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Stock Watch

Will Q1 see the Aviva share price continue to recover?

aviva share price: an aviva office

Is there still life in the Aviva share price? It certainly seems so. The stock took a huge hit in March 2020, after 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.

The company has recovered strongly since, having made its way back to just over 400p this month. Could this upward trend continue as Aviva releases its Q1 results on Thursday?

Aviva share price helped by divestment spree

Aviva has been on a bit of a disposal spree in the last few months, selling its Singapore business for £1.6bn to Singlife and a consortium of other buyers in September. The insurer also sold its stake in Italian business, Aviva Vita in November for €400m, and the Hong Kong and Vietnam businesses in December. In March it announced another disposal, selling Aviva Italy to Allianz for €873m, while earlier this month the company completed the exit process for its Turkey business, receiving a £122m cash consideration in the process.

These sales are part of CEO Amanda Blanc’s desire to focus on the company’s core markets of UK, Ireland and Canada, and it appears to be paying off as the Aviva share price continues its rise. On taking up her role, Blanc had said: “We will invest where we are sure it delivers sufficient returns alongside marked benefits for our customers. And where we see a value opportunity to invest in growth, we will take it.”

Aviva hopes to continue growth

In November we saw new business sales in UK and Ireland rise by 40%, and in the recent full-year numbers there has been continued growth in all areas of the business, from assets under management, which have risen to £81bn for bundled workplace pensions, to record net flows of £8.5bn for savings and retirement.

Group operating profits also beat expectations, coming in at £3.2bn, well above consensus estimates of £2.73bn, and only 0.7% below last year’s number. The company also confirmed a final dividend per share of 14p.

Aviva to double down on net zero pledge                        

In March Aviva became the first major insurer in the world to target net zero carbon by 2040, including a pledge to have net zero carbon in its own operations and supply chain by 2030. The insurer will hope that investors see the value in such a move, potentially boosting the Aviva share price.

Blanc commented: “Aviva is taking bold steps to help tackle the climate crisis. As the UK’s leading insurer, we have a huge responsibility to change the way we invest, insure and serve our customers. For the world to reach net zero, it’s going to take leadership and radical ambition.”

In recent weeks the company have also pledged to withdraw capital from companies that don’t align with those goals.

Thomas Tayler, senior manager in the Aviva Investors Sustainable Finance Centre, said: “If you do not commit to transition then we do not think you are a good investment on a financial basis, and will therefore withdraw capital.

“We want you to do the right thing and we want to see that happen. But if we don’t see it happening, we will have to make a change.”

As the insurer releases its Q1 results on Thursday at 7am, what will the latest number mean for the Aviva share price?


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