Briefing: Is this the perfect time to make a swoop for Aviva?

I’m less than a fortnight into my return to insurance journalism, via a brief stop in insurance PR, and whether it’s the long hot summer, post-Covid fever or just the good old insurance market rumour, the topic on my mind is the future of Aviva.

Despite a “categorical” denial of a sale from Aviva, several sources have raised the fact Aviva now looks like a key takeover target. And while the statement from Aviva leaves no room for dispute, it hasn’t stopped some people talking and it certainly would be an interesting prospect.

After deals such as Intact coming in for RSA from Canada, and Brown and Brown entering the UK market on the broking side, surely there would be no end of interest on the global market? Could a major global player look to be enhancing its UK portfolio? And what an enhancement it would be. 

Transformation

There is no doubt Aviva has been on a transformational journey over the past few years, and since Amanda Blanc came in as group CEO over two years ago, Aviva has ‘cut the fat’.

Over the past two years, Aviva has sold, for a total of around £7.5bn,:

• Aviva Vietnam
• Aviva Italia for £284m
• Hong Kong joint venture, Blue
• Indonesia joint venture
• Aviva Poland
• Aviva France
• Aviva Vita
• Friends of Provident International

Selling off all of these areas of the business has created a much leaner business, which is now totally committed to the organic growth and development - all of which makes it a very attractive prospect for any potential buyers.  This is a fantastic brand with a simple business model, only operating in the UK, Ireland and Canada, where it is profitable.

Add into the mix Aviva’s recent acquisition of Azur’s high-net-worth business which, along with the transfer of Axa XL’s private clients business, will confirm Aviva as the “market leader in the UK and Ireland private clients market,” according to Adam Winslow, CEO of Aviva UK & Ireland General Insurance.

All of this creates a very attractive company to acquire if you have the capital to do so.

Perfect time?

Earlier this year, Aviva shares saw a dramatic drop in share price according to the London Stock Exchange, but that was the net result of a share consolidation plus a new B share scheme as part of the company’s return of capital to shareholders. According to Aviva, its share price was trading at 405.5p at the beginning of the year, and now at c400p, so 1% down.

However, Aviva share prices are still running around 25% lower than they were five years ago. So, it could be both a great time for any interested party to swoop in and make an offer.

If you were an Aviva shareholder, and an offer were to come in at 25% above share price, would you wait to see if share prices return? Or do you take your money and run?

Who would come in to purchase?

The potential buyer would need to be a corporation with the capacity and ability to take on a company as large as Aviva, because while globally, Aviva isn’t the largest insurer, it is far and away the largest player in the UK GI market.

Could Intact Financial be one to watch, after its acquisition of RSA last year? Or Generali? or AIG? Both already have a large global presence, but could want to really ramp up their UK and Ireland presence.

It’s true the rumour mill has already tried to speculated Aviva is looking at a prospective new Lloyd’s syndicate, talk which ended up going nowhere but imagine if this is the summer, my first in role, the biggest of big deals comes around – as a news editor I can only dream.