Aviva PLC (LON:AV.) said it is planning for higher payouts to shareholders after the sale of its French and Italian businesses and strong cash generation from the ongoing businesses.
The life insurer said today it had sold the last bits of its Italian business for £754mln having agreed the sale of its French and Turkish businesses last month for £2.7bn and £122mln respectively.
Amanda Blanc, the life and pensions group’s chief executive, has targeted cash remittances from its core business of £5bn over the next three years to fund both investment and payouts to investors.
The FTSE 100 group said operating profits fell by 3% to £2.49bn in the year to end-December 2020, which Blanc described as a resilient performance.
Trading in several key markets had been strong, she added, with Saving and Retirement and bulk purchase annuities both having record years.
As well the French, Turkish and Italian businesses, Aviva also sold its operations in Singapore, Vietnam, Hong Kong, and Indonesia.
The dividend for the year was 21p (15.5p) with a final payment of 14p, which Aviva said is in line with policy.
Aviva also expects to reduce debt by £1.7bn in the first half of 2021 following the disposals in Europe and has launched a tender offer to remove £800mln of debt.
Cash remittances in 2020 were £1.5bn with a target of £1.8bn by 2023 while proceeds from the Italy and France disposals will boost excess capital by £3bn.
Aviva’s solvency ratio, a key measure of financial health, was very strong at 202% (206%) at the year-end.
Russ mOuld, investment director at wealth manager AJ Bell said: "Aviva has sold off seven separate businesses since August and netted more than £5 billion in proceeds – the latest deal seeing the company exit Italy.
“This is now a much more streamlined company with a clear strategic focus on UK, Ireland and Canada – where today’s results reveal it delivered resilient performance in 2020 despite the pandemic with, somewhat remarkably, record sales posted in several areas amid a notably strong showing from its asset management arm.
"Blanc is not just making progress on selling off bits of the group but, using the proceeds derived from these transactions, is also rapidly paying down debt.
“This should allow Aviva to begin returning a lot of capital to shareholders, potentially as soon as next year."
Shares rose 3% to 395.3p.
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