British insurer Aviva leaves the door open for a larger capital repayment

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 said we will maintain 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,” he said. CEO Amanda White told Reuters.

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

Aviva shares were up 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 £4.75bn ($5.9bn) to investors after raising £7.5bn following a series of disposals around the world since Mr Blanc was appointed Chief Executive Officer in July 2020.

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

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

Gross written premiums in general insurance hit a record high of £2.1 billion in the first quarter, while sales from the insurer’s life business rose 1% to £8.7 billion.

Fund management unit Aviva Investors, however, saw external net outflows of £200m, which it said reflects the volatility of market conditions. Assets under management were £253 billion at the end of March, down 5% from the previous quarter.

Jefferies analysts said the results showed there was “promising growth in parts of the business”, reiterating their “hold” rating on the stock.

($1 = 0.8063 pounds)

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