Aviva Shares Spike After New Share Buyback Plan Announced

By Scott Kanowsky 

Investing.com -- Aviva PLC (LON:AV) shares surged to a two-month high on Wednesday after the British insurer unveiled a new share buyback scheme backed by balance sheet strength and cash inflows.

The company did not release how much in shares it will repurchase but said it is aiming to start the program at its full-year results. Earlier in 2022, Aviva agreed to return £4.75B in capital to stakeholders and increased its dividend, thanks to funds raised from the sale of eight businesses.

"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 the capital surplus (including the impact of market movements) and our preference to return surplus capital regularly and sustainably," Aviva said.

The group's Solvency II ratio - a key measure of its capital position against its required amount - came in at 213% on a pro forma basis, above analyst expectations of 206%, according to the Financial Times.

Undergirding this figure were first-half cash remittances - Aviva's term for generated cash - of £798M, down from £1.06B in the same period last year but in line with company estimates. Gross written premiums at its general insurance unit and new sales at its life division, in particular, rose during the period.

"[O]ur financial position is stronger. This has been an excellent six months for Aviva," said chief executive officer Amanda Blanc in a statement.

Blanc added that the company has made progress in reaching its full-year financial targets despite facing a "challenging" economic climate.