“I think we can do much better,” has been the mantra for Aviva’s (AV.) chief executive Maurice Tulloch since he took the top job at the insurer in March. Half-year results were unveiled with the same optimistic-defensive appeal for patience. But as Mr Tulloch is no doubt aware, investors will soon want to see evidence of this untapped potential.
There has been some progress on the push to simplify the sprawling business. Management teams have already been shaken up, digital operations have been aligned with general insurance, and a £300m annual cost savings plan is on target.
To these goals, Aviva has added a strategic review of its expanding and profitable Asia business, although management failed to explain why the division had been singled out for a carve out. Further details have been promised at November’s capital markets day.
By that point, shareholders will want to see a pick-up in the life insurance business, where intense competition in individual protection and personal lines, together with a drop in the longevity reserve release, conspired to reduce first-half operating profit. A rocky period for asset management also put a dent in Aviva Investors’ profits, although improved investment performance and a surge in net flows at the period end bode well for the second half.
Goldman Sachs forecasts full-year earnings of 57.9p a share, rising to 61p in 2020.
| AVIVA (AV.) | ||||
| ORD PRICE: | 385p | MARKET VALUE: | £15bn | |
| TOUCH: | 384.8-385.1p | 12-MONTH HIGH: | 505p | LOW: 362p |
| DIVIDEND YIELD: | 7.9% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 456p* | SOLVENCY II RATIO: | 194% | |
| Half-year to 30 Jun | Gross premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 15.2 | 0.43 | 7.9 | 9.25 |
| 2019 | 15.2 | 2.05 | 28.2 | 9.50 |
| % change | +0.2 | +374 | +257 | +3 |
| Ex-div: | 15 Aug | |||
| Payment: | 26 Sep | |||
| *Includes intangible assets of £4.9bn, or 125p a share | ||||
