Aviva delivers upbeat statement as it rides out the pandemic

The life, motor and home insurer, which employs 2,000 people at its life and general insurance business in York and 1,500 at its life and health insurance operation in Sheffield, said it is exploring options for its remaining European businesses.

Aviva’s new chief executive, Amanda Blanc, has said the company wants to scale back operations in Europe and Asia to focus on core markets of Britain, Ireland and Canada.

She said: “We are making good progress in our strategy to simplify Aviva’s portfolio and have recently announced the sale of Aviva Singapore and Aviva Vita in Italy for £2bn.

"We are announcing today a new sustainable and resilient dividend policy, based on our core markets of the UK, Ireland and Canada. As we simplify Aviva’s portfolio, we will deliver further value to shareholders by returning excess capital above 180 per cent solvency cover ratio, once our debt leverage target ratio has been reached."

The firm expects to pay a total dividend for 2020 of 21p.

Aviva did not pay a final dividend for 2019 as a result of the coronavirus pandemic, bringing its total dividend for last year to 15.5p. Its total payout in 2018 was 30p.

Ms Blanc said: "Our trading performance is robust and our financial position is strong with a capital surplus of £11.8bn.

"The first nine months have demonstrated Aviva’s ability to grow in core markets where we have attractive, long-term growth prospects. Bulk purchase annuities sales increased to £5bn, which is a record for Aviva and commercial insurance premiums are up 9 per cent across the UK, Canada and Ireland.

"The response of our people to the Covid crisis has been nothing less than phenomenal and I would like to thank them for all they have done for our customers this year. We continue to work at pace to deliver our strategy, support our customers, and unlock value for Aviva shareholders.”

Richard Hunter, head of markets at interactive investor, said: “Aviva has delivered a generally upbeat statement and outlook, with the added highlight of positive dividend news.

"A new policy includes a payment of 7p with a proposed final dividend of 14p. For the future, the sizeof the payout is set at sustainable levels, although dividend growth may not be at historically high rates.

"Even so, the news puts the implied yield in excess of 6 per cent, which is a breath of fresh air to income-starved investors who have seen the requirement for yield largely evaporate as the pandemic has bitten. The implied yield may not return Aviva to the previously heady heights of around 9 per cent, but the new framework is nonetheless welcome and likely to prove resilient in tougher times."