Aviva shareholder criticism prompts £450m preference share climbdown

Insurance giant Aviva has today been forced into a U-turn over controversial plans to cancel £450m of high-interest shares.

After receiving “strong feedback and criticism” from investors, Aviva has reneged on proposals to bin its irredeemable preference shares. Some of the shares date back to 1992 and pay an 8.5 per cent coupon.

Boss Mark Wilson said he hoped Aviva’s change of heart will “restore trust” in the company.

Plans to cancel the preference shares were announced on 8 March. While Aviva insisted no firm decision had been taken, it is understood to have enraged large institutions, pensioners and charities, which bought the shares on the assumption they would continue to pay the chunky interest in perpetuity.

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Fund management giants including M&G, Invesco, Blackrock and GAM are understood to have demanded meetings with Aviva’s top brass to voice their ire in the wake of the announcement.

“Aviva has listened. Aviva announces that it has decided to take no action to cancel its preference shares,” the insurer said today.

Wilson said: “I am very aware that Aviva is in a position of trust with our customers and investors.

To maintain that trust it is critical that we listen to and act on feedback. The reputation of Aviva, and the trust people have in us, is paramount.

Our announcement today means that preference shareholders can rest secure in their holdings. The board and I have a duty to consider not just the financial implications of our actions. We must consider the impact to Aviva’s wider reputation. I hope our decision today goes some way to restoring that trust.

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