Aviva share price: Group offers compensation over preference shares

Insurer looks to restore investor trust

Aviva share price: Group offers compensation over preference shares

Aviva (LON:AV) is offering a goodwill payment to investors who sold shares following the insurer’s plan to cancel £450 million worth of preference shares. The company subsequently scrapped the move following criticism from investors.

Aviva’s share price has advanced in London in today’s session, having added 0.99 percent to 530.20p as of 10:02 BST, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.35 percent higher at 7,528.46 points. The insurer’s shares have added less than one percent to their value over the past year, as compared with an over four-percent rise in the Footsie.

Goodwill payment

Aviva announced in a statement this morning that it would offer a discretionary goodwill payment to shareholders who sold preference shares in the period from March 8 to March 22. The group estimates that fewer than 2,000 individual investors sold their preference shares during the period, meaning that the total cost of the goodwill payment scheme should not exceed approximately £14 million. The move follows the insurer’s announcement that it was considering cancelling its three outstanding issues of preference shares, which fuelled backlash among investors, forcing to company to scrap the plan.

“We recognise that whilst we were considering our options for the preference shares this caused uncertainty and led some investors to sell their shares,” Aviva’s chief executive Mark Wilson explained in today’s statement, adding that the group was hoping that the “goodwill payment goes some way to restoring trust in Aviva”.

Analysts on Aviva

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 495.00p. As of April 27, the consensus forecast amongst 20 polled investment analysts covering the blue-chip insurer has it that the company will outperform the market.

As of 10:28 BST, Monday, 30 April, Aviva plc share price is 530.26p.

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