Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Stock Watch

Is the Aviva share price on the road to recovery?

Aviva share price: the Aviva logo on a linesman's flag

After a difficult 2020, is there still life in the Aviva share price? There seems to be, with the stock rising steadily since taking a huge hit in March 2020. Aviva’s share price had hit highs of 423p in January last year, but as the Covid-19 pandemic took hold, that figure was halved. It’s been a steady road to recovery since, despite a few bumps, and shares are now trading at just below 370p.

Could this improvement continue as Aviva releases its full-year results on Thursday?

Aviva share price boosted by divestments

When the company reported back in August, new CEO Amanda Blanc indicated that the main focus of the business going forward would be on the company’s core markets of the UK, Ireland and Canada.

This has led Aviva to make a number of sales of overseas businesses. Aviva has sold its Singapore business for £1.6bn to Singlife and a consortium of other buyers, divested its Italian business Aviva Vita in November for €400m, and removed its Hong Kong and Vietnam businesses in December. More may yet be to come as Blanc continues to focus operations in key markets. 

Aviva has long been a multi-faceted and complex operation, and the move to finally streamline the business, and maintain the rise in the Aviva share price, seems to be working so far. In November there were early signs that the strategy was paying off with £1.2bn of net inflows from the UK and North America.

There was a similar improvement in other areas of the business with UK and Ireland Life new business sales up 40%, while claims fell to £100m.

Investors focus on the Aviva dividend

This week’s main focus is likely to be on the final dividend. Aviva had cancelled the dividend this time last year as regulators called for "restraint", a move that prompted the Aviva share price to fall 8.1%.

However, this year the payouts look set to return. A 7p interim dividend was announced in November, with expectations now closer to 14p a share.

Could green focus sway investors?

Since taking over, Blanc has taken a harder line on sustainability, and Aviva’s investment arm has threatened to sell it’s shares in 30 top gas, oil, mining and utilities companies unless they sign up to a transition plan in the next two years.

Blanc has been outspoken on the issue, and Aviva has also pledged not to sell insurance to companies at which pollutants count for over 5% of revenue, while setting the ambitious target of becoming a carbon-neutral business by 2040.

Blanc described the pledge as “the most demanding target set by any major insurer in the world” and “the biggest challenge we’ve ever faced as a business.”

As sustainability and climate change become more and more of a key issue, will these green pledges boost the Aviva share price?

Aviva will announce its full-year results on 4 March at 7am.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.