Aviva Share Discussion Threads

[muscletrade] 24/2/2021 07:08

Turkey gone and more to come of course. At least no one can criticise AB for not cracking on with her strategy.

[muscletrade] 24/2/2021 06:38

Aviva is to sell its French business for €3.2bn as chief executive Amanda Blanc pushes ahead with her plan to slim down the sprawling insurance group.

Blanc, who took charge in July, plans to focus on the UK, Ireland and Canada and has already sold off operations in Singapore and Italy.

The French business accounted for just over a tenth of the group’s profits in 2019. Aviva said on Tuesday it would sell the unit to French insurer Aéma Groupe for €3.2bn, slightly higher than the €3.03bn that analysts at Jefferies expected.

Aéma Groupe was created this year through the merger of Macif and Aéseo, two mutual insurance companies.

With the Aviva acquisition, Aéma had become “one of the top five players in the French market”, said Adrien Couret, chief executive of the mutual group, who believed the French market was ripe for consolidation.

The new group will take in €16bn in revenues and guarantee the 4,200 jobs at Aviva France. Couret said that, despite only recently going through a merger to create Aéma, this was not a deal he could pass up. “This kind of opportunity only comes up every 10 to 15 years in the French market.”

Blanc said that, for Aviva, the deal “is a very significant milestone in the delivery of our strategy”.

“The transaction will increase Aviva’s financial strength, remove significant volatility and bring real focus to the group,” she added.

As part of the sale, Aviva has agreed to shoulder some of the outstanding risk on “known price” contracts that were sold in France between 1989 and 1997. The contracts allowed the owners to bet on price movements of funds and their validity has been the subject of legal action.

Without being drawn on the level of provisioning for those contracts, Couret said that any risk taken on was “proportional and controlled”.

Philip Kett, an analyst at Jefferies, said the sale was “the most significant of Aviva’s potential disposals, as this business made the group highly exposed to low interest rates and highly correlated to French yields”. 

The sale will improve Aviva’s solvency ratio — a measure of capital available as a proportion of the minimum required — by 22 percentage points. The ratio stood at 195 per cent in September last year.

The company said it would use the proceeds of the sale to cut debt, invest in growth and return capital to shareholders. Aviva announced a dividend policy in November that would result in it paying out almost a third less than it did before the coronavirus crisis.

The insurer’s shares rose 1 per cent on Tuesday, and are almost back to where they were a year ago before the pandemic hammered the company’s valuation.

Aviva is the latest large UK insurance group to break itself up. Prudential has already demerged its UK business and is about to do the same in the US. RSA, meanwhile, has been bought by two overseas insurers that plan to split up the 300-year-old group.

[fenners66] 23/2/2021 23:02

RCT someone posted earlier that the Golden Ticket losses above that which have already been provided for ( we don't know how much that is) would be shared 50/50 in future. So that removes some not all of any potential liability , if that interpretation is correct.

It may be that with new French owners the French courts take a partizan view and deem the profits possible on the GT over the top and cap or something.

However the court cases have been ongoing for many years and Aviva has not won yet.

Personally I have seen so many examples of lets say ill-informed board members declaring every thing is good - then later we find out everything is a disaster - that I cannot take it as an "insignificant risk " at face value.

As mentioned earlier in the thread Aviva are already in hot water over their reporting of Preference share redemption so they have previous in screwing up their words.

All BOD's seem to down play the risks ... and if no one has quantified them properly , its not even their fault....

Why have they not told the market the size of their provisions ?
Commercially if they are still negotiating a way out with the holders of GT's - I understand their may be more than one...then I guess they cannot play their hand in public - but it still leaves me doubtful.

For now anyway its in the price.

Until something else happens - but that is why we buy or sell shares , because we think we can see the future better than the market sees it today.

[whatsup32] 23/2/2021 22:16

FT Lex have a article on Aviva . Need premium account to access.

Headline is Amanda Blank has delivered to shareholders what numerous previous chiefs have not

[linton5] 23/2/2021 21:19

It must be due to the weakness in dollar since March last year as aviva has reached the price it was in the USA,but still 30p short in uk

[brilltrader] 23/2/2021 19:04

Based on earlier posts (Cyberian) the price achieved for France equates to roughly 10 x net profits. That is yet another confirmation that AV is still trading at a 50% discount. 10 times average earnings over past 3 years suggests that this should be £30 Billion market cap not less than £15 Billion. Making some headway but a way to go.

[cyberian] 23/2/2021 16:55

RC...forget it....we have all moved on...the CEO has dealt with it and stated that it is no longer material...all provisions have been made and considered more than adequate. Additionally the buyers are aware and happy to move forward...so relax and enjoy the joys of spring to come and new vaccines to take care of us later in the year....normality to resume fairly soon.
Prepare for more good news this Friday, possibly?

[rcturner2] 23/2/2021 16:44

Can someone explain the "golden ticket" issue pls?

[muscletrade] 23/2/2021 16:41

Would you rather have a nett benefit of 5.2Billion today (sales proceeds plus capital benefits less loan return) or 300million per annum paper benefit for the next twenty years with possibly no dividends paid to the parent, with the added benefit of being free and clear of France. I know what I would choose.

[anthony100] 23/2/2021 16:34

Not sure to make of the France sale price. The RNS States an IFRS book value in June 2020 of £2.4bn but not sure if that is before or after the Bung required to rectify the French business life modelling errors.
I thought these were circa 300m. As usual with Aviva we don't know if the 2.4 reflects ie accounts for those errors or not.
The sale did not seem compelling for A list bidders so maybe we should be glad this dark horse has picked up the carcass

[eurofox] 23/2/2021 16:05

soon all the bedwetters will have gone

[cyberian] 23/2/2021 16:03

karvi...read the RNS statement from CEO full comment on the issue....it is not a substantial issue although flagged and the French Courts will determine legality of GT matter I am sure under new ownership.

[alphorn] 23/2/2021 16:03

Does the GT die with the holders or can it be passed on?

Imagine using it with BTC. :(

[karv1] 23/2/2021 15:45

I was using 2019 year more of a normal year adjusted operating profit of 473 million before debt payment and taxes.
Does the GT ticking timebomb have a time limit and or price limit to it for The UK AV group?
The article I think was in THE TIMES or another site claimed some time back something like a 70k investment 20+ years ago at 70% increase per year would already be over 1 billion on these contracts, it then would be mathematically impossible not to overtake AV France solvency fund when enough years have passed, also at the same time AV France losing every court case in France to try and get out of it.

Has the AV group basically sign up to cover all of AV France's future losses or just the cost in closing down AV FRANCE?

[whatsup32] 23/2/2021 15:42

Golden ticket is beginning to cause concern . If it was that insignificant (as Aviva) tries to portray then why is Aema determined not to touch it and passed burden on to Aviva.

[wskill] 23/2/2021 15:36

Only half the golden ticket now that’s a huge improvement from Aviva pity that they could have not negotiated it away that’s life ,it’s been around for a long time just part and parcel of Aviva now incompetents that are the management team in Aviva need clearing out top to bottom AB needs to start earning her keep when this firesale of assets is over.

[mark1000] 23/2/2021 15:30

Good point Salver yes Karv1 please show us where they make a profit of GBP 500 on France. From the figures above in todays press release profits for 2019 293M + 33M = 326M they also state the dividend for 2020 was zero and the business is capital intensive. To come up with a P/E of 6 you have failed your o level book-keeping course.

[cyberian] 23/2/2021 15:29

salver...that's what I make it 10x post tax...my question earlier today is my assumption that AV. will pick-up Post-tax earnings for this year from France based on £293 million in 2019 year. With the French sale unlikely to be completed until late 2021 that would seem reasonable to expect. Therefore the real benefit is a tad more attractive than the raw Euro 3.2 billion cash figure. The caveats on the Golden Ticket are far less onerous and the new owners will seek to have that anomaly closed PDQ through the French legal system.

[salver2] 23/2/2021 15:02

They also were never making 500 million /they were making less than 300 out of France -The price I think is about 10 times earnings

[eurofox] 23/2/2021 14:22

guess you're glad you are not invested here then?

[karv1] 23/2/2021 14:18

From my limited understanding, It looks terrible to me, such a low price something like 6 x earnings?
Near 500 million pre-tax profit per year gone against a sale price of 2.8 billion, I know which one I would pick. The Only way I could see this as a great price is if the GOLDEN TICK issue was gone but What really makes it terrible is they still on the hook for the unlimited liabilities from the golden tickets. so the liabilities have gone from just being av France to new owners and AV group if this is correct how can this be classed as good news That is my view.

[mark1000] 23/2/2021 13:29

1robbob It was widely flagged even the exact price 3.2Bn Euro's was a known figure so no surprise there but as you say plenty to look forward to .

[1robbob] 23/2/2021 12:50

Gentlemen
An old Stock Market saying...'The thrill of travelling is always better than the arriving'
Proven by AV today.
But sales of Poland and Italy and the Final Announcement, still to 'travel' to?

[eurofox] 23/2/2021 12:15

It was already priced-in so no surprise to me - my course of action = do nothing