UK insurer Aviva, which has substantial operations in Ireland, is considering acquisitions in Poland and Turkey, its chief executive said, as it reported a 2% rise in operating profit and said it planned to return £500m (€560m) to shareholders. The shares rose 0.5% after paring losses, writes Carolyn Cohn and Eamon Quinn.
European insurers such as Allianz and Munich Re have been offering share buybacks as they struggle to find other ways to deploy capital. Aviva, which provides general and life insurance and also operates in other countries including Canada and France, said it also planned to spend around £600m on “bolt-on” acquisitions and £900m on debt reduction. Chief executive Mark Wilson said the firm was looking for purchases in “Poland, Turkey, anywhere we have existing markets”.
“We have this pile of cash... it’s not burning a hole in our pocket, if we don’t spend it we will give it back,” he said.
The £600m acquisition target includes Aviva’s €130m purchase of insurer Friends First here late last year, it said. Aviva’s 2017 operating profit was £3.1bn, slightly above a forecast £3bn and helped by strong performance in the UK. Profits in Canada shrank, however.
KBW analysts described the results as a “mixed bag”. It said it would pay a total dividend of 27.4 pence, up 18% and above a forecast 26.4 pence. In the Republic where it is the largest general insurer, it said it generated an operating profit last year of €93m, after charges of €6m to account for staff pension changes.
In 2016, it had earned €82m in operating profit, which included a contribution for part of the year from Aviva Health. It urged a speedy work-out of insurance reforms. “But time is of the essence: We believe all parties, including the industry, must act speedily to create a stable and sustainable trading environment in which prudent, well-regulated insurers can serve the best interests of their customers,” it said. And Aviva Ireland again said that the purchase of Friends First would help it tap the network of brokers.
- Reuters and Irish Examiner staff