Aviva (LON:AV) is launching a £600-million share buyback, the blue-chip insurer has said this morning. The announcement comes hot on the heels of the group’s move to offer a goodwill payment to investors who sold shares following its controversial plan to cancel £450 million worth of preference shares.
Aviva’s share price has advanced in today’s session, having gained 0.95 percent to 534.00p as of 09:17 BST. The stock is outperforming the benchmark FTSE 100 index which has climbed marginally into positive territory and currently stands 0.24 percent higher at 7,527.23 points.
Share buyback plans
Aviva announced in a statement this morning that it will start a share buyback of its ordinary shares for up to a maximum aggregate consideration of £600 million. The move comes after the blue-chip insurer said in its recent full-year results that it had ‘significant excess capital’ and committed to deploy £2 billion of this in the current year.
"Aviva has significant surplus cash and capital and we are deploying £2 billion productively in 2018,” the group’s chief executive Mark Wilson commented in the statement. “The £600 million buy-back, together with our plan to repay £900 million of expensive debt maturing this year and invest in bolt-on acquisitions, will grow Aviva's earnings, strengthen cashflow and improve debt ratios.”
The FTSE 100 group noted that the buyback will start today and will end no later than December 31.
Berenberg Bank, which has a ‘sell’ rating on Aviva, boosted its price target on the shares from 456p to 495p last week, while earlier in April, AlphaValue trimmed its stance on the blue-chip insurer to ‘add,’ without specifying a valuation on the stock. According to MarketBeat, the FTSE 100 company currently has a consensus ‘hold’ rating and an average price target of 572.07p.