Aviva PLC (LSE:AV.) has spent years trying to prove that it can grow like its European rivals while keeping the steady hand investors expect from a life insurer. RBC thinks that moment may finally have arrived.
The broker has resumed coverage of the group with an “outperform” rating and an 800p price target, arguing that the Direct Line acquisition has shifted Aviva’s balance decisively towards higher-return, “capital-light” business such as general insurance and protection. That means faster earnings growth and a more flexible capital base.
RBC reckons the combination leaves Aviva better placed to be judged alongside the big continental composites such as Allianz and Axa rather than the narrower UK life cohort.
On its numbers, the shares trade at just ten times forecast 2026 earnings against an EU average of 12, despite a stronger 17% annual growth rate in earnings per share.
Integration of Direct Line looks to be going smoothly. RBC sees scope for annual cost savings to rise from Aviva’s guided £125 million to £200 million as overlapping systems and roles are streamlined.
It also flags the potential to cross-sell Aviva products to some four million Direct Line customers now being moved on to its single digital platform.
Chief executive Amanda Blanc’s next big moment comes on 13 November, when Aviva will host an “In Focus” event to outline new group targets.
RBC expects the company to set out goals for operating earnings growth above 15%, a return on equity north of 20%, and cumulative Solvency II capital generation of more than £6.5 billion, all ahead of current consensus.
The analyst team also highlights the company’s steadily rising dividend and its plan to keep annual share buybacks flat at £350 million. A dividend yield nudging 6% adds to the appeal.
After a decade of reshaping, Aviva is now less a lumbering life office and more a diversified insurer with scale in the everyday policies most households actually buy. If RBC is right, the market may need to start valuing it that way.