Aviva to pay half of earnings back to shareholders from 2017

Oliver Gill
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Aviva, Britain's largest insurance compa
Aviva remains confident about the future (Source: Getty)

Insurance giant Aviva plans to increase its dividend payout to shareholders, it told investors this morning.

Ahead of its capital markets day, the UK’s second-largest insurer by market capitalisation said it planned to increase its payout ratio to 50 per cent in 2017 from its current level of 42 per cent.

The announcement comes as positive news to shareholders as Aviva was forced to freeze redemptions from its £1.8bn property trust on Tuesday.

In a trend replicated by some UK insurers, Aviva has seen nearly £3bn wiped off its market value since the Brexit vote. Its shares have dived nearly 20 per cent since 23 June and were down four per cent in morning trading.

Nevertheless, chief executive Mark Wilson remained bullish about the future.

"Aviva's fundamentals are sound. Our balance sheet is strong and resilient and we are a simpler, focused group with excellent franchises.

“We expect the UK to deliver cash-flow and growth for our shareholders. A sustainable and growing dividend is paramount,” he said.

The principal concern for investors in insurance companies is that the Brexit vote would weaken their investments, adversely impacting capital requirements under European solvency rules.

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