Aviva’s chief executive Amanda Blanc has called on UK companies and policymakers to “stop talking ourselves down” as anxiety grows about an exodus from the London stock market.
The decision of groups such as chipmaker Arm and building materials giant CRH to opt for listings in New York has fed concern about the decline of the UK’s capital markets. This week, Legal & General boss Sir Nigel Wilson lamented the “perpetual drift” away from the City. UK policymakers and regulators have also shared their concerns about a rash of delistings.
“We want the UK to be successful and I think we should stop talking ourselves down,” Blanc told the Financial Times, after the publication of the company’s full-year results.
“For me, I do believe we have a lot of the component parts in the UK, and we just need to get out of our own way and actually start delivering on some of the stuff that we said we would do,” she added.
Blanc highlighted the government’s planned overhaul of insurance solvency rules, which the industry hopes will unlock £100bn of investment in UK infrastructure. The UK economy would benefit from “a bit of confidence”, she added.
Aviva’s shares rose 3 per cent by lunchtime in London after its full-year operating profits of £2.2bn came in ahead of analyst expectations, driven by a good performance by its UK life business and changes in longevity assumptions.
The insurer’s year-end solvency level also beat consensus estimates, clearing the way for the company to announce a fresh £300mn share buyback. Aviva also improved its future dividend guidance, with it now expecting low-to-mid single-digit growth in the cash cost of the dividend after the £915mn that should be returned in respect of this year.
In the results statement, Blanc highlighted that this took the total capital return to shareholders to more than £5bn since 2021. That was the number originally pushed for by Cevian, the activist shareholder that took a stake in Aviva that year, becoming one of its largest shareholders. It has now reduced its stake below 5 per cent.
Cevian partner Niko Pakalén said Aviva’s management had done an excellent job restructuring the company and that the day’s announcements showed a “strong start” to the next phase of “delivering on Aviva’s full long-term potential”.
One area the company is relying on for future growth is the market for corporate pension deals, where businesses pay to transfer their pension liabilities to an insurer. Rising interest rates have made such deals possible for a swath of pension schemes.
Aviva did 50 deals for schemes in 2022, worth a total of £4bn, and expects to complete deals worth £15bn to £20bn in total by 2024. But Blanc said the insurer “would not be prepared to enter into a pricing war” as providers compete fiercely for business.
Elsewhere, conditions in Aviva’s asset management business are expected to remain “challenging” amid choppy markets. But the group’s general insurance business managed to turn an underwriting profit, again in line with analyst forecasts, despite the threat from inflation driving up claims costs.