London: Aviva, Britain’s second-biggest insurer, cut its dividend by over a quarter to provide extra funds for a turnaround strategy aimed at bolstering capital and profit.
Aviva shareholders will get 19 pence in total from 2012 earnings, down from 26 pence the previous year and far below the 25.6 pence expected by analysts in a company poll.
The cut, Aviva’s first since 2009, is the latest step in a reorganisation launched by Aviva last July after investors irked by a persistently weak share price forced out chief executive Andrew Moss.
“I regret that this has become necessary, but can assure shareholders we took this decision only after examining scrupulously all alternatives,” Aviva Chairman John McFarlane said in a statement.
The cut will help Aviva pay down debt and build up its capital reserves, McFarlane said.
Under the recovery plan, Aviva has cut costs and raised about £2.4 billion (Dh13.5 billion) by selling less profitable businesses that tie up too much capital, including its subsidiary in the United States.
Aviva shares have risen by a third since the revamp began, partly recouping a near-60 per cent decline under Moss’s five-year tenure, but only narrowly beating a 28 per cent gain for the European insurance sector as a whole.
