Analysts have reiterated that Aviva’s bullish goals are within reach and achievable.
On Thursday, with British insurer Aviva stating, it expects to generate an extra $4.04 billion (3 billion pounds) in cash over the next 2 years and plans on providing better returns to its shareholders, reaching the market, the shares of the company scurried upwards.
Ahead of an investor day in Warsaw, Aviva said, by repaying expensive debts to the tune of 900 million, it expects to recoup additional funds and will be spending 2 billion pounds in 2018 by making “bolt-on” acquisitions and returning cash to shareholders.
“After a few years of restructuring, our businesses are now high quality and we expect good, sustainable growth from each of them,” said Aviva’s CEO Mark Wilson.
With the insurance industry facing strong competition, insurers and re-insurers, including Swiss Re, have been returning cash to shareholders since strong competition is cutting opportunities for further expansions.
In a note to client, Jon Hocking, an analyst with Morgan Stanley reiterated his ‘overweight’ weighting on the stock saying, “Taken as a package, we think this is a bullish set of goals from Aviva and, if achieved, the current multiple on the shares looks too low.”
He has set a price rise of 649p for its share.
Following its $7.54 billion (5.6 billion pounds) acquisition of Friends Life in 2015, Aviva has said it is only looking for mainly small acquisitions.
The British insurer has raised its expectations for earning growth to more than 5% annually from 2019 onwards while disclosing that it would increase its dividend pay-out ratio to 55%-60% of EPS by 2020, from its current 50%.
($1 = 0.7424 pounds)
($1 = 0.8428 euros)