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    AV.   GB0002162385

AVIVA PLC

(AV.)
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Aviva to generate extra £3 billion of cash, planning payback, some M&A

11/30/2017 | 06:00am EDT
FILE PHOTO: People enter and exit the AVIVA headquarters building in Dublin.

LONDON (Reuters) - Aviva expects to generate an extra 3 billion pounds in cash over the next two years and will make acquisitions as well as giving money back to shareholders, it said on Thursday, sending its share price to three-month highs.

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

Aviva has made a number of disposals in the past year, including in France, Spain, Italy and Taiwan, and says its Indian joint venture is under "strategic review".

"The franchises we have left have a pretty decent track record," Chief Executive Mark Wilson told an investor day in Warsaw.

"We are moving into a new phase and we have the capital to be able to do it."

Aviva expects to deploy 2 billion pounds of cash in 2018 by spending 900 million pounds on repaying expensive debt and using the remaining 1.1 billion pounds for "bolt-on" acquisitions and returning cash, it said in a statement ahead of the investor day.

Some analysts had anticipated Aviva would announce a share buyback of 1 billion pounds on Thursday, but Wilson said the firm had an "appetite for M&A".

Aviva has said it is only looking at small purchases following its 5.6 billion-pound ($7.5 billion) takeover of Friends Life in 2015, and is interested in expanding in "insurtech" and artificial intelligence.

Aviva's cash promise helped send its shares to three-month highs. They were up 2.17 percent at 520 pence at 1035 GMT, the second-biggest gainer on the FTSE 100 index.

Morgan Stanley analyst Jon Hocking reiterated his 'overweight' rating on the stock in a note to clients. "Taken as a package, we think this is a bullish set of goals from Aviva and, if achieved, the current multiple on the shares looks too low," he said, giving the shares a 649p price target.

Aviva said it was raising its expectations for earnings growth to more than 5 percent annually from 2019 onwards, from a previous target of mid-single-digit growth.

It also said it would increase its dividend pay-out ratio to 55-60 percent of earnings per share by 2020, from 50 percent.

The new targets are "achievable", JP Morgan analysts said in a note, reiterating their "overweight" investment rating on the shares.

(Additional reporting by Simon JessopEditing by Jason Neely, Greg Mahlich)

By Carolyn Cohn


© Reuters 2017
Stocks mentioned in the article
ChangeLast1st jan.
AVIVA PLC -0.54% 385.2 Delayed Quote.18.45%
FTSE 100 0.85% 7027.58 Delayed Quote.8.78%
JASON CO., LTD. 0.19% 540 End-of-day quote.-19.16%
MORGAN STANLEY -1.07% 94.55 Delayed Quote.37.97%
MSCI TAIWAN (STRD) -0.43% 698.8 Real-time Quote.16.79%
MSCI UNITED KINGDOM (STRD) 0.84% 1132.599 Real-time Quote.8.94%
S&P UNITED KINGDOM (PDS) 0.88% 1399.75 Delayed Quote.9.30%
SET -0.47% 1545.1 Real-time Quote.6.61%
SWISS RE LTD 0.26% 83.26 Delayed Quote.-0.10%
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More news
Financials
Sales 2021 46 772 M 64 293 M 64 293 M
Net income 2021 2 260 M 3 106 M 3 106 M
Net cash 2021 8 664 M 11 910 M 11 910 M
P/E ratio 2021 6,82x
Yield 2021 5,70%
Capitalization 15 130 M 20 814 M 20 798 M
EV / Sales 2021 0,14x
EV / Sales 2022 0,14x
Nbr of Employees 28 596
Free-Float 97,1%
Chart AVIVA PLC
Duration : Period :
Aviva plc Technical Analysis Chart | AV. | GB0002162385 | MarketScreener
Technical analysis trends AVIVA PLC
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 21
Last Close Price 385,20 GBX
Average target price 466,10 GBX
Spread / Average Target 21,0%
EPS Revisions
Managers and Directors
Amanda Blanc Chief Executive Officer & Executive Director
Jason Michael Windsor Chief Financial Officer & Director
Mark George Culmer Non-Executive Chairman
Nitinbhai Babubhai Maganbhai Amin Chief Operating Officer
Michael Mire Independent Non-Executive Director
Sector and Competitors
1st jan.Capi. (M$)
AVIVA PLC18.45%22 787
AXA11.57%62 649
METLIFE, INC.22.75%53 418
PRUDENTIAL PLC1.30%52 488
PRUDENTIAL FINANCIAL, INC.27.45%41 106
MANULIFE FINANCIAL CORPORATION5.83%38 899