Aviva's 53,000 Irish shareholders in dividend boost

By Geoff Percival 

Aviva’s 53,000 Irish-based shareholders are set to benefit from the insurance giant returning a significant portion of £3bn (€3.4bn) in surplus cash to investors over the next two years.

The British insurer —which has recently moved to increase its share of the Irish pensions and life assurance markets by agreeing to buy Friends First for €130m — expects to generate an extra £3bn in cash over the next two years which will be returned to shareholders and used to fund more acquisitions.

“We have significant surplus capital and cash and this means we will have £3bn of excess cash to deploy in 2018 and 2019, £2bn of which we plan to deploy next year,” group chief executive Mark Wilson told investors and analysts at Aviva’s capital markets day in Warsaw.

“In 2018, we expect to use our excess cash to pay down £900m of expensive debt, return capital to investors and invest in growing our business, both organically and through acquisitions,” he said.

“The quality of our earnings has improved by 15%-20% and with lower debt costs and stronger-than-expected cash flows, it is appropriate to raise our target dividend pay-out ratio to 55%-60% by 2020,” Mr Wilson said.

Aviva also upgraded its growth targets, saying it now expects more than 5% earnings growth per year from 2019 onwards.

The news sent Aviva’s share price up 2.17% — to a three-month high — before paring back in later trading.

Insurers and reinsurers, among them Allianz and Swiss Re, have been returning cash to shareholders in recent times as strong competition cuts opportunities for expansion.

“We are moving into a new phase and we have the capital to be able to do it,” Mr Wilson said.


KEYWORDS: Aviva

 

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