Shares in insurer Aviva (AV.) made a new 12-month high of 404p on news of the disposal of its Polish business, the latest in a string of asset sales as the firm focuses on its core UK, Irish and Canadian businesses.
The sale to Germany’s Allianz, which netted €2.5 billion in cash, increased the insurer’s net asset value by £1.8 billion from its end-December level or 46p per share to 493p.
Chief executive Amanda Blanc described the deal as ‘an excellent conclusion to the refocusing of our portfolio announced just eight months ago’.
BIG PAYOUT
During that time, Aviva has sold eight non-core businesses for total cash proceeds of £7.5 billion, which will go towards paying down debt, investing for growth in its core businesses as well as ‘a substantial return of capital to shareholders’.
The speed with which the new chief executive has re-shaped Aviva is impressive given the lack of progress under previous management, and the market is hopeful the same determination is brought to bear on improving returns in its core businesses.
Aviva’s shares have rallied some 80% since Amanda Blanc took over, and analysts are penciling in ever greater cash returns with investment bank Berenberg forecasting £1.5 billion of share buybacks in the next financial year and another £1.5 billion the year after.
Combined, these figures would equate to 20% of the company’s current market value, which allied with a prospective 6.4% dividend yield would make Aviva one of the most attractive income stocks in the FTSE 100 for several years.
