Aviva plans 2022 year-end share buyback programme

Aviva has today (10 August 2022) announced its intention to launch a new share buyback scheme in March 2023 following the “strong capital position” revealed in its 2022 half-year financial results, published today.

Although unwilling to confirm the potential size of the share buyback programme, Aviva’s group chief executive Amanda Blanc explained that there is “scope for additional capital returns” because Aviva’s “capital position remains very strong”.

Addressing journalists during a conference call this morning, Blanc said: “I’ve been clear on how we think about surplus capital – surplus above our target level of 180% [Solvency II cover ratio] is available for investment in the business or tactical, bolt-on M&A to provide further growth.

“The bar for investment and bolt-on M&A is high, but we will move if we identify the right opportunity – and we did with the recent acquisitions of Succession Wealth and Azur’s high net worth business.

“But where we can’t achieve sufficient value by reinvesting in the business or through M&A, surplus capital will be returned to shareholders over time.

“We are announcing this morning that we anticipate returning further capital to our shareholders following the year-end via a new share buyback programme, which will - of course - be subject to market conditions and regulatory approval.

“Our preference is that returns of surplus capital will be sustainable and regular over a number of years.”

Aviva inked its deal to buy MGA Azur’s high net worth business in August 2022.

Taking a ‘prudent’ approach

Although aware of Aviva’s long-standing commitment to return surplus capital to shareholders, Blanc emphasised that the insurer would be “prudent” and not confirm the size of the new share buyback scheme prior to reviewing its year-end results next March.

This is because the “interest rate environment” can impact solvency figures.

“We want to be prudent. Market movements have driven a significant amount of the excess capital and we therefore need to just watch and see what the market will be like when it comes to March,” Blanc added.

“Market movements can go both ways. We are committed to returning excess capital.”

Despite this caution, Blanc does believe that Aviva has more than enough “capacity” to facilitate both bolt-on M&A deals and the share buyback programme.

A press release published alongside Aviva’s 2022 half-year results confirmed: “Given our strong capital position and prospects, we anticipate commencing a new share buyback programme with our 2022 full-year results, subject to market conditions and regulatory approval.

“Assuming a new buyback is agreed, its size will be determined by the board at year-end and will take account of the financial position at that time, as well as both the drivers of capital surplus - including the impact of market movements - and our preference to return surplus capital regularly and sustainably.”