AVIVA UPGRADES GROWTH, CASH AND DIVIDEND TARGETS
Aviva plc ("Aviva") is announcing today upgrades to its targets for earnings growth, cash and dividend at a conference for investors and analysts.
Over the last four years Aviva's financial and strategic position has been transformed. The capital surplus has tripled; the group has been streamlined and Aviva is now focused on markets where it has high quality franchises and is gaining market share.
As a result Aviva is upgrading the financial objectives it set out previously. Specifically:
Growth: targeting higher than mid-single digit percentage growth annually in IFRS operating earnings per share from 2019;
Cash: remittance target increased from £7 billion to £8 billion[1], allowing Aviva to deploy £3 billion of excess cash over 2018 and 2019. This is expected to be used to repay £900 million of debt in 2018 and fund bolt-on acquisitions and additional returns to investors;
Dividend: pay-out ratio target increased to 55-60% of operating EPS by 2020, underpinned by improved earnings quality and cash flows from Aviva's businesses which are becoming less capital-intensive.
The investor and analyst event will start at 8am UK time, with presentations covering strategy, growth, capital management and Aviva's international businesses. The conference, which is being held at Aviva's office in Warsaw, Poland, will include break-out sessions focused on Aviva's businesses in France, Canada and Poland, as well as progress made with Aviva's digital strategy.
To watch a webcast of the event, please paste the following URL into the address bar of your browser: http://avivawebcast.com/cmd2017/
Mark Wilson, Group Chief Executive Officer, said:
"We are upgrading our cash flow and growth targets. After a few years of restructuring, our businesses are now high quality and we expect good, sustainable growth from each of them. We have improved the consistency and quality of our profits and so we are raising our expectations for earnings growth to more than 5% annually from 2019 onwards.
"We have significant surplus capital and cash and this means we will have £3 billion of excess cash to deploy in 2018 and 2019, £2 billion of which we plan to deploy next year. In 2018 we expect to use our excess cash to pay down £900 million of expensive debt, return capital to investors and invest in growing our business, both organically and through acquisitions.
"The quality of our earnings has improved by 15 to 20% and with lower debt costs and stronger than expected cash flows, it is appropriate to raise our target dividend pay-out ratio to 55-60% by 2020."
*This Announcement Contains Inside Information.
[1] Cash remittance target between 2016 and 2018