Aviva – the UK’s largest insurer has reset its dividend after Covid-19 put a stop to dividend payouts across the insurance industry in 2020.
After the announcement of there being no final FY2019 dividend, Aviva declared a 7p per share half year dividend set to be paid in January 2021, with a further dividend of 14p per share expected though not yet promised by the company earmarked for the company’s final dividend of its 2020 financial year.
Aviva dividend returns after Covid hit the industry hard
The 21p total dividend for the year is 9p down on the total for FY2018 which was 30p per share. FY2019’s dividend was set to rise to 30.9p but without its final dividend, finished at just 15.5p per share leaving investors concerned. Although FY2020 figures will not be pretty for the company, the decisiveness of the board will undoubtedly see a long-term healthy return to a thriving business post-Covid.
The company’s dividend reset is a result of the challenging circumstances that the Covid-19 has presented, though it has tied in with the company scaling back its international operations.
Company restructures as international businesses sold off
On 30 November 2020, Aviva announced the completed sale of its majority shareholding of its Aviva Singapore business for £1.1bn of cash and securities. The completion of the sale took less than just three months after its announcement on 11 September, showing the company’s eagerness to reduce the company’s debt with the sale.
As well as its Singapore business, Aviva is selling its Italian business, Aviva Vita for around £364m which is expected to be completed by Q2 2020 according to new CEO Amanda Blanc. Its Indonesian and Hong Kong business are also expected to be sold in the short term.
The company’s new strategy to focus on its UK, Ireland and Canada operations are clear, and whilst the company has suffered a loss in nearly 20% of its share price on the year, the company’s decisiveness should give investors’ confidence that management is moving the company in the right direction.
Aviva’s CEO also confirmed in the latest Q3 results call that the company is exploring the sale of its France and Poland arms, and the remainder of its Italian operations, as well as joint ventures.