Aviva hikes dividend and lines-up £300m share buyback

Aviva declared another share buyback and dividend increase on Thursday after its annual profits beat forecasts.

The insurance giant reported operating profit growth of 9 per cent to £1.47bn last year, slightly ahead of management’s forecast of £1.45bn.

Trading was boosted by general insurance premiums rising 13 per cent to £10.9 billion, following strong performances in the British Isles and Canada.

In the UK, demand for its private health cover soared as more Britons sought to bypass record National Health Service waiting lists for routine operations. Aviva said it expects strong demand to continue.

Aviva’s workplace business also achieved a record £6.9bn in net flows, while higher interest rates helped the group win 56 annuity bulk purchase deals worth a total of £5.5 billion.

At the same time, the company achieved its £750m cost reduction target a year earlier than expected, partly by reducing office space amid a significant shift towards hybrid working.

As a result, Aviva announced a further £300m share buyback and increased its final dividend to 22.3p per share.

This means the London-listed group has returned more than £9 billion in capital and dividends to shareholders since 2021.

Aviva’s huge payouts came after pressure from activist investor Cevian Capital and were largely funded by the sale of multiple overseas divisions, including those in Poland, Turkey and Singapore.

Cevian sold its stake in Aviva last May after concluding that the company had transformed itself from a “poorly performing conglomerate to a focused, well-performing insurance company.”

Amanda Blanc, chief executive of Aviva, said: ‘We have transformed Aviva’s performance over the last three years.

‘We have grown quarter after quarter, year after year, and by operating more efficiently, we are converting this into improvements in profitability.

“Through our dividend growth and regular share repurchases, we are sustainably delivering superior returns to our investors.”

Aviva’s results come three days after it agreed to acquire insurance syndicate Probitas for £242m, paving the way for its re-entry into the historic Lloyd’s of London insurance market after more than two decades of absence.

It said the acquisition would help enhance the growth of its general insurance business, especially its global corporate and specialty arm.

Aviva’s other recent acquisitions include Canadian vehicle replacement insurance provider Optiom and AIG’s UK protection segment, which it bought from Texas-based Corebridge Financial for £460m.

aviva shares They rose 2.6 per cent to 466.8 pence just before midday on Thursday, meaning they are up about a quarter in the last six months.