Britain’s second-largest insurance group said it will pay down almost half of the £1.5bn in debt it needs to refinance during the period.
The company said it had also reduced the deficit on its defined-benefit pension scheme to £400m, from £1.7bn at the end of 2009. Last April, the company prompted anger from unions by ending final-salary benefits for 7,600 workers.
Thursday’s changes were instigated by Pat Regan, Aviva’s finance director, who replaced Philip Scott in 2009. Mr Regan confirmed the insurer would start to provide a more conventional measure of embedded value – an insurance industry measure of profits – rather than just disclosing market consistent embedded value, a version investors and analysts have warned is too confusing.
Aviva hopes the latest round of balance sheet restructuring will enable it to generate more cash. The insurer also hopes to improve its share price, which on Thursday closed down 0.2 at 428.1p. Aviva’s market capitalisation stands at just over £12bn, compared with rival Prudential’s £17bn.
Andrew Moss, Aviva’s chief executive, said: “I am confident that Aviva is in a very strong position to deliver value for our customers and shareholders. Pat will demonstrate today that Aviva’s high quality, well managed balance sheet is a major strength, underpinning our powerful capital generation.
“We have a clear strategy to grow our dividend and profits through increasing our geographic focus and in light of the changed economic environment and our strong capital generation we’re planning to reduce our hybrid debt over the next three years.”
The news comes a day after Aviva removed the head of its European business, Andrea Moneta.
Source : The Telegraph
