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FTSE 100: Aviva share price soars on new buyback plan

Aviva shares jumped to a two-month high following the update. Photo: Reuters/Stephen Hird
Aviva shares jumped to a two-month high following the update. Photo: Reuters/Stephen Hird

Aviva (AV.L) said it plans to return more money to shareholders as it posted a better than expected first-half operating profit, helped by a strong performance in commercial lines.

Shares in the FTSE 100 (^FTSE) insurer rose to the top of the bluechip index, up as much as 9.1% in early trade on Wednesday in London.

Operating profits jumped 14% in the six months to 30 June to £829m ($1bn), compared to a £742m company-supplied consensus forecast.

Of this year's results, £204m came from Canada, £159m from the UK, and £12m from Ireland.

Aviva's interim dividend for this year jumped 40% to 10.3p per share, up from 7.35p a year earlier.

The company announced plans to launch a share buyback scheme just months after returning £4.75bn to its investors. The stock buyback will be funded by better than expected cash generation and balance sheet strength rather than disposals, it said.

"Sales are up, operating profit is higher, our financial position is stronger," CEO Amanda Blanc said in a statement. "This has been an excellent six months for Aviva."

She added that the "scale and diversification give us resilience and opportunity, enabling Aviva to withstand the challenging economic climate".

UK and Ireland Life sales rose 4% to £16.8bn, up slightly from the £16.2bn recorded in the same period in 2021.

Read more: New car insurance £129 more expensive than renewals as cost of living bites

Aviva, which has major businesses in Britain, Canada and Ireland, reported a 6% increase in general insurance gross written premium (GWP) to £4.7bn.

The company also confirmed that the nearly £400m takeover of Succession Wealth will be completed later this year.

It comes amid shareholder and City concerns over the insurer's momentum after i had its share price stall recently, and Credit Suisse (CS) and Deutsche Bank (DB) among those to trim their target price for the stock in the past month.

Aviva UK & Ireland general insurance chief executive Adam Winslow, said: "It’s pleasing to see the Aviva UK general insurance (GI) business performing strongly in the first half of 2022 across a diverse commercial and personal lines portfolio, and against challenging market conditions.

"We’ve been decisive in managing our costs, creating more efficient ways of working and actively managing the mix of our portfolio for long-term, sustainable growth. We have deliberately rated to ensure we remain in step with inflationary pressures."

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