Aviva PLC (LON:AV.) shares slipped lower on Thursday as it reported an as-expected 2% rise in 2017 operating profit, helped by a strong performance from its UK division, unveiled plans for a £500mln share buy-back, and said it would spend £600mln on ‘bolt-on- acquisitions.
The FTSE 100-listed general insurer and iife assurer said its 2017 operating profit rose by 2% to £3.1bn, just above the company-supplied consensus forecasts of £3bn.
The group added that assets under management at Aviva Investors, the firm’s fund arm, increased by 9% to £490bn, with its fund management revenue up 14% to £577mln.
Mark Wilson, Aviva’s group chief executive officer, commented: “Our largest market, the UK, has gone from strength to strength, growing sales, market share and profit. For Aviva, the UK is a dependable and growing business.”
He added: “This year, we expect to deploy £2bn of excess cash, including £900mln in debt reduction, in excess of £500mln of capital returns to shareholders and about £600mln for bolt-on acquisitions.”
The firm said it will pay a total dividend of 27.4p, up 18% on its 23.3p payout in 2016 and slightly above forecasts.
Subdued share price
In early morning trading, Aviva shares were 2.1% lower at 496.6p.
Richard Hunter, head of markets at interactive investor, commented: “The muted share price reaction to the results cannot detract from what is generally a sparkling set of numbers.”
He added: “Disappointments are few and far between, although committed bears may point to a slightly softer General Insurance operating profit, an uptick in operating expenses and a ‘disappointing”’ contribution from Canada.
“Nonetheless, overall Aviva has shown its strength in terms of growth, capital stability and an improved outlook statement.“
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