Aviva Share Discussion Threads

[whatsup32] 09/9/2020 11:07

Just bought a little more sub 285p . Times said 20 interested parties whittled down to 3 and final decision by end of month .
Priced in Euro so that's good too and with completion to buy should get good price .
Expected news French opp. Sold , backdated dividend paid in full other units also sold , should be better from here

[ianood] 08/9/2020 20:15

wba - thanks for the response and honest opinion which is appreciated. Best that idea is forgotten at the current time then!

[edmundshaw] 08/9/2020 18:11

Thanks wba. Very informative.

[cjac39] 08/9/2020 16:45

1robbob - your qns are very reasonable and something I've always had a problem with. the SCR or solvency capital ratio is supposed to represent a 1 in 200y disaster scenario. so as you say, once you capitalise this surely that is sufficient. if that scenario manifests you eat into your capital and then earn it back or replenish it externally.

however the PRA takes a very very different view. they insist that actually breaching 100% of SCR is tantamount to being game over and they could easily force you to close to new business and go into runoff. i believe part of this is because any company that breaches SCR triggers the requirement for the PRA to inform EIOPA of that breach which they take as a negative.

in brexit world who knows whether this will change but the PRA built many layers of capital on capital and insist insurers have buffers over 100% with lots of triggered actions to restore capital.

so blocking divis i think is unusual and more covid related unless you start heading down below 110% when they will certainly expect you to have plans in place to return above that level.

there are other things as well like risk margins that add to the overall solvency requirement and it is here that you get the largest unintended consequence of low interest rates as its very interest rate sensitive.

the flip side of this though is you can be sure that UK insurers are so well capitalised that any covid type event is not going to be existential and any falls in share price can be taken advantage of. I'm convinced lots of market participants still don't understand this dynamic and also that Mtm accounting doesn't really impact them that much in the life book.

[whatsup32] 08/9/2020 16:08

Interims paid in a few weeks. Should see a small positive on the day as some may have auto reinvest

[1robbob] 08/9/2020 16:01

The whole Solvency Margin situation needs sorting out.
Both by the BoE and the Companies

Forgive my ignorance, but:
Does a Solvency Margin of 100% mean that assets are twice the level of the required margin...or equal to the required margin

What is the point of being set a Solvency Margin of presumably
100% and then setting the Corporate Target at 160% plus.
A margin for safety yes; but that much?

If the BoE Solvency Margin has been satisfied, what right does it have
to then impose Dividend Restraint?

The BoE by its Bond Buying operation is artifically reducing long term iterest rates and thus reducing Solvency Margins and more importantly reducing the available stock of Long Dated Bonds for Insurance Companies to buy to match Long Term Liabilities

[hhhold2] 08/9/2020 15:49

I do think this share is going to get exciting soon, I really don't care if it goes up or down as if drops it won't be down for long & I would like more cheap Aviva shares thanks,



Aviva has increased its dividend payout 6 times over the past 10 years - and the dividend per share is forecast to grow by 181.7% in the coming year.

hxxps://www.stockopedia.com/articles/aviva-passes-this-3-point-dividend-checklist-119333/

[harleymaxwell] 08/9/2020 15:36

Reckon solvency margins will need to improve for insurers and bigger capital base to support so consolidation in the sector likely - meanwhile rsa shares rising nicely ...

[wba1] 08/9/2020 13:47

Just got back from hacking through the garden jungle. The idea of Aviva and RSA getting together would worry me for two reasons; firstly, I am no fan of composites and would like to see Aviva split into two companies - general and life/investment. I suppose putting the two together might help make that happen by making the general side too big and too dominant in a combined group, but given the history of Aviva I suspect they would take 5 years to realise the problems. Secondly, the Aviva history of managing mergers and takeovers (albeit some years ago) is awful (and the culture is still pretty much the same - we are Aviva and need no help from our new partner or their people). I still recall them taking over L&E in 1999, purely for the scheme book (with banks and building societies). The L&E Sales Director wanted only one thing to stay - a direct report to Patrick Snowball. They refused - and lost almost all the schemes within 3 years.

On the matter of France; my experience was that French subsidiaries can produce decent results but are massively draining on group management. There are two issues; when problems do occur French labour laws make them almost impossible to resolve. I used to compare them to Longbridge in the 1970s. Secondly, they have a very hierarchical culture. I used to work in Munich with people coming from subsidiaries in all the major countries. They all came with decision authority - except France, who always had to take any decision back to their President. So I would sell them, knowing that even if they are currently performing (which makes it a decent time to sell) there will come a time when they have problems and senior management will find it almost impossible to resolve.

[ianood] 08/9/2020 12:07

harley - Interesting idea, love to hear the thoughts of cjac &/or wba on that one please.

[harleymaxwell] 08/9/2020 11:30

Have to think consolidation on the cards in this sector _ could see Aviva and RSA getting together fairly complimentary profiles and combined capital would give real strength

[essentialinvestor] 08/9/2020 11:24

Would be deeply sceptical of those numbers mentioned, that's the polite version.

[edmundshaw] 08/9/2020 11:20

Well I guess the French view would be thattheir business is wonderful and why would anyone want to sell it! :-). Hopefully then some empire-building execs will pay a good price...

[cjac39] 08/9/2020 10:58

thanks edmundshaw.

an old colleague of mine was sent to france within aviva as consultant for a while. his view last i spoke to him was its a bit of nightmare, very difficult regulators, not market leading and more pain than its worth.

personally given the whole group is trading at decent discount to book value i would think selling something at an ok price would be fairly sensible even if not top price and especially if non strategic

[edmundshaw] 08/9/2020 10:01

Certaines sources estiment que le prix pourrait se situer entre 3 et 4 milliards d’euros, soit entre 6 et 7 fois les 550 millions de bénéfices annuels.

That is 3 or 4 billion Euros not pounds (obviously), which seems a little light to me. Not the ideal time to offload businesses unless you are buying something cheap at the same time...

Any other articles? My French is pretty good, I can mostly read these articles fluently.

[wba1] 08/9/2020 09:50

cjac, my French is rusty to say the least but it is interesting that some of the articles are directly quoting Patrick Dixneuf,the CEO for France and Europe. As far as I can understand the reports he also seems to be speaking to reassure the French staff that they are looking to sell Aviva France as a whole rather than selling it off in bits. Seems like a good idea.

I am slightly disappointed at the share price reaction given the confirmation of action and suggested price.

[cjac39] 08/9/2020 09:41

as you know wba the various bankers involved with the process will be leaking all sorts of bits and bobs to the press to stoke up interest and price. ive also heard some pe people are interested in the french business as well.

[wba1] 08/9/2020 09:09

The various French links seem to suggest the sale process is still at a very early stage (as you would expect) with multiple expressions of interest. But the 3-4 billion seems to simply be press speculation over the price rather than an actual offer (albeit that it seems a reasonable suggestion). However, at least it is firm confirmation of the sale from the top of Aviva France.

[cjac39] 08/9/2020 08:25

thanks for link.

steady state france delivers c£420mln of op profit so i would think it will be a decent number. they disclose own funds of more than £6bln as well across europe of which france must be more than 50% you would guess.

[oggyrocks] 08/9/2020 08:21

That sounds better. This could be catalyst for the price to rise and a release of our dividend monies !!!!

[salver2] 08/9/2020 08:19

I’m sorry I meant 3-4 Billion- good spot just as well I’m not an accountant!