Aviva: A Buying Opportunity?

Shares in the insurer plunged by 12.5% after the company slashed its dividend, but that means this might be a buying opportunity

Vincent Lui, CFA 8 March, 2013 | 10:42AM
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Aviva (AV.) has struggled to achieve growth in the post-financial-crisis era. After years of sluggish growth and getting hit by large losses in the US annuity business, the company has completely overhauled its operations and management, and 2012 was a year of transition at Aviva. The company hired former AIA executive Mark Wilson as CEO, and within three months he has made significant progress in cutting exposure to underperforming markets and products. Toward the end of 2012, the company announced the sales of the US insurance business and the Malaysian joint venture. The new strategy appears to have brought more focus to the company's capital strength and operational efficiency.

2012 was a year of transition at Aviva

All told, the company's results were marginally lower than our expectations. Operating profits for the full year were £1.78 billion, down 4% from last year, partly due to an unfavourable foreign exchange impact. The company reported a full-year net loss of £3 billion following a £3.3 billion write-down on the US disposal. That said, economic capital surplus has more than doubled from last year's level, reaching £7 billion following the asset sales.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Aviva PLC395.50 GBX0.48Rating

About Author

Vincent Lui, CFA  Vincent Lui, CFA is an equity analyst for Morningstar, covering life insurance companies.