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Stock Watch

Is there still life in the Aviva share price?

Aviva is set to announce its Q3 results on Thursday. After a tough H1, the insurance giant will be hoping for better news, as it continues its focus on core markets.

There was a good start to the week for the company, as the Aviva share price rose sharply on Monday, posting new six-month highs just under 330p. The stock had taken a hit as the Covid-19 pandemic took hold in March, bottoming out at 211p, but has since staged a steady recovery.

Sales boost Aviva share price

The 2% bump in the Aviva share price came following the news that the company’s 80% holding in Italian life-insurance operation Aviva Vita has been sold to partner UBI Banca for £400m. New CEO Amanda Blanc, who took on the mantle in July, described the sale as “an important step forward.” The deal also includes the return of a £40m loan Aviva gave the business, and will boost Aviva’s capital surplus by £200m.

Further divestments are part of the long-term strategy for Blanc, as Aviva looks to reshape its portfolio and shore up its finances. The Aviva Vita deal comes swiftly after the sale of Aviva’s Singapore business. The sale of Aviva’s majority shareholding, to a consortium of buyers led by SingLife, netted the British multinational £1.6bn. Aviva had also announced the sale of its shareholding in PT Astra Aviva Life, an Indonesian insurance company, in March, and that deal has also been finalised this month.

Further sales are expected in European and Asian markets as the company embarks on a refocus. Blanc has certainly taken over at a very challenging time but has said that the main focus of the business going forward will be on the company’s core markets of UK, Ireland and Canada, as Aviva looks to reduce its debt, and improve its cash levels.

A tough time for the Aviva share price

Aviva’s share price has had a turbulent 2020. The impact of Covid-19 on insurance can shoulder some of the blame for this, as claims rose by £165m, denting Aviva’s profits.

There’s also the looming spectre of Brexit’s effect on the financial sector, while Aviva also saw an official rebuke from the Financial Conduct Authority over its plan to cancel high-yielding preference shares.

Is there a better quarter in store for Aviva?

Will the Aviva share price will be further boosted by this week’s Q3 results? The company will hope to see an upturn from its most recent announcement. When Aviva reported its H1 numbers in August, profits fell 11%, dragging the company’s operating profits down to £1.2bn. Having suspended the dividend in April the company announced an interim payment of 6p a share.

The firm’s asset management arm Aviva Investors took a sizeable hit as profits fell over 40% to £35m, however the recent improvements in financial markets could see some of this clawed back in Q3. Investors will hope that the Aviva share price continues its ascent.

The company releases its Q3 results on Thursday 26 November at 7am. What will happen to the Aviva share price?


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