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UPDATE 3-Aviva shares soar as new CEO cuts focus on Asia and Europe

Thu, 6th Aug 2020 07:45

* Aviva to focus on Britain, Ireland and Canada

* Shares rise as much as 7.5%, top FTSE gainer

* First-half profit down 12% but ahead of forecasts
(Adds recent sale of Indonesia, updates shares)

By Carolyn Cohn

LONDON, Aug 6 (Reuters) - Aviva shares soared to
five-month highs on Thursday after the British life, motor and
home insurer's new chief executive Amanda Blanc said it would
reduce its focus on Asia and Europe in a strategy shift welcomed
by analysts.

Blanc took over last month to become the insurance company's
third chief executive in less than two years. Analysts have said
the insurer is operating in too many countries and sectors, and
its shares have lagged rivals.

Aviva will instead focus on Britain, Ireland and Canada, the
company said.

Aviva shares rose as much as 7.5% before trimming gains to
trade at 296 pence at 0902 GMT, up 4.2% and the top performer in
the FTSE 100.

"We are going to shake up the organisation," Blanc told a
call about Aviva's first-half results released on Thursday. She
said there may be better owners in the long term for some of
Aviva's Asian and European businesses.

Aviva's European operations include France, Italy and
Poland. It said last year it was selling its stake in its Hong
Kong business. Its other Asian operations include Singapore and
a joint venture in China.

"Amanda Blanc is not taking her foot off the gas," said Joe
Healey, investment research analyst at broker The Share Centre.
"It's pleasing to see a prudent process in place to keep the
balance sheet healthy."

Aviva posted a 12% drop in first-half operating profit to
1.2 billion pounds ($1.6 billion), though this was above
expectations of 1.1 billion pounds, according to a
company-supplied consensus forecast.

Aviva's performance was helped by strong results in UK
annuities. The value of new business in its UK life business
rose 60% to 323 million pounds, but Europe life and Asia life
fell by 21% and 6% respectively, to 188 million and 90 million.

Former CEO Maurice Tulloch carried out a strategic review of
the Asian businesses last year but sources said he was unable to
secure a high enough price to sell Aviva's Singapore division.

Aviva also said at the time it was looking at strategic
options for Vietnam and Indonesia. It has since pulled out of
Indonesia.

JP Morgan analysts said management under Blanc was moving
fast on strategy though it reiterated its "neutral" rating on
the stock. KBW said the strategic changes were positive,
reiterating its "market perform" rating.

The company set aside 165 million pounds in its general
insurance business for claims related to the COVID-19 pandemic,
in line with a previous estimate.

Aviva, which like several other insurers suspended its final
dividend for 2019 earlier this year, said it would pay a 2019
second interim dividend of six pence and would review the final
dividend, and its dividend policy later, in the year.
($1 = 0.7590 pounds)
(Reporting by Carolyn Cohn; Editing by Sinead Cruise, Jason
Neely and David Clarke)

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