’The business is forecast to have strong free cash flow and excess capital,’ says investment research director
Aviva’s share price has shot up today (6 October 2023) following rumours that it could be the target of a takeover bid.
Earlier today, The Times cited that “chatter surrounding Aviva refused to die down”, claiming that Allianz, Intact Financial Corporation and Scandinavian group Tryg were considering their options.
It was also reported that an American insurer is rumoured to be interested in Aviva.
The talk appeared to give Aviva’s shares a boost – between 8am and 10.30am, the insurer’s share price rose from 385.9p to 427.24p
Aviva declined to comment when approached by Insurance Times.
Why the interest?
After the share price rose, AJ Bell’s Russ Mould discussed why there may be interest in Aviva.
The investment research director said: “The business is forecast to have strong free cash flow and excess capital and its valuation is cheap.
“It has slimmed down in recent years to focus on the stronger parts of the group and there is now an opportunity to increase its position in bulk annuities, which looks like a more prosperous market thanks to higher gilt yields.”
In Insurance Times’ Top 50 Insurers 2023 report, Aviva maintained its number two spot and remained hot on the heels of competitor Axa.
Aviva reported a gross written premium (GWP) of £5.4bn, according to its latest regulatory returns, representing an 8% increase on the previous year, when premiums totalled £5bn.
And this year-on-year increase of £400m in GWP came alongside an improvement in the insurer’s underwriting profitability.
Meanwhile, last month (25 September 2023), Aviva agreed to acquire the UK protection arm of AIG for £460m.
The acquisition will add 1.3m individual protection customers and 1.4m group protection members to Aviva.
Aviva chief executive Amanda Blanc added: “This acquisition brings significant strategic and financial benefits to Aviva.
“It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth.
“We look forward to welcoming our new customers and colleagues to Aviva.”
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
Now working within the insurance sector, James has a particular focus on motor, M&A activity and financial reporting.View full Profile