Aviva (LON:AV) has come under fire over its controversial decision to cancel preference shares worth £450 million, The Times has reported. The news comes after the FTSE 100 group updated investors on its full-year performance last week, revealing a rise in profits and dividend for the 12 months ended December 31.
Aviva’s share price rose marginally in the previous session, adding 0.39 percent to close at 521.40p. The shares outperformed the broader UK market, with the benchmark FTSE 100 index shedding 9.75 points to end the session 0.13 percent lower at 7,214.76p. The group’s shares have lost about 3.6 percent of their value over the past year, as compared with a 1.75-percent dip in the Footsie.
Aviva attacked over preference shares plans
The Times reported yesterday that Nationwide, Britain’s biggest building society, had said yesterday that it would not be copying Aviva’s move to cancel its preference shares, hours after Ecclesiastical Insurance Office, a specialist insurer of churches, had launched a thinly veiled attack on the decision.
The newspaper reported that according to Mark Taber, an expert in retail fixed-income investments, about £700 million has been wiped off the value of sterling-denominated preference shares since Aviva’s announcement on Thursday that it was considering cancelling its three outstanding issues. Taber is in the early stages of setting up a group to challenge the blue-chip insurer’s plans.
Analysts on blue-chip insurer
The 18 analysts offering 12-month price targets for Aviva for the Financial Times have a median target of 582.50p on the shares, with a high estimate of 636.00p and a low estimate of 456.00p. As of March 10, the consensus forecast amongst 20 polled investment analysts covering the blue-chip insurer has it that the company will outperform the market.