Preferential treatment

21 Mar 2018 By Aimee Donnellan Follow @aimeedonnellan

The UK insurer has riled shareholders with a plan to retire supposedly “irredeemable” preference shares at their 450 mln pound face value. The juicy 8.5 pct average coupon made them a hit, but also encouraged Aviva to seek legal loopholes. It’s a powerful lesson in buyer beware.

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Aviva on March 20 clashed with investors over its plan to cancel preference shares with a face value of 450 million pounds.

Institutional investors including M&G, Prudential, Invesco, GAM, BlackRock, Legal & General and EdenTree met Aviva Chairman Adrian Montague, to ask the British insurer to scrap a plan to cancel three issues of preference shares which pay annual coupons as high as 8.9 percent.

Aviva said on March 8 it was considering cancelling the shares to save 38 million pounds in annual interest.

The investor group owns 30 percent of Aviva’s preference shares and 15 percent of its ordinary stock.

Aviva shares were down 0.55 percent at 18.94 pounds by 1009 GMT on March 21.

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