Aviva promises extra returns for investors as it lifts growth targets and frees up £3bn

Lucy White
London Irish v Wasps - Aviva Premiership
Aviva believes it has been strategically "transformed" in recent years (Source: Getty)

Insurance group Aviva has today lifted its earnings growth, cash and dividend targets and promised to free up £3bn.

The extra £3bn will be used to repay £900m of debt in 2018, fund bolt-on acquisitions and for “additional returns to investors”.

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The announcement came as Aviva said its strategic position has been “transformed” over the past four years, as the capital surplus has tripled, the group has been streamlined and its focus has shifted to markets where it has “high quality franchises”.

“We have improved the consistency and quality of our profits and so we are raising our expectations for earnings growth to more than five per cent annually from 2019 onwards,” said chief executive Mark Wilson.

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The dividend payout ratio target has also increased to 55 to 60 per cent of operating earnings per share, due to improved earnings quality and cash flows from businesses which are becoming less capital-intensive.

Aviva has already been active on the acquisition trail in recent weeks, snapping up Friends First earlier this month while selling two of its Italian businesses and Friends Provident in summer to make room for its new strategy.

Total group assets under management at Aviva are £450bn, and last year the insurance business paid out £34.4bn in benefits and claims.

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