Aviva plc (LON:AV.) has abandoned plans to cancel its high-yielding preference shares that had been opposed by investors and drawn scrutiny from the Financial Conduct Authority.
In a statement, the FTSE 100-listed insurer said: “Since the full year results announcement on 8 March 2018, Aviva plc has heard a wide range of views on its preference shares, has spoken to a large number of investors and has received strong feedback and criticism.”
READ: Aviva slips after in-line 2017 profits; to spend £500mln on buy-backs, £600mln on 'bolt-on' acquisitions
It added: “As a result, Aviva has listened. Aviva announces that it has decided to take no action to cancel its preference shares.”
The group said it is in a strong financial position and still plans to deploy £3bn of excess cash in 2018 and 2019 to reduce hybrid debt, fund bolt-on acquisitions and buy back ordinary shares.
Mark Wilson, Aviva’s group chief executive officer said: "I am very aware that Aviva is in a position of trust with our customers and investors. To maintain that trust it is critical that we listen to and act on feedback.
“The reputation of Aviva, and the trust people have in us, is paramount. Our announcement today means that preference shareholders can rest secure in their holdings.”
He added: “The Board and I have a duty to consider not just the financial implications of our actions. We must consider the impact to Aviva's wider reputation. I hope our decision today goes some way to restoring that trust."
Russ Mould, investment director at AJ Bell commented: “Aviva had planned to cancel the shares at par value despite the fact their high yields had seen them trade at significant premiums.
“After a storm of criticism, it has reversed this decision. However, this is potentially negative news for ordinary shareholders who might otherwise have enjoyed more generous returns themselves.”
In late afternoon trading, Aviva shares were 2.2% lower at 492.9p.
-- Adds broker comment, share price --