Shares in Aviva (LON:AV) have fallen into the red in London this morning, even as the company unveiled a rise in profits and dividend for the 12 months ended December 31, 2017. Analysts, however, have instead focused on disappointing performance at the insurer’s Canadian business.
As of 09:12 GMT, Aviva’s share price had given up 2.25 percent to stand at 496.20p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having gained 0.15 percent to 7,168.80 points so far in today’s trading.
Aviva posts results
Aviva announced in a statement this morning that its operating profit had climbed two percent to £3.07 billion last year, while its operating earnings per share came in seven percent higher at 54.8p. The company further hiked its payout to shareholders by 18 percent to 27.4p per share for the year.
“In 2017, Aviva delivered growth in profits, in dividends, in capital and in cash,” the group’s chief executive Mark Wilson commented in the statement, adding that the company’s home market had “gone from strength to strength, growing sales, market share and profit”.
“For Aviva, the UK is a dependable and growing business,” Wilson pointed out.
Aviva’s CEO further reiterated that the company was planning to deploy £2 billion of excess cash this year, specifying that £900 million would be spent on debt reduction, in excess of £500 million on capital returns to shareholders, while about £600 million has been earmarked for bolt-on acquisitions.
Analysts weigh in
The Times quoted analysts at Bernstein as noting that in November, Aviva had flagged that its Canadian general insurance business was having a challenging year.
“But the full-year result came in even worse than the market expected due to adverse prior year development, a spike in motor claims inflation and elevated weather and large commercial lines losses,” the analysts pointed out. Aviva said in the statement that it had “implemented a detailed recovery plan” in the country, raising premium rates and taking actions on underwriting, claims, distribution and expense management.