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Activist Cevian takes Aviva stake, seeks 5 billion stg capital return By Reuters 

© Reuters. FILE PHOTO: The Aviva brand sits exterior the corporate head workplace within the metropolis of London, Britain March 7, 2019. REUTERS/Simon Dawson

By Carolyn Cohn

LONDON (Reuters) -Activist investor Cevian Capital stated Aviva (LON:) ought to return 5 billion kilos ($7.08 billion) of extra capital in 2022 after revealing it has constructed up a close to 5% stake within the British insurer, placing new CEO Amanda Blanc beneath strain to speed up adjustments.

Aviva, which has bought eight companies for the reason that appointment of Blanc as CEO in July 2020, stated final month it had raised 7.5 billion kilos from disposals and deliberate to return cash to shareholders, with out placing a determine on it.

“Aviva has been poorly managed for a few years, and its high-quality core companies have been held again by excessive prices and a sequence of unhealthy strategic choices,” Christer Gardell, managing associate and co-founder of Cevian stated in an announcement.

Analysts have stated the insurer would have between 3.7 billion and 6.6 billion kilos of extra capital following the completion of the asset gross sales.

Aviva ought to have a worth of greater than 8 kilos per share inside three years, and greater than double its dividend to 45 pence, Cevian stated.

Aviva’s shares are presently buying and selling above 4 kilos a share and rose 3.5% on the Cevian assertion.

Cevian additionally stated it noticed scope for additional cost-cutting, totalling at the least 500 million kilos by 2023. Aviva outlined a method final 12 months together with 300 million kilos in price cuts by 2022.

Aviva is shifting focus to the important thing markets of Britain, Canada and Eire for the reason that asset gross sales.

Business sources have speculated the insurer might make additional adjustments akin to promoting books of life insurance coverage enterprise closed to new clients. The Canadian unit may additionally entice consumers, they stated.

“Aviva has made vital strategic progress over the previous 11 months and we stay sharply targeted on additional bettering our efficiency,” an Aviva spokesperson stated in an emailed assertion.

“We recurrently have interaction with buyers and welcome any ideas which transfer us in direction of our objective of delivering long run shareholder worth.”

Cevian purchased a stake in rival insurer RSA in 2013 which it constructed as much as 15%, culminating within the completion final week of RSA’s sale to Denmark’s Tryg and Canada’s Intact Monetary.

Cevian began increase the stake in Aviva a number of months in the past, with relations cordial between the investor and Aviva’s administration, in response to two sources aware of the matter.

Chairman George Culmer and CEO Blanc are “dedicated to…delivering substantial shareholder worth”, Cevian stated within the assertion.

($1 = 0.7063 kilos)

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