Aviva reinstates dividend for H1 as trading shows resilience in the first nine months

Aviva reinstates dividend for H1 as trading shows resilience in the first nine months
Written by:
Wajeeh Khan
November 26, 2020
  • Aviva reinstates dividend for H1 as trading shows resilience in the first nine months.
  • The insurance firm expects to pay 21 pence per share of total dividend this year.
  • The British multinational's solvency II ratio is expected at 195% as of 30th September.

Aviva plc (LON: AV) said on Thursday that trading remained robust in the first three quarters despite the ongoing Coronavirus pandemic that has so far infected more than 1.5 million people in the United Kingdom and caused over 56 thousand deaths. On the back of resilient performance, the company decided in favour of reinstating dividend payments for the fiscal first half.

Aviva plc opened more than 0.5% up on Thursday but lost over 1% in the next hour. Aviva shares are now trading at £3.25 versus a much lower £2.11 per share in March when the impact of COVID-19 was at its peak. Aviva had started the year at a per-share price of £4.23.

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Aviva expects to pay 21 pence per share of total dividend

Aviva expects to pay 21 pence per share of total dividend this year after suspending its final dividend for 2019 in a bid to cushion the economic blow from the COVID-19 crisis that narrowed its total dividend last year to 15.5 pence per share versus 30 pence per share in fiscal 2018.

Life new business (UK and Ireland), as per Aviva plc, saw a 40% annualised sales growth to £9.2 million in the first nine months. The British multinational valued new business at £203 million that represents a 5% year over year increase.

At £9.3 billion, new business premiums’ present value posted a 21% decline in Continental Europe. Net written premiums, on the other hand, printed at £1.27 billion that translates to a 4% growth in the region, primarily attributed to France where rate increased.

In the same period last year, new business was valued at £411 million versus the year-ago figure of £510 million because of lower volumes. In separate news from the United Kingdom, water services company, Severn Trent, also published its half-year financial update on Thursday.

Aviva’s Solvency II ratio is expected at 195%

As of 30th September, Aviva’s Solvency II ratio is expected at 195% as compared to 194% in the fiscal first half, with £11.8 billion of capital surplus. In its first-half report published in the first week of August, the London-based company had posted an increase in general insurance claims to £165 million.

Aviva performed fairly upbeat in the stock market last year with an annual gain of more than 10%. At the time of writing, the British multinational insurance company is valued at £12.78 billion and has a price to earnings ratio of 5.92.