Pension deficit down 76.5%
Aviva plans to reduce its hybrid debt by at least £700m over the next three years.
In a briefing note to investors, the insurer also said that it has reduced its pension deficit 76.5% to £0.4bn as of 30 November, 2010. This is down from £1.7bn in December 2009.
Jefferies analyst James Shuck said the plan to reduce hybrid debt is good news for shareholders.
“Some £700m of debt will not be renewed over the next 3 years reducing gearing from a peer average 42% (Aviva basis) to 39%. We take this very positively as clear indication that management is becoming more shareholder focused,” Shuck said.
Aviva’s chief financial officer, Pat Regan said: “The strength of Aviva’s balance sheet rests on our successful track record of managing credit and insurance risk and the financial and risk actions we have taken, such as the material reduction of our pension deficit.”
“We have also delivered consistent outperformance in our asset portfolios and we’re disclosing today a net asset value of 617p on an EEV equivalent basis,” Regan continued.
Aviva’s chief executive, Andrew Moss added: “We have a clear strategy to grow our dividend and profits through increasing our geographic focus and in light of the changed economic environment and our strong capital generation we’re planning to reduce our hybrid debt over the next three years.”
