Aviva shares climb as insurer refocuses on Britain and Ireland                

Aviva says that it now intends to focus primarily on Britain, Ireland and Canada

Additional reporting from Reuters and Bloomberg

Aviva shares soared to five-month highs after the motor and home insurer’s new chief executive Amanda Blanc said it would reduce its focus on Asia and Europe in a strategy shift welcomed by analysts.

The chief executive took over last month to become the insurance company’s third chief in less than two years. 

Analysts have said the insurer is operating in too many countries and sectors, and its shares have lagged rivals.

Aviva will instead focus on Britain, Ireland, and Canada, the company said.

Aviva shares rose as much as 7.5% before trimming gains to trade 4.2% higher, and to be the top performer in the Fftse- 100.

“We are going to shake up the organisation,” Ms Blanc told a call about Aviva’s first-half results released on Thursday. 

She said there may be better owners in the long term for some of Aviva’s Asian and European businesses.

Aviva’s European operations include France, Italy, and Poland. It said last year it was selling its stake in its Hong Kong business. Its other Asian operations include Singapore and a joint venture in China.

“Amanda Blanc is not taking her foot off the gas,” said Joe Healey, investment research analyst at broker The Share Centre. “

"It’s pleasing to see a prudent process in place to keep the balance sheet healthy,” he said. 

Aviva posted a 12% drop in first-half operating profit to £1.2bn (€1.3bn), though this was above expectations of £1.1bn, according to a company-supplied consensus forecast.

Aviva’s performance was helped by strong results in UK annuities. The value of new business in its UK life business rose 60% to £323m, but Europe life and Asia life fell by 21% and 6% respectively, to £188m and £90m. 

JP Morgan analysts said management under Ms Blanc was moving fast on strategy though it reiterated its “neutral” rating on the stock. 

KBW said the strategic changes were positive, reiterating its “market perform” rating.

The company set aside £165m in its general insurance business for claims related to the Covid-19 pandemic, in line with a previous estimate.

Aviva, which like several other insurers suspended its final dividend for 2019 earlier this year, said it would pay a 2019 second interim dividend of six pence and would review the final dividend, and its dividend policy later, in the year.

Meanwhile, AXA’s profit sank in the first half as it booked a €1.5bn charge for claims related to Covid-19 and warned of further shocks from the pandemic.

The French insurer saw net income fall 39% from the year-earlier period to €1.4bn, driven lower by virus-related claims and writedowns of invested assets, according to a company statement. In response, the firm scrapped two growth targets and canceled a payout to shareholders.

The Covid charge was in line with AXA’s previous estimate of claims related to the pandemic this year. But the firm said the number could go higher.