Aviva's profits for the first half of the year rose 5%, beating City forecasts. That’ll be good news for under-pressure chief exec Andrew Moss, who’s sure to be happy to see the shares going up: gaining more than 2% to 383.5p, the stock was one of the biggest winners in the market. Just don’t mention how far that is still from the 800p it was when Moss revealed the ‘one Aviva, twice the value’ strategy in 2007. Doesn’t sound like the shareholder reality matches the catchphrase just yet.
So it’s perhaps no surprise that there’s been mutterings of shareholder discontent over the rate of progress at the company. Moss has had the tricky job of making a coherent ‘one Aviva’ out of several messy mergers, with Norwich Union, General Accident and Commercial Union. And shares have since suffered over fears that the company’s too exposed to the sovereign debt currently crippling the eurozone. Indeed, aside from the growth markets of Turkey and Russia, Aviva’s main focus is on France, Poland, Italy, Spain and Ireland. Several of those of must seem to concerned stakeholders like baskets where you really don’t want to keep your nest-eggs.
But as a counter to such preconceptions, European operating profits actually rose 21%. Aviva reckons its exposure to sovereign debt across Greece, Portugal, Spain, Ireland and Italy in the period was £1.4bn – just 1% of the company's total £113bn shareholder assets.
It’s also worth noting that despite some effective streamlining – Aviva sold the RAC for £1bn earlier this year – the company remains one of the two biggest insurers in this country and, as Moss points out, is still the provider of choice to RBS and the Post Office. And with the Government actively pushing punters and companies to be more conscientious about pension plans, it’s sticking its weight behind corporate business as a centre of future growth.
Moss will be pleased with the direction, not least because it should mean not having to dip into his pension pot quite so prematurely…