UK insurer Aviva leaves door open to return more capital

People walk in and out of the AVIVA headquarters building in Dublin October 19, 2011. REUTERS/Cathal McNaughton

LONDON, May 18 (Reuters) – Aviva (AV.L) may be able to return more cash to shareholders, its chief executive said on Wednesday, as the British insurer announced a 5% increase in sales of General Insurance in the first quarter and said its capital position was strong.

Aviva’s Solvency II ratio, a key measure of capital strength, was 198%. A level of 100% is considered by regulators to be the absolute minimum that insurers should hold.

“We have said that we will keep a clear commitment that any excess capital above the 180% solvency ratio that we do not reinvest in the business to generate more value will be returned to shareholders over time,” said CEO Amanda Blanc to Reuters.

“We will not keep excess capital where we cannot put it to good use in the business.”

Aviva shares rose 0.64% at 0734 GMT, outperforming the FTSE 100.

Aviva is under pressure from activist investor Cevian Capital, which owns 6% of the insurer’s shares, to return more money to shareholders.

The home, car and life insurer has already returned 4.75 billion pounds ($5.9 billion) to investors after raising 7.5 billion pounds following a series of disposals around the world since that Blanc was named chief executive in July 2020.

Aviva, which has major businesses in Britain, Canada and Ireland, also said in March it would increase its dividend this year and next, although Cevian said the insurer could make more. . Read more

Aviva said on Wednesday it was on track to meet the financial targets it raised in March, including cost savings of £750 million gross of inflation over the 2018-24 period.

General insurance gross written premiums hit a record £2.1bn in the first quarter, while sales from the insurer’s life business rose 1% to £8.7bn.

The Aviva Investors fund management unit, however, saw external net outflows of £200m, which it said reflects volatile market conditions. Assets under management totaled 253 billion pounds at the end of March, a decline of 5% over the quarter.

Jefferies analysts said the results showed there was “promising growth in the company’s pockets,” reiterating their “holding” rating on the stock.

($1 = 0.8063 pounds)

Reporting by Carolyn Cohn, editing by Sinead Cruise

Our standards: The Thomson Reuters Trust Principles.