in a statement this morning that its operating profit had climbed 12 percent to £3 billion last year, beating analyst forecasts of £2.9 billion. The result, however, excludes the impact of the change in the Ogden discount rate in UK general insurance. The £380-million charge as a result of the change pressured the group’s IFRS profit after tax, which dipped 22 percent to £859 million.
Aviva, however, unveiled that its Solvency II capital surplus had climbed to £11.3 billion in 2016, as compared with £9.7 billion in the prior-year period, and hiked its total dividend per share by 12 percent to 23.3p.
“Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options,” the insurer’s chief executive Mark Wilson commented in the statement, adding that the company was now ‘actively planning’ to return capital to shareholders and reduce debt this year.
Bloomberg meanwhile quoted Wilson as commenting that the company, which acquired Friends Life in 2015, was not interested in expanding in asset management through acquisitions as blue-chip rival Standard Life (LON:SL) did this week, unveiling that it had agreed to acquire Aberdeen Asset Management (LON:ADN).
“We might do some tactical bolt-ons,” he pointed out. “We’re not looking at any jumbo deals, we don’t need it, we’re getting organic growth across the board.”